That's the word from Grubb & Ellis' Q2 market report, authored by Stephen Jenco, VP-client services manager in the firm's Fairfield, NJ office. Since Q1, the market decelerated in the wake of more than 3.1 million sf of negative net absorption in Q2, the largest volume of negative absorption in a single quarter since Q2 of 2005.
Andrew Siemsen, associate director in the Edison office of Cushman & Wakefield, agrees, to a degree. "The lack of velocity in the New Jersey leasing market appears to be limited to the big-box product," he says. "But activity under 100,000 sf remains relatively stable this year."
But according to Grubb & Ellis' latest stats, developed by Jenco, 16 of the 24 North/Central Jersey submarkets posted negative absorption numbers during Q2, with 13 of those 16 recording negative numbers of more than 100,000 sf each. The bright spots? The Hudson Waterfront, Exit 12/Woodbridge and Monmouth East submarkets all saw more than 100,000 sf of positive absorption.
Altogether, almost 62.9 million sf of direct and sublet space was available at the end of Q2, according to G&E, compared to 59.2 million sf on the market in Q1. The overall industrial availability climbed from 9.2% in early 2008 to 9.8% at mid-year. Overall availability has stayed above the 9% level for the past three consecutive quarters, Jenco reports.
According to C&W's numbers, meanwhile, the 12 million sf of leasing seen in the first half of 2007 melted to just 8.6 million sf in the first half of 2008, with Q2 coming in at a paltry 2.4 million sf. Coupled with the nearly eight million sf of space added to the market in the past year, that has decidedly affected average rents, which have risen by an average of just $.06 per sf to $6.77 since the end of 2007.
The ports, primarily the area around Newark and Elizabeth, could help counter that. "The region is looking to build new W/D buildings to help support the demand and growth within that area," Siemsen says.
Still, a report by Rutgers University economists adds a note of caution to the port scenario. "A major concern is whether New Jersey is losing competitiveness to other transportation/distribution centers," say authors James W. Hughes and Joseph J. Seneca. "Between 2003 and 2007, New Jersey lost 4,700 jobs in logistics, 2,000 jobs in wholesale trade and 2,600 jobs in transportation and warehousing.
"In contrast, logistics employment in Pennsylvania, a key competitor, grew by 33,800 between 2003 and 2007," the economists write.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
