SADDLE BROOK, NJ — According to CBRE Group, Inc.’s Q3 2015 New Jersey Industrial MarketView Report, the third quarter of 2015 represented the 18th consecutive quarter of strong positive momentum since the industrial market’s recovery began in Q4 2010, with 18 of 24 submarkets recording positive net absorption.
At 8.1%, the state’s availability rate is 83% back to its pre-recession low, compared to its recessionary peak reached in Q3 2010. With 5.74 million s/f of leasing velocity, New Jersey’s industrial market surpassed the 5 million s/f quarterly leasing mark, carrying the year-to-date total to 17.34 million s/f. Notably, year-to-date velocity sits 2.56 million s/f below the 2014 total.
“Occupier demand continued to center around top quality product in highly desirable locations this quarter,” said Noah Balanoff, first vice president, CBRE. “Class A leasing accounted for more than 45 percent of the New Jersey’s total velocity, which is especially notable given that class A product accounts for only 9.3% of total inventory.”
Top performing submarkets included Route 287/Exit 10, Exit 8A, the Meadowlands and Hudson Waterfront with 1.29 million s/f, 978,000 s/f, 745,000 s/f, and 553,000 s/f of leasing velocity respectively. Notable activity included:
•Home Depot’s 813,000 s/f renewal at Exit 8A
•Laser Logistics’ 248,000 s/f renewal in Trenton/295
•ECDC, Inc.’s commitment to 216,000 s/f in the Meadowlands
•Kennedy International’s 190,000 s/f lease at Exit 8A.
Strong demand for industrial space drove the state’s overall availability rate down 60 basis points. Northern New Jersey contributed significantly to this overall improvement, dipping below 8.0% for the first time since Q4 2008. Robust demand coupled with diminishing availability boosted absorption to 3.60 million s/f—the highest quarterly absorption seen since Q3 2014.
In Q3 2015, three projects totaling 1.32 million s/f were delivered to market and five projects totaling 2.15 million s/f broke ground. Currently, 18 projects are under construction, making up 4.48 million s/f of future inventory. 79.6% of the construction pipeline is speculative development.
“The increasing reliance on modern product by industrial occupiers continued to stir new construction this quarter,” said Steven Beyda, vice president, CBRE. “It’s critical to note that the absorption rate of the new product on the market remains very healthy. The average time on market following delivery for speculative projects has been just five months.”