Jones Lang LaSalle Finds Class A Demand Tightening New Jersey Industrial Market
Firm’s first quarter 2012 research shows that large tenants continue to seek well located, Class A space, with incentives playing key role
HASBROUCK HEIGHTS, N.J. (April 24, 2012) — The Garden State’s industrial marketplace continues to exhibit encouraging momentum, according to Jones Lang LaSalle’sfirst quarter 2012 New Jersey industrial market report.
In Northern New Jersey, the coming quarters are expected to continue a trend established late last year: The delivery of Class A development projects is coinciding with theemergence of several large tenants in the market that qualify for and benefit from state incentives.
The influx of activity throughout the Meadowlands submarket persisted in the first quarter as small- and mid-sized tenants continued to feverishly tour this coveted submarket, resulting in numerous “bread and butter” lease transactions and a net absorption of 920,000 square feet of industrial space.
“Programs such as the Urban Transit Hub Tax Credit and Grow New Jersey are serving as market drivers throughout the state,” Jones Lang LaSalle Managing Director Rob Kossarsaid. “As the large tenants that benefit from these programs have begun to seek out space, landlords are finding reason to bring Class A projects to the market.”
In Central New Jersey, brokers report that lease offers are out for virtually all Class A space along the New Jersey Turnpike, with demand coming particularly from consumer products, retailers, and food and beverage companies. The increase in demand is expected to fuel the purchase of land by developers in the hopes of constructing new institutional grade product, resulting in increases in land pricing and rental rates, and a decrease in vacancy rates in the coming quarters.
Throughout the first quarter, large Class A offerings within the Exit 8A and Exit 7A submarkets leased up at a rapid pace. An excess of 2.1 million square feet of gross absorption was observed in the month of March alone, directly contributing to staggering 21.5 and 18.1 percent drops in total quarter-over-quarter availability in the Exit 8A and Exit 7A submarkets, respectively.
“Tocomplete so many deals of this magnitude in such a short time frame is evidence of both the quality of these properties and their exceptional location,” Jones Lang LaSalle Managing Director David Kneesaid.“Companies are seeking out space in the central part of the state for its convenient access to major transportation routes. We anticipate that due to this high level of absorption, developers will start to consider increasing speculative development in this market. Heightened activity like this is an encouraging sign that companies are planning for the future and want to capitalize on the current market conditions to secure favorable terms.”
Highlights from Jones Jang LaSalle’s first quarter 2012 industrial market report include:
- In Northern New Jersey the Q1 2012 vacancy rate stood at 8.1 percent, while in the central portion of the state the overall vacancy totaled 10.2 percent. Year-on-year, this is down 0.6 percent in Northern New Jersey and down 8.6 percent in Central New Jersey.
- Average asking rents in New Jersey were $4.91 at the end of Q1 2012, compared to $4.95 at the end of Q4 2011. Average asking rents in Northern New Jersey were $5.50 at the end of Q1 2012, while they were $5.54 at the end of Q4 2011. Average asking rents in Central New Jersey were $4.17 at the end of the first quarter of 2012, compared to $4.18 in Q4 2011.
- A number of state incentives continue to spur leasing activity. The Urban Transit Hub Tax Credit program has continued to be a driver for select tenants and development projects within the Port, while the Grow New Jersey program is impacting projects throughout the state. Four projects — Teva, Lockheed Martin, Royal Wine and Ascena Retail Group — totaling $541.5 million were awarded Grow New Jersey incentives in April.
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 first quarter New Jersey industrial market highlights 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.