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Industrial:Smaller Deals Making the Headlines

A lack of large commitments is resulting in significant downward pressure on rents.

By Stan Danzig | Updated on October 05, 2008

Leading into the final months of 2008, smaller industrial deals continue to make the headlines. In fact, there is a reasonable amount of activity in the 100,000-square-foot- and-under range at Exits 8A, 7A and 7, and even as you come up north. However, a notable shortage of larger deals this year has created a dry spell in the 200,000-square-foot and larger range, which has pushed absorption down significantly throughout the market.

The result? Landlords face major downward pressure on rents. As such, they are competing heavily to make the few deals that are out there. This is especially true in the port region and points south. The Meadowlands, where there is less available space, is not experiencing this trend to the same degree.

To illustrate this point, we are running one lease for a major retailer in Middlesex County. The rent is likely to come in under the replacement cost of the building. Within this context, it is difficult to get anyone to think about new land purchases or new development. As such, construction starts are virtually nonexistent, and the investment community has become very quiet.

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