E-commerce Drives New Jersey’s Industrial Sector
E-commerce Drives New Jersey’s Industrial Sector
E-commerce fulfillment is spurring demand for modern, Class A industrial space, with port-related development sites being the focal point of new construction
HASBROUCK HEIGHTS, N.J. (Nov. 19, 2012) — The Garden State, with its proximity to two major metropolitan areas, is attracting major electronic commerce (e-commerce) retailers, according to Jones Lang LaSalle’sthird quarter 2012 New Jersey industrial market report.
As a result of this rising demand, the commercial real estate services firm anticipates that more developers will soon embark on speculative and build-to-suit development projects, particularly along the New Jersey Turnpike industrial corridor.
“As retail powerhouses such as Amazon work feverishly to provide their customers with same-day or next-day delivery in lieu of the upcoming online state sales tax mandate, New Jersey’s industrial market is expected to experience a significant boost in demand, particularly for big-box space,” said David Knee, Managing Director for Jones Lang LaSalle in New Jersey.“Despite the sluggish economic recovery, retailers are rapidly undergoing a transformation as traditional retail sales decline while online sales skyrocket. Since e-commerce fulfillment operations require high-cube warehouse facilities that are normally separate from traditional in-store fulfillment operations, there has been newfound demand for these spaces.”
Currently, there is approximately 2.1 million square feet of industrial product under construction in New Jersey, with virtually all of it concentrated at or near the Port of New York and New Jersey.Speculative construction commenced on two noteworthy projects in the third quarter:
- Clarion Partners is planning to deliver the 277,000-square-foot Elizabeth Logistics Center on Dowd Avenue in Elizabeth in May 2013.
- The Morris Companies is constructing a 350,000-square-foot building with rail service at 60 Lister Avenue in Newark, which is slated to be complete in November 2013.
Although demand diminished in the Meadowlands and Port submarkets compared to previous quarters, the summer slowdown is not anticipated to be a sign of things to come. The activity in the previous quarters that spurred the uptick in speculative construction indicates that 2013 will be a year of continued growth in Northern New Jersey.
Several large leases signed from late 2011 to early 2012 in the Exit 8A and Exit 7A submarkets resulted in high positive net absorption during the third quarter. Additionally, another wave of significant leases that were inked in the third quarter is expected to positively impact future absorption rates.
Additional highlights from Jones Lang LaSalle’s third quarter 2012 industrial market report include:
- The third quarter vacancy rate was 8.2 percent, compared to 7.9 percent in the second quarter for Northern New Jersey. In Central New Jersey, the overall vacancy was 8.8 percent in the third quarter, down from 9.5 percent in the second quarter.
- The average asking rent in New Jersey was $5.05 per square foot at the end of third quarter, compared to $4.97 per square foot in the second quarter. In Northern New Jersey, asking rents were $5.66 per square foot at the end of the third quarter, a $0.08 per square foot increase quarter-over-quarter. Average asking rents in Central New Jersey went from $4.17 per square foot in the second quarter to $4.28 per square foot in the third quarter.
- The largest year-to-date industrial sale transaction in the state occurred during the third quarter as Avidan Management sold its 98-percent occupied, nine-building, 2.5-million-square-foot industrial portfolio to Cohen Asset Management/New York Life.
- Amazon continues its quest to find an appropriate site for a one-million-square-foot warehouse/distribution facility in Central New Jersey.
Jones Lang LaSalle’s team of in-house research professionals compiles the industrial market report, which provides an extensive analysis of the New Jersey real estate industrial market. To download the 2012 third quarter New Jersey Industrial Outlook, click here.
In New Jersey, Jones Lang LaSalle is a leader in commercial real estate brokerage, project management and investment sales. Employing more than 600 of the region’s most respected industry experts, the firm offers Office and Industrial Brokerage, Tenant and Landlord Representation, Project and Development Services, Property Management, and Capital Markets services to its clients in New Jersey. The operations also serve as the local service provider for the firm’s global and national corporate clients that have a presence in New Jersey.
About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2011 global revenue of $3.6 billion, Jones Lang LaSalle serves clients in 70 countries from more than 1,000 locations worldwide, including 200 corporate offices. The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 2.1 billion square feet worldwide. LaSalle Investment Management, the company’s investment management business, is one of the world’s largest and most diverse in real estate with $47.7 billion of assets under management. For further information, please visit our website,www.joneslanglasalle.com.