Leasing activity of 5.9 million sf during the Q2 spurred by 3PL firms
Saddle Brook, NJ — After a slight decline during Q1 2024, Northern and Central New Jersey’s industrial sector was back in positive form during Q2 with 5.9 million s/f leased - a 16% quarterly increase, according to CBRE’s New Jersey Industrial Figures report.
Strong demand by smaller tenants, particularly third-party-logistics (3PL) companies, which accounted for 47% of the market’s total leasing activity, helped push absorption to a positive 1.7 million s/f. As a result, occupancy increased for the first time since Q1 2023. The vacancy rate jumped by 10 basis points (bps) to just 5.0% due to the delivery of two million s/f. of new product entering the marketplace - the slowest increase in vacancy since the same time last year.
“New Jersey’s industrial market continues to exhibit resiliency despite economic concerns and lingering inflation felt earlier this year,” said CBRE’s Chad Hillyer. “Smaller leases by 3PL and food and beverage companies accounted for most of the leasing activity during the quarter, which once again was strong, especially in the 50,000 to 100,000 s/f range.”
Strong leasing activity in Q2 was a boon for developers of new facilities given that 1.6 million s/f of space was absorbed in properties built after 2021. The largest two leases in the market during Q2 were DSV’s 355,000 s/f commitment at 300 Salt Meadow Rd. in Carteret, and JW Fulfillment’s 342,000 s/f lease at 99 Callahan Blvd. in Sayreville.
While the vacancy rate was up slightly, sublease availabilities reached the highest level since Q3 2020 at 6.5 million s/f The average asking rents remained relatively stable quarter-over-quarter with class A space rents at $19.40 per s/f industrial space in class B and C properties experienced an increase of 3% due to strong demand for smaller units, to end the quarter at $16.62 psf.
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