SADDLE BROOK, NJ – According to CBRE's Q3 2020 industrial report, the New Jersey industrial market exceeded expectations within the past three months by displaying strong leasing activity and climbing average asking rents.
During the third quarter, industrial leasing totaled 7.3 million square feet, representing a 40% increase from Q2 2020.
The state's average asking rent for class A industrial space was $11.18 per square foot, representing a 7% increase from Q2 2020.
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Additionally, the overall availability rate within North and Central New Jersey decreased to 5.8%, representing a drop of 13 basis points from the previous quarter, and a 14 basis point decline year-over-year, for all classes.
E-commerce led the sector's leasing with five leases totaling 1.94 million square feet. Prominent Q3 e-commerce transactions include the 900,022-square-foot commitment in Edison by an e-commerce tenant, the 583,376-square-foot renewal in South Brunswick by G-III Apparel, and the 308,550-square-foot lease in Somerset for TSG Cabinets.
The sector additionally experienced a record number of new projects during the third quarter, totaling 6.56 million square feet in new inventory; 80% of which was pre-leased. Additionally, six new projects commenced in Q3, totaling 2.7 million square feet.
"New Jersey's industrial market came back strong after experiencing a COVID-related setback during the second quarter, and proved once again its resiliency even in light of the many challenges still facing our industry," states CBRE's Larry Schiffenhaus. "The market broke several records during the third quarter, including leasing activity and net absorption, which at 7.2 million square feet far surpassed the 3.7 million square feet in the previous quarter." CBRE suggests that investors will continuously seek construction and conversion opportunities, as the market experiences substantial demand for large, modern, high-quality space.
Investment transaction volume within the market grew to $304 million during the third quarter, representing a 9% increase from the previous quarter. Significant transactions accounting for 40% of the quarter's sales include two deals in the Meadowlands submarket.
"Strong industrial leasing fundamentals in New Jersey continue to attract global institutional investors," says CBRE vice chairman, Brian Fiumara. "Many of these investors see stability and growth in the market, leading to safe long-term investments."
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Ingrid Tunberg
Ingrid Tunberg sits on the editorial team as a coordinator and reporter for Real Estate Forum and GlobeSt.com. She is responsible for writing stories, assisting with industry awards and marketing nomination events. Previously, Ingrid worked as a copywriter across various industries throughout New York City and Chicago.
