New Jersey’s Warehousing Market: Current Trends and Insights

By Jonathan Glick and Josh Glussky, Sheldon Gross Realty

New Jersey’s warehousing market – it’s never, ever dull. If you’re searching for a word to describe it, “dynamic” is probably accurate, whether we’re talking about sales, leasing, or even the growing demand for industrial outside storage (IOS).

Here’s a look at how we view the current warehousing market, divided into four sectors.

Leasing

With warehouse leasing, we’ve observed some interesting shifts, with particular emphasis on private owners. For small bay, industrial spaces (1,500 to 20,000 s/f), demand is outpacing supply. And while rental rates have stabilized, tenants are still benefiting from incentives like free rent and tenant improvements.

With larger spaces, however, there’s a different trend. Supply is ahead of demand, and the number of property showings versus actual offers has been decidedly skewed. This discrepancy is primarily attributable to the aftermath of the recent elections and ongoing uncertainty related to tariffs and global trade policies. Once these factors stabilize, expect demand for larger spaces to rise.

A significant challenge – and one that won’t be solved by a recovery of overall demand – is the oversupply of class A warehouse space. To stay competitive, owners are offering substantial rent concessions and tenant improvements as they attempt to meet their asking rental rates. This dynamic is further complicated by older properties, on which rental rates have been slashed by about 10 to 15%.

Sales

Demand for warehouse space on the sales side continues to be strong across all size ranges, though supply is quite limited. Prices are remaining firm, and many transactions are closing near or even at replacement value. We’re consistently seeing sellers willing to hold out for closer alignment with their asking price … and for the most part, this is proving to be an effective strategy.

Office Space

With office space, sales and leasing transactions continue to be few and far between. There’s simply little growth in the sector – in fact, there’s been a noticeable slowdown. Demand is stagnant.

Industrial Outside Storage

In recent years, the single most significant shift in the warehousing market has been the rise of IOS. This sector is currently performing robustly, particularly with sales. This is particularly true with properties that offer the right zoning, parcel configuration, and access to major trucking routes. However, leasing IOS spaces has become more challenging – even more so with large sites for which securing financially stable tenants is difficult. Still, rental prices for IOS properties continue to be strong and should retain their value in the near term.

Jonathan Glick is executive VP and Josh Glussky is corporate sales representative at Sheldon Gross Realty.