"For the second straight quarter, new demand exceeded 6.0 million square feet in our market, pushing the year-to-date industrial leasing total to its highest level since before the recession," noted Cushman & Wakefield's Kim Brennan, New Jersey market leader. "We recorded 13 transactions in excess of 100,000 square feet during the past three months."
The majority of those larger transactions took place in the state's central counties, with the Exit 8A market hosting more than 1.7 million square feet in deal volume. This included a 611,320-square-
"Third-party logistics firms and online retailers are among the most active industrial tenants and represent the bulk of the ‘blockbuster' deals," Brennan said. "Larger tenants continue to seek modern warehouse/distribution space with a minimum 32' clear ceiling heights. Direct asking rents within this niche continue to trend upward, albeit modestly as quality space continues to dwindle." The current average, $5.61 per square foot, has risen 8.3 percent since one year ago.
Year-to-date, the New Jersey industrial market has seen more than 5.8 million square feet of space absorbed - the highest amount recorded during the first half of a year in recent history, according to Cushman & Wakefield. Brennan noted that while demand will remain robust, construction deliveries may keep absorption and the vacancy rate more stable in the coming months.
"More than 900,000 square feet of speculative construction was delivered during the second quarter, which prevented the state's vacancy rate from falling even further than it did," Brennan said. "We anticipate that another 3.0 million square feet of speculative construction will be completed during the second half of the year. In total, New Jersey should see more than 8.5 square feet of construction completions - both spec and build-to-suit - in 2014, the highest annual total in 13 years."
The most significant second-quarter construction completions included Amazon's 1.0 million-square-
"In the near term, we anticipate the continued escalation of direct asking rents as quality space dwindles and demand for Class B space to rise further, especially along the New Jersey Turnpike," Brennan concluded. "And looking further ahead, with both online retail sales and manufacturing expected to trend higher in the next few years, New Jersey's proximity to dense population centers positions it for continued solid performance."