Strong leasing velocity continued in the third quarter of 2017,keepingindustrial vacancy rates in Northern and Central New Jersey at asteady 4.0 percent, according to JLL. The state witnessed 7.1 million square feet of industrial leasing activity this quarter, with pre-leasing activity making up 26.3 percent of that amount.
The Exit 8A submarket claimed 48.8 percent of third-quarter deal volume, creditedmostly to large deals by retailers. Wayfair Inc. signed a lease for 1.3 million square feet at Clarion Partners LLC’s1 Brickyard Roadin Cranbury; while Rema Foods Inc. inked a 300,000 square-foot lease at 2353 US Highway 130 Building 1 in Dayton.
“The continuedimbalance between supply and demand has created two likely conclusions for tenants,” said David Knee, executive managing director at JLL. “First, rental rate growth should continue into early next year, and second, large blocks of space will continue to come off the market quickly. Companies hoping to expand their distribution networks in the region via primary submarketsshould plan early for their real estate needs.”
Northern and Central New Jersey recorded 717,746 square feet in positive net absorption in the third quarter of the year. Absorption was subdued due to several large blocks of low-quality industrial space in the Port submarket becoming vacant this quarter. Although the Port registered 741,756 square feet of negative net absorption, the decline is expected to be transitory as two Class A leases were signed during the third quarter, but have not yet taken effect. Combined, these leases account for enough positive absorption to bring the submarket back into positive territory for the year.
Average asking rental rates for Northern and Central New Jersey industrial space rose $0.75 per square foot, or 11.5 percent, in the past year, increasing to $7.09 per square foot in the third quarter of 2017.In certain submarkets, the rent growth was even more acute. Rental rates in submarkets like the Meadowlands shot up 8.1 percent in the past three months and 16.6 percent in the past year.
Industrial construction activity across the market accelerated this quarter, as developers launched new projects to meet the state’s burgeoning demand for industrial space. Northern and Central New Jersey witnessed 2.0 million square feet of new industrial product break ground in the third quarter of 2017, bringing the total amount underway to 6.4 million square feet.
Pre-leasing activity for the millions of square feet of industrial space under construction remains very strong, with 89.3 percent of 2017 deliveries already pre-leased, as was 61.0 percent of the industrial product being delivered in over the next 12 months.
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JLL is a leader in the northern/central New Jersey commercial real estate market, with more than 1,000 professionals and support staff providing agency leasing and property marketing, tenant representation, industrial services, strategic consulting, occupancy planning, workplace strategies, project and development services, property and facility management, and investment sales/capital markets services to New Jersey's leading corporate tenants, investors and landlords. The firm, which assists clients from three full-service offices in Parsippany, Iselin (Metropark) and East Rutherford, also acts as a local service provider for JLL’s global and national corporate clients in need of real estate assistance in New Jersey. JLL’s New Jersey operations were honored by NJBiz magazine as one of its 2015 Best Places to Work in New Jersey.
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. A Fortune 500 company, JLL helps real estate owners, occupiers and investors achieve their business ambitions. In 2016, JLL had revenue of $6.8 billion and fee revenue of $5.8 billion and, on behalf of clients, managed 4.4 billion square feet, or 409 million square meters, and completed sales acquisitions and finance transactions of approximately $145 billion. At the end of the second quarter of 2017, JLL had nearly 300 corporate offices, operations in over 80 countries and a global workforce of nearly 80,000. As of June 30, 2017, LaSalle Investment Management had $57.6 billion of real estate under asset management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit ir.jll.com.