May 09, 2018
PARSIPPANY, N.J. – With demand steadily outpacing supply, New Jersey’s industrial property sector, which has tightened every year since 2010, has registered its 20th consecutive quarter of positive net absorption, according to Transwestern’s First-Quarter 2018 Industrial Market Report.
The first quarter witnessed 2.8 million square feet in net absorption, the second-highest level since the third quarter of 2016. This tally also follows fast upon a near-record level of 5.3 million square feet recorded the prior quarter. Net absorption thus totaled 8.1 million square feet over the past two quarters, which amounts to the second-highest all-time total over a six-month period.
Middlesex County dominated all submarkets by recording the quarter’s four largest transactions. This county alone accounted for nearly 7 million square feet of absorption during the past 12 months, prompting 7.6 million square feet of new product currently under development.
“Middlesex County has really stood out as the center of the New Jersey industrial boom,” said Transwestern Managing Director Jeffrey Furey. “Moreover, recognizing the lucrative opportunities here, the development sector has responded by setting in motion a substantial pipeline of new construction.”
Three of the submarket’s largest transactions were closed by logistics firms. Two of those companies leased space in the New Jersey Turnpike Exit 8A submarket, led by XPO Logistics, which took approximately 470,000 square feet in Dayton, while US Elogistics Services committed to 340,900 square feet in South Brunswick. At Turnpike Exit 11/GSP, 4PX signed a 354,250-square-foot lease in Perth Amboy at the newly constructed ePort Logistics Center.
“With vacancy at record lows and rents at record highs, the New Jersey industrial sector is an undisputedly healthy market,” said Transwestern’s New Jersey Research Director Matthew Dolly. “While several indicators provide a continuing sense of optimism, such as high consumer confidence, healthy employment levels, and record-high container volume at American ports, two sources of concern are a relative paucity of truck drivers and construction workers, as well as rumblings over a potential trade war with China.”
Overall industrial vacancy for New Jersey stands at 4.1 percent, marking a record low for the third straight quarter. This figure represents a year-over-year improvement of 100 basis points. At $7.74 per square foot, rents are at a record high for the ninth consecutive quarter, with 16 of 25 submarkets reporting higher rents in comparison to last quarter. Additionally, 18 submarkets reported boosts in rents on a year-over-year basis.
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