What exit? A glance at the Garden State At mid-year, central and northern New Jersey's 721 million sq. ft.market continues to thrive. According to New York-based Cushman & Wakefield, at mid-year, central and north Jersey reported 12.1 million sq. ft. of leasing activity, average asking rents of $5.13 and a vacancy rate of 7.6%, compared with 9.6 million sq. ft. of leasing and average asking rents of $4.67 through the mid 1998. At 7%, mid-year 1998's vacancy rate was a bit lower than the first half of 1999.
"Exit 8A is really the central focus for industrial," says Don Eisen, Cushman & Wakefield's executive managing director for the New York area. "Exit 10 is where people would locate if they had their druthers, but there are just very few sites left so they go a few minutes south. What people are focusing on is the new space - the 30- to 32-ft. clear height buildings."
And everyone wants to get in on the action at Exit 8A and Exit 10.players like Aurora, Colo.-based ProLogis have been active as have local developers such as Edison, N.J-based Heller Industrial Parks.
On the financing side, pension funds have returned to the market to fund development, with primary emphasis on central New Jersey where there is more available land, says Ben Katz, senior managing director in the Saddlebrook, N.J., office of New York-based Insignia/ESG.
"It's carrying along because we have an abundance of land that's ready for development down at (Exit) 8A, and then you can fall back to (Exit) 7A after that," Katz says. "So, there is land available, and the REITs are competing with each other and making attractive. You can make some deals on a new building that the rental rates would fall into line with a building that's eight- to 10-years-old."
Corporate users centralizing distribution networks are driving demand for new, big-box space, Eisen says. In the next year, he expects demand to increase and more ventures between private developers and equity partners.
"I expect a kick up in activity," Eisen says. "It's been a little slow but sure, but we see a huge number of potential transactions.
"The old, 'buy, develop and hold' way of doing business seems to be changing," he continues. "That model becomes more and more difficult to maintain. So we'll see all kinds of combinations because the business is still a good business, and there's still terrific demand for the product."