Press Releases

10.6 Million SF Delivered in 2018 Doesn’t Offset Record 12.8 Million SF of Absorption

February 01, 2019


FLORHAM PARK, N.J. – Despite a near-record amount of new development in 2018, New Jersey’s supply of industrial space is not keeping pace with the extraordinary demand, according to Transwestern’s Fourth-Quarter 2018 Industrial Market Report. The 10.6 million square feet of space that was delivered last year – the most since 2001 – was not enough to satisfy the insatiable appetite of tenants, which set a new record for net absorption. 

While the record-level absorption of 12.8 million square feet can be largely attributed to leasing activity from retailers and wholesalers, manufacturing and food-related companies have emerged of late. With these industries continuing to expand their presence, vacancy rates dipped below 3.0 percent in 12 of the state’s 25 submarkets, with seven submarkets reaching an all-time low. 

Although 35 million square feet of industrial space has been developed in New Jersey since 2011, occupancy levels have grown by 60 million square feet during the same period. This has resulted in skyrocketing rents, which have increased for 14 consecutive quarters, and have risen to above $9 per square foot in seven submarkets.

“To be competitive in today’s environment, industrial tenants must take advantage of New Jersey’s unparalleled location at the center of the Northeast Corridor,” said Jeffrey Furey, Managing Director at Transwestern. “The demand is so high that tenants are resetting the market when renewing leases, with no choice but to pay significantly higher rents.”

New industrial development is occurring primarily in the central part of the state, along the Turnpike between Exits 7A and 13A, and, more recently, along the Interstate 287 corridor. An additional 6.2 million square feet is under construction in the state’s core markets, with 5.1 million square feet in central New Jersey alone.

Overall, vacancy across New Jersey reached an all-time low for the sixth consecutive quarter – a trend that’s expected to continue in 2019, despite new construction.

“As the industrial market shows no signs of cooling, New Jersey faces some critical challenges moving forward,” said Matthew Dolly, Director of Research at Transwestern. “While the state boasts excellent air, freight, port, and rail infrastructure, upgrades are necessary. Unless critical needs are addressed, the state’s current infrastructure will have difficulty accommodating the growth that the industrial sector presents.”

ABOUT TRANSWESTERN

Transwestern is a privately held real estate firm of collaborative entrepreneurs who deliver a higher level of personalized service – the Transwestern Experience. Specializing in Agency Leasing, Asset Services, Occupier Solutions, Capital Markets and Research, our fully integrated global enterprise adds value for investors, owners and occupiers of all commercial property types. We leverage market insights and operational expertise from members of the Transwestern family of companies specializing in development, real estate investment management and research. Transwestern has 33 U.S. offices and assists clients from more than 219 offices in 37 countries through strategic alliances with France-based BNP Paribas Real Estate and Canada-based Devencore. Experience Extraordinary at transwestern.com and @Transwestern.

Media Contact:
Amanda Ferraro
201.649.1186
aferraro@beckermanpr.com
twmediarelations@transwestern.com

Jeffrey Furey

Managing Director

Florham Park, New Jersey

+1 (973) 947-9242

Matt Dolly

Director of Research - NJ

Florham Park, New Jersey

+1 (973) 947-9244