HASBROUCK HEIGHTS, NJ-Industrial rents will rise in Northern and Central New Jersey, and speculative development may not be far behind, according to Jones Lang LaSalle’s soon-to-be released fourth quarter market report. The report predicts that the current average asking rent of $5.54 per square foot and overall average effective rent of $5.35 per square foot in Northern New Jersey will increase this year, as demand from food and beverage, and pharmaceutical companies will outpace supply. Meanwhile, the lack of available spaces of more than 400,000 square feet should drive up Central New Jersey’s asking rent of $4.18 per square foot and effective rate of $3.59 per square foot.
“This is definitely not an anomaly,” Robert C. Kossar, a managing director of JLL based here, tells GlobeSt.com. “We all have guarded optimism. All of the underlying signs and trends are positive in all markets in New Jersey.”
Overall vacancy in Northern New Jersey was 8.19%, down from 8.24% in the third quarter. Central New Jersey reported vacancy of 9.97%, down from 10.13% in third quarter. The state actually trends similarly to, but slightly behind, California’s Inland Empire, Kossar observes.
“They’re 12 months ahead of us in terms of recovery, and there is serious underdevelopment in large buildings,” Kossar says. “We now have nine spec buildings under way there, and we’re just behind them.”
Though the recovery has been somewhat delayed by the recession, even smaller spaces in areas such as Fairfield are filling up, with overall vacancy dropping from 6.33% in the third quarter to 6.05% in the fourth. This also will encourage building later on. And as large tenants move to newer, larger space in Central New Jersey, “we have users who will backfill into second- and third-general spaces, especially close to Manhattan,” Kossar says.
Meanwhile, a number of companies, including ProLogis and Hampshire Cos., are actively developing new industrial space. And there should be takers.
“We are looking forward to the widening of the Panama Canal,” Kossar says. “And I look at the spread between the availability rate and the vacancy rate. The tighter I see those numbers, the more I see the market improving.”
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