HACKENSACK, NJ—The northern and central New Jersey industrial market finished 2017 with the same momentum it began the year, seeing more than 9.9 million square feet leased in the fourth quarter alone, an increase of more than 3.5 million square feet from the third quarter of 2017, according to NAI James E. Hanson. NAI Hanson released its the fourth quarter of 2017 Northern and Central New Jersey Industrial Market Report detailing leasing and sales data for key industrial submarkets.
“The data behind the fourth quarter of 2017 perfectly illustrates the continued growth trajectory of the northern and central parts of the state. We have seen year-to-year increases in asking rates, and sales numbers with subsequent decreases in vacancy rates as new construction struggles to keep up with red hot demand,” says Kristen Jost, research director for NAI James E. Hanson. “However, there has been significant talk regarding the current high pricing for industrial assets in the region as leasing rates approach double digits and the possibility of a price correction coming at some point within the next 12-18 months.”
For the first time in recent history, the vacancy rate for northern and central New Jersey's industrial market ended the year below four percent at 3.7 percent. This represents a decrease of 0.5 percent from the third quarter of 2017 and 0.9 percent from the fourth quarter of 2016. In another sign of the strong demand, each submarket in the region also now stands at a sub-double-digit vacancy rate.
The two hottest markets on the Turnpike, Brunswick/Exit 9 (1.1 percent vacancy rate) and Exit 8A (1.6 percent) drove a significant portion of the region's leasing velocity with over 4.5 million square feet leased in the fourth quarter of 2017. The strength of the Turnpike markets also propelled Middlesex County to lead the state with 5.8 million square feet leased in the quarter. In response to this sustained high demand, there are currently more than 7.1 million square feet of industrial projects under construction in Middlesex County market scheduled for delivery over the next two years.
Sales volume was also strong in the fourth quarter of 2017, almost tripling the volume from the third quarter of 2017 with over $1.3 billion in total sales in the fourth quarter of, versus $573 million in the third quarter of 2017. The sales price per square foot (per square foot) also saw a jump of $37.09 per square foot from the third quarter of 2017, finally eclipsing the triple digit mark ending the year at $118.75 per square foot.
In a continuance of the trend that was noted in the third quarter of 2017, markets outside of the increasingly expensive central Bergen and Middlesex markets saw considerable activity.
Somerset County saw an increase from $6.14 per square foot in the fourth quarter of 2016 to $8.09 in the fourth quarter of 2017. Similarly, the Hunterdon County market saw an increase from $5.37 per square foot in the fourth quarter of 2016 up to $8.23 in the fourth quarter of 2017.
Within the hot Bergen County market, the northern portion of the county continues to show strong growth fundamentals with a decrease in the vacancy rate from 6.8 percent in the fourth quarter of 2016 down to 4.7 percent in the fourth quarter of 2017. Much of the demand being driven by the lack of development opportunities and heightened prices as the average asking rate approaches double digits in the central portion of the county, currently standing at $9.04, an increase from $7.40 per square foot in the fourth quarter of 2016.
Due to this trend, the largest building under construction in the entire county is The Sitex Group's 271,195-square-foot spec-development project at 100 Performance Drive in Mahwah, NJ.
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Steve Lubetkin
Steve Lubetkin is the New Jersey and Philadelphia editor for GlobeSt.com. He is currently filling in covering Chicago and Midwest markets until a new permanent editor is named. He previously filled in covering Atlanta. Steve’s journalism background includes print and broadcast reporting for NJ news organizations. His audio and video work for GlobeSt.com has been honored by the Garden State Journalists Association, and he has also been recognized for video by the New Jersey Chapter of the Society of Professional Journalists. He has produced audio podcasts on CRE topics for the NAR Commercial Division and the CCIM Institute. Steve has also served (from August 2017 to March 2018) as national broadcast news correspondent for CEOReport.com, a news website focused on practical advice for senior executives in small- and medium-sized companies. Steve also reports on-camera and covers conferences for NJSpotlight.com, a public policy news coverage website focused on New Jersey government and industry; and for clients of StateBroadcastNews.com, a division of The Lubetkin Media Companies LLC. Steve has been the computer columnist for the Jewish Community Voice of Southern New Jersey, since 1996. Steve is co-author, with Toronto-based podcasting pioneer Donna Papacosta, of the book, The Business of Podcasting: How to Take Your Podcasting Passion from the Personal to the Professional. You can email Steve at [email protected].
