"In terms of velocity, the year started out strongly, weakened in the middle and rebounded at the end," says Gil Medina, executive managing director for Cushman & Wakefield here. His firm's 2008 numbers show North and Central New Jersey leasing activity of more than 17 million square feet for the year, a solid number, but down from 2007's 23 million square feet.
"In general, warehouse/distribution leasing seems to be waning as new construction hasn't attracted the same amount of interest as in the past," he says. Medina expects vacancy rates to continue to rise from their current 7.2%, which itself is an increase from 6.9% a year ago.
On the investment side, according to C&W, investors chalked up 12.6 million square feet of sales deals in 2008, a big jump from 2007's 8.5 million square feet. Investment sales accounted for nearly two-thirds of the 2008 total.
For AMB Property Corp., meanwhile, the recent period has been good, adding up to 1.1 million square feet in recent weeks. "Leasing activity this quarter in New Jersey was impressive," says Paul Rosen, vice president and regional manager for AMB here. "This market remains active for institutional-quality product."
Some industrial sector highlights at opposite ends of the state in recent days illustrate what's been going on. While the mega big-box deals aren't necessarily happening, deals of a slightly smaller variety are. In the Thorofare section of South Jersey's West Deptford Twp., for example, Exeter Property Group has sold the 184,000-square-foot 117 Crown Point Rd. on 16.2 acres to Albert Tire Co. for an undisclosed price The latter, a distributor to the retail trade, will relocate its headquarters and W/D operations from Pennsauken to the site.
"It was designed as a cross-dock facility for high-volume distribution," says Lou Battagliese, who brokered the sale with Jackson Cross Partners colleagues Jim Young and Harry McKenna. The building is newly constructed and will be built out to Albert's specs.
In North Jersey's Elmwood Park, on the other hand, logistics company Premier Motor Lines has leased 175,000 square feet in Hartz Mountain Industries' 224,000-square-foot 397 E. 54th St. It's one of several industrial deals orchestrated in North Jersey by CB Richard Ellis "despite current market conditions," says the firm's Matthew Corpuel notes.
And real estate sectors can certainly impact each other, perhaps none more than retail with its W/D requirements, on industrial. That fact has brought a two-building, 1.25-million-square-foot portfolio to the investment sale market as discounter apparel retailer Burlington Coat Factory looks to raise cash in the wake of recent quarterly losses. Jones Lang LaSalle's Philadelphia office has the assignment, which includes the 730,392-square-foot Edgewater Park distribution facility at 4287 Rte. 130 in South Jersey's Beverly, and the 521,441-square-foot distribution facility at 1830 Rte. 130 North in Burlington.
"These facilities consist of both office and warehouse space that has been very well maintained," says JLL's Bruce Westwood-Booth. Burlington Coat Factory will stay in at least a portion of both buildings on a long-term basis, with the Edgewater Park facility slated for $21 million in capital improvements.
"They should appeal to a broad range of investors with their core geographic distribution location and future upside opportunity," Westwood-Booth says.
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