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Report: Port Activity Floats Northern Industrial Market

ELMWOOD PARK, NJ-Although Northern New Jersey's industrial market continues to suffer from the recession, the impact would be far worse if not for the region's ports.

By Maria Wood | Updated on June 23, 2009

ELMWOOD PARK, NJ-Northern New Jersey’s industrial market has softened due to the recession, but its status as an international and domestic shipping and logistics hub has kept it from going completely underwater. So says a midyear industrial report from Marcus & Millichap Real Estate Investment Services.

According to Marcus & Millichap, demand remains strong for properties near the ports, particularly the Hudson Waterfront and Newark submarkets, where vacancy has been stable and rental decreases have been less severe than the overall marketplace. However, demand has “dried up” for spaces of more than 200,000 square feet, and in Middlesex County supply far outpaces demand. There, approximately 2.7 million square feet was delivered last year, with an additional 575,000 square feet due this year. Even though the construction pipeline market-wide has shrunk in comparison to previous years, Marcus & Millichap estimates that as much as three-fourths of the 1.5 million square feet projected to come on line this year will be delivered vacant.

Lack of demand coupled with a more measured number of new construction deliveries will push up vacancies 100 basis points to 13.1% in 2009. That’s on top of a 120 basis point increase in the vacancy rate last year. Yet, because the region is on pace to witness one of the lowest vacancy increases in the US, Northern New Jersey moved up six places to number 10 on Marcus & Millichap’s ranking of 28 industrial markets in the nation.

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