PARSIPPANY, N.J., Oct. 9, 2017 - Continued historic industrial market fundamentals and measurable office sector improvement translated to robust overall third-quarter performance for New Jersey commercial real estate, according to Colliers International NJ LLC (NASDAQ: CIGI, TSX: CIG). The global commercial real estate services firm today released its latest regional Market Snapshots.
Record-setting demand and consistent positive net absorption have yielded historically low industrial availability in Northern and Central New Jersey, with the availability rate dropping 20 basis points during the third quarter to just 6.3 percent.
"This demand in conjunction with new class A properties that have been recently developed has pushed industrial asking rents in our region to new levels," noted David A. Simon, SIOR, executive managing director and New Jersey market leader. "New Jersey's industrial average asking rent today is $7.13 per square foot, which is 15.4 percent higher than this time last year.
"At the same time, while activity remains strong, the shortage of existing available inventory has made it difficult for industrial users to find new locations and the result of limited inventory has led to less transactions being completed. In fact, quarterly industrial leasing activity dropped below 10 million square feet, to 9.1 million square feet, for the first time since third-quarter 2015," Simon added.
Still, several significant transactions closed, led by Wayfair's 1.3 million-square-foot commitment at 1 Brick Yard Road in Cranbury, Rema Foods' 320,867-square-foot lease at 2353 Route 130 in Dayton and RAB Lighting's 264,085-square-foot lease at 10 Broadway Road in Cranbury.
Diminishing available space has led developers to accelerate their development pipeline, according to the Colliers report. During the quarter, 10 projects totaling 2.6 MSF broke ground, bringing the total construction pipeline to 43 properties totaling 15.0 MSF.
Market by market:
• Northern New Jersey maintained its positive momentum for the fifteenth consecutive quarter, absorbing 1.3 million square feet of industrial space, lowering the availability rate to 7.0 percent - an improvement of 100 bps from the prior year. At 4.1 million square feet, Northern New Jersey industrial leasing remained active, up 4.1 percent from this time last year. The Port and Meadowlands submarkets continue to benefit from a majority of the demand, accounting for 71 percent of third-quarter leasing activity in Northern New Jersey.
• The lack of available space in Central New Jersey has resulted in difficulty for industrial tenants in search of new space. Accordingly, leasing activity dropped for the second consecutive quarter to 5.0 million square feet. Despite the recent deceleration of leasing velocity in the state's central counties, net absorption totaled a positive 2.4 million square feet. This was driven by 1.8 million square feet of new industrial product delivery this quarter, all of which was pre-leased.
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