Cassidy Turley Industrial Market Snapshots Find Northern New Jersey Flat, While Central Jersey Exper
While activity in the industrial market in Central New Jersey is picking up steam, the Northern New Jersey market is full of uncertainty, according to recently released third-quarter Industrial Market Snapshots for the Northern and Central New Jersey markets from Cassidy Turley, a leading commercial real estate services provider in the U.S.
One commonality in both markets is that tenants, particularly those who are not reliant on Port access, are increasingly willing to expand from traditional markets in favor of high-quality buildings that can accommodate larger users.
“The Central New Jersey industrial market is moving in a positive direction with increased leasing velocity and declining vacancies,” stated Douglas Bansbach, Senior Vice President, Principal, for Cassidy Turley.“The industrial market in Northern New Jersey appears to be at a standstill, but there are a number of transactions in the pipeline that are waiting for the current cloudy situation to pass,” stated Howard Weinberg, Senior Vice President, Principal for Cassidy Turley.
The vacancy rate in Central New Jersey fell to 9.4 percent in the third quarter from 9.6 percent in the previous quarter and there was an encouraging 2,556,682 square feet of positive absorption year to date. The strongest absorption was reported in the Exit 8A submarket with just less than 800,000 square feet of positive demand. Exit 7A also experienced an increase in demand with approximately 450,000 square feet of positive absorption.
The average asking rental rate fell by eight cents over the quarter and 21 cents year over year. It was $4.36 per square foot in the third quarter. As leasing velocity increases, the market will provide fewer opportunities for tenants, which should lead to an increase in rental rates and a drop in overall landlord concessions, according to the report.
Northern New Jersey Industrial leasing activity slowed in the third quarter and the vacancy rate remained at 7.7 percent. Net demand was flat with a reported 26,079 square feet, bringing the year-to-date performance to negative 727,094 square feet. On a brighter note, a few submarkets such as Passaic, Hudson Waterfront, Central Bergen and Port/Airport each reported positive absorption in excess of 240,000 square feet.
The average asking rate continues to decline, falling by one cent over the quarter and a total of 13 cents year over year. It currently stands at $5.63 per square foot.
“There is an increasing trend of tenants looking to expand from traditional markets in order to obtain high-quality buildings at the same or lower pricing,” added Bansbach. “Newer, high-quality buildings will continue to drive demand and outperform older facilities. Tenants welcome the opportunity to upgrade and modernize their operation facilities, while locking in low rental rates and concessions.”
One notable transaction in the third quarter occurred in the Exit 8A submarket as Synnex signed a 600,000-square-foot lease at 201 Middlesex Center Boulevard in South Brunswick.
Following three quarters of no deliveries, 244,856 square feet of warehouse space was delivered this quarter in Central New Jersey, primarily due to the completion of a 227,000-square-foot Class A warehouse building at 60 Deans Rhode Hall Road in South Brunswick, which will be occupied by Coca-Cola.
The recent uptick in demand and increased leasing activity in Central New Jersey have encouraged speculative development, which is now being considered for the first time in years, according to the report. Considerations for spec products from Exit 10 to the Port submarkets are surfacing.
In the Northern New Jersey market, one 68,000-square-foot building was delivered in the third quarter at 165a Clinton Road in West Caldwell.
About Cassidy Turley
Cassidy Turley is a leading commercial real estate services provider with more than 3,400 professionals in more than 60 offices nationwide. The company represents a wide range of clients—from small businesses to Fortune 500 companies, from local non-profits to major institutions. The firm completed transactions valued at $18 billion in 2010, manages 455 million square feet on behalf of private, institutional and corporate clients and supports more than 25,000 domestic corporate services locations. Cassidy Turley serves owners, investors and occupiers with a full spectrum of integrated commercial real estate services—including capital markets, tenant representation, corporate services, project leasing, property management, project and development services, and research and consulting. In 2010, the firm enhanced its global service delivery outside of North America through its partnership with GVA. Please visit www.cassidyturley.comfor more information about Cassidy Turley.