Among its findings are that both sales and leasing velocity rose, closing out 2009 with a strong finish, totaling 7.1 million square feet, despite the fact that large blocks of space have made their entrance onto the market, leaving the availability rate at a static 11.7%.
"Sales and leasing velocity both increased dramatically, meaning that companies out there are looking to take advantage of the market and make deals before it is too late," says William Waxman, senior vice president at CB Richard Ellis. "Leasing activity increased by almost 18%, and sales were 33% higher than in the two previous quarters combined," he continues.
Availability does remain high, but the fact that it has not increased, even as large blocks enter the market, serves as an indicator that the market is stabilizing, Waxman tells GlobeSt.com. "Buyers are taking advantage of competitive asking prices, and leasing deals are happening now that landlords have dipped their rates to a level more palatable to prospective tenants. Taking rents, however, are still lower than asking rates, so while deals are getting done, there is still room for the pace to accelerate as landlords' hopes inch closer to the rates tenants are willing to pay."
Leasing velocity led the way, indicating that landlords are continuing to align asking rates with market reality and that occupiers are responding positively. Average asking lease rates declined by 10% from the previous quarter, to $5.55 per square foot, a rate not seen since the first quarter of 2003, the report finds.
That rate was also $0.55 lower than a year ago, yielding 4.37 million square feet of leasing activity during the fourth quarter of 2009, an increase of almost 18% over adjusted third-quarter velocity.Central New Jersey experienced the second straight quarter of $0.19 declines in asking rates, settling at $4.85 per square foot.
At the close of the fourth quarter, the sales activity tally reached 2.73 million square feet, 33% stronger than the previous two quarters combined. The increase in transaction momentum arrived during the fourth consecutive quarter of declines in asking prices.
The current average, $69.89 per square foot, is 13% lower than at the beginning of 2009 and 16% below the peak of $82.97 per square foot, reached in the fourth quarter of 2007. The pace of change has also quickened, as the average asking price declined by $1.88 during the third quarter and then accelerated to $3.22 in the fourth quarter.
"Momentum is with the New Jersey industrial market, but unless the pace of properties coming to market slows, availability rates will not likely return to pre-recession numbers soon," Mindy Lissner, senior vice president for CBRE, tells GlobeSt.com. "One boon is that construction projects remain in check, giving the existing inventory an opportunity to balance itself without facing competition from new properties. Ultimately, we believe that the New Jersey industrial market just may have reached its bottom and is on its way upward again over the next 12 to 24 months."
The state's top fourth-quarter transactions include two from South Brunswick--a 583,376-square-foot lease at 140 Docks Corner Rd. to G-III Apparel Group and the 418,213-square-foot sale of 329-331 Herrod Blvd. to Cabot Properties--and two in Edison--the 473,083 square-foot sale of 30 Clearview Rd. to Arizona Iced Tea and a 232,297-square-foot lease at 3001 Woodbridge Ave. to Ashley Furniture Industries. Rounding out the top five is a 375,000-square-foot lease at 1 Costco Way in Monroe to L.A. Enterprises.
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