Hackensack, N.J. (May 8, 2018) –NAI James E. Hanson released its 1Q 2018 Northern and Central New Jersey Industrial Market Report detailing leasing and sales data for key industrial submarkets. The report highlights record-high levels of continued demand for quality industrial space across northern and central New Jersey with low supply rates driving pricing for available space.
For much of the northern and central New Jersey industrial market, the supply and demand equation continues to lean heavily towards the demand side. The ongoing supply shortage has caused vacancy rates to creep even lower throughout the market to 3.5%, a decrease of 0.2% from the previous quarter and 1.1% from 1Q 2017. The Turnpike industrial submarkets continue to hover around 100% occupancy with Exit 8A at 1.3%, down from 2.4% for the same period last year, Exit 9 at 1.6%, down from 3.3% in 1Q 2017, and Exit 10/12 at 2.3%, down from 2.9% in 1Q 2017.
With decreasing vacancy rates, rents continue their road towards clearing the double digits barrier in several submarkets across the region. The current asking rate for the entire submarket is up $0.38 psf from the 4Q of last year and $0.81 psf from 1Q 2017, currently standing at $7.70 psf. The Meadowlands submarket leads the pack at $9.27 psf, up from $8.20 in the first quarter of 2017. Additionally, Exit 10/12 has seen an increase of $0.98 psf from 1Q last year up to $8.14 psf.
Secondary markets also continue to display strong leasing momentum into 1Q with Hunterdon County seeing an increase of $3.03 psf from 1Q 2017 up to $8.23 psf. Additionally, the Warren and Sussex submarket has begun showing interest from tenants and developers with a subsequent decrease in the vacancy rate down from 13.1% at this time last year to 6.4% in 1Q 2018 with over one million of new space under construction in Phillipsburg scheduled for a 1Q 2019 delivery. Suburban Essex also saw an increase of $1.92 psf from 1Q 2017, up to $8.22 psf this quarter.
On the sales side, several large portfolio deals drove much of the $500,000,000 in sales volume for 1Q 2018. The sustained appetite for quality institutional and private real estate investment opportunities and the lag in development of new space has caused the sales price for industrial product to continue to move upwards with the price per square foot now standing at $81.82, an increase of $2.00 from 1Q 2017.
“There are few industrial markets in the United States that have shown the quarter-over-quarter consistency and level of activity of the Northern and Central New Jersey Industrial market. With limited opportunities for development in many of the most active submarkets in the region, particularly those along the Turnpike, near the Port and in the Central Bergen area, and rapidly increasing prices for land, the most desirable locations have become affordable only for the largest companies,” said Kristen Jost, Research Director for NAI James E. Hanson. “With this in mind, we are seeing many developers look to the north, west and south to find more favorable investment opportunities. Similarly, many medium and smaller tenants are beginning to look to the less pricey yet accessible markets along Interstates 78, 80 and 287 for leasing opportunities and we expect those markets to continue their strong momentum throughout 2018.”
NAI Hanson’s research team has also recently published additional 1Q Market Reports for the Meadowlands Industrial, Medical Office and Upper Parkway Office markets.