HASBROUCK HEIGHTS, NJ-The industrial market in New Jersey is turning around, with vacancy decreasing, rents creeping up and transactions on the rise, according to Jones Lang LaSalle’s first quarter sector report.
“We certainly have turned the corner,” Rob Kossar, a JLL managing director, tells GlobeSt.com. “You can’t even see the amount of activity going on in the market right now from these statistics. We’re past turning the corner and moving forward with guarded optimism.”
There were 210 industrial lease deals executed, including new leases and lease renewals in New Jersey during Q1, with the overall vacancy rate for the state now at 9.4%, compared with 11.25% at year-end 2010.
Leasing interest is growing at the Meadowlands, which saw net positive absorption in the last quarter, even though apparel companies are relocating farther south to larger facilities near New Jersey Turnpike exit 8A. However, that frees up the Meadowlands space for food companies who often must deliver into Manhattan three or four times a day, Kossar says. “There will be an inflow of companies coming to the Meadowlands,” Kossar says. “I would expect that to continue.”
However, Central New Jersey reported negative absorption in the first quarter, according to the report. Despite the increased interest – or perhaps the cause of it, asking rents declined slightly from the past quarter. Average asking rents statewide were $4.96 at quarter end, compared with $5.03 at year-end 2010, the report says. Average asking rents in Northern New Jersey were $5.48 at the end of the most recent quarter, down 12 cents from Q4. Rents in Central New Jersey were $4.29 at the end of the last quarter, down three cents from Q4.
However, that should change as business increases. Kossar says as space fills up along 8A, expect rents to spike, with $3-per-square-foot rents already increasing to $4- and $5-per-square-foot rents, particularly since no speculative projects are under construction.
The recent sale of a six-building industrial portfolio near 8A indicates that transactions, too, should increase, and values are back to pre-bubble pricing, according to Kossar. “Even early in the second quarter, the market has intensified,” he says. “The activity is happening.”
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