EAST RUTHERFORD, N.J. – Steady demand fueled the New Jersey industrial real estate market through mid-year 2013, according to Cushman & Wakefield, Inc. And despite the market experiencing negative space absorption during the second quarter, the commercial real estate services firm’s latest research findings reflect year-over-year statistical improvements in a number of areas.
With 5.3 million square feet of new industrial commitments, second-quarter leasing activity remained on pace with the first quarter. The resulting 10.6 million square feet of year-to-date activity outpaced the first six months of 2012 (at which time 10.1 million square feet of leases had been signed). Eight deals in excess of 100,000 square feet were completed during the past three months.
“More than 60 percent of the state’s second quarter industrial leasing was concentrated in the state’s central counties,” noted Cushman & Wakefield’s Marc Petrella, who is based in the firm’s Edison office. “Williams Sonoma’s 751,450-square-foot commitment at 101 Middlesex Center Boulevard in South Brunswick led the pack.” That project currently is under construction.
As quality space tightened in some major submarkets, asking rents within the warehouse/distribution sector rose 2.4 percent, to $5.18 per square foot, from mid-year 2012. Cushman & Wakefield expects continued growth as big box space dwindles even further.
Still, New Jersey recorded negative 554,037 square feet in overall space absorption during 2013’s second quarter, as compared to positive 972,106 square feet last year at this time. The bulk of the negative absorption was concentrated in the Hudson Meadowlands, the Port Region, and Lower 287. Conversely, the Exit 8A and Bergen Meadowlands submarkets posted the highest levels of absorption for the quarter.
“In turn, the New Jersey industrial market saw its overall vacancy rates inch up from 8.7 percent to 8.9 percent over the past three months,” said Stan Danzig, an industrial specialist based in Cushman & Wakefield’s East Rutherford office. “Still, this number is lower than last year’s 9.2 percent mid-year vacancy rate, and we anticipate that it will improve notably during the second half of 2013 based on strong leasing and user sales demand.”
On the industrial sales front, year-to-date user and investment transactions total 11.5 million square feet. Twelve properties in excess of 100,000 square feet traded hands during the second quarter, including 10 warehouse/distribution assets. Looking ahead, Cushman & Wakefield reports that industrial sales may well exceed the 2012 total (12.9 million square feet) and could reach volumes not seen since 2006.