HASBROUCK HEIGHTS, NJ-The stabilizing Northern and Central New Jersey industrial markets should even begin to grow, despite market turmoil and toll hikes, according to Jones Lang LaSalle and data from the firm's second quarter sector overview. At the end of the quarter, rents remain depressed, with average asking rents in New Jersey at $4.93 at the end of the most recent quarter, compared to $4.96 at the end of the first quarter. The good news: the overall vacancy rate for New Jersey was 9.3%, down from 9.4% at the end of the first quarter.
“Markets are tightening up,” with more companies moving farther out, says Rob Kossar, managing director at Jones Lang LaSalle. Net absorption in Northern New Jersey declined 1,051,531 square feet during the quarter, though this was driven by the introduction of several new large spaces.
The lack of industrial space in Manhattan means that the Meadowlands remains strong for companies needing to get into and out of the city frequently. The port areas also are strong, with industrial owners wanting to be as close to the docks as they can, Kossar continues.
On the other hand, the Central New Jersey market saw 2.1 million square feet in positive absorption, with food and third party logistics companies spurring much of the activity. With no construction currently underway in the area, vacancy rates are expected to drop and asking rents are expected to rise.
“And Exit 8A has always been continues to be a great place for regional distribution,” Kossar says. “It faced increasing competition from Pennsylvania, but has always been well positioned.”
This area, in fact, has had the most turmoil, and will see the sharpest rebound in prices. Deals that had been $5 per square feet pre-recession are now $3.75 per square feet. But Kossar says he expects a very quick jump, which then will flatten out as space is taken. “The question is, when does that happen?” Kossar says.
The current market volatility and recently confirmed toll hikes should not affect the market, he adds. The latter may increase the cost of doing business, but the region is too strong to ignore. “I’m looking at all this as turbulence,” Kossar says. “Nothing has changed in terms of activity in the market. As we learned from the most recent downturn, the stop button doesn’t get pushed until the last minute. For tenants, right now is a really good window of opportunity.”
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