By Howard Applebaum, Corporate America Realty & Advisors
The industrial real estate market in New Jersey has experienced remarkable growth over the past decade, fueled by the strong demand from e-commerce retailers and increased container traffic into nearby ports. This growth has resulted in a 300% surge in the average sales price psf for industrial properties. However, limited supply and antiwarehouse development in some municipalities have created a highly competitive market for investors. In this article, we will explore the key factors driving this growth, analyze market trends, and provide investment considerations for those looking to enter this thriving market.
1. Strong Demand and Limited Supply: The rise of e-commerce has revolutionized the retail industry, leading to an exponential demand for industrial space in New Jersey. E-commerce retailers require storage and distribution facilities, driving the need for warehouses and fulfillment centers. Additionally, the influx of inbound containers into the Ports of Newark/Elizabeth and nearby ports has further fueled the demand for industrial space. However, the supply of available industrial space is limited, and certain municipalities have been resistant to warehouse development, exacerbating the upward pressure on prices and increasing competition.
2. Impressive Market Growth: Over the past ten years, the average sales price psf for industrial space in New Jersey has soared by 300%. This growth underscores the market’s current trend towards expansion, driven by the surge in demand from e-commerce retailers and the scarcity of industrial properties. The economic impact has been substantial, with lucrative investment opportunities and job creation throughout the state.
3. Future Outlook and Forecast: CoStar forecasts a continued upward trajectory for the New Jersey industrial real estate market. Over the next five years, there is an anticipated 10% increase in the average price per square foot for industrial space. This forecast indicates that the market will become even more competitive, making it essential for investors to conduct thorough research and identify areas with strong demand and limited supply.
4. Investment Considerations: Investors seeking to enter the New Jersey industrial real estate market should conduct comprehensive location analyses. Factors such as proximity to major transportation hubs, availability of skilled labor, and adherence to zoning regulations are crucial considerations. Additionally, ensuring efficient property management is essential to attract and retain tenants.
Conclusion:
The New Jersey industrial real estate market has experienced significant growth due to the surge in e-commerce demand and increased port activity. However, limited supply and anti-warehouse sentiment pose challenges for investors. Despite these obstacles, the market presents attractive opportunities for those who conduct thorough research, select properties in high-demand areas, and carefully manage their investments. With strategic decision-making and a focus on market dynamics,
More good news and reasons to own or invest in Industrial Real Estate in 2023-2024!
Trepp CMBS Research, perhaps the leading Real Estate Research and Financial publisher in the Country, in their August 2023 analytic report comparing different US Real Estate Asset Classes, “Mortgage Delinquencies” shows that nationwide, Industrial Real Estate Is The Strongest Asset Class, with the smallest percentage of overall “troubled” mortgage debts.
Howard Applebaum is president of Corporate America Realty & Advisors.