By Joshua Burd
Retailers accounted for more than a third of all industrial gains in northern and central New Jersey at the end of 2017, according to JLL, fueling what amounted to the second-highest net absorption total of any year since the recession ended.
The real estate services firm said retailers represented more than 38.5 percent of the 5.8 million square feet of positive absorption recorded in the region during Q4. That activity was led by Amazon taking occupancy of more than 1.6 million square feet across Central Jersey.
All told, tenants inked 8.1 million square feet in industrial leases during Q4, JLL said. Deal volume for the entire year totaled 27.9 million square feet, representing a jump of more than 35 percent from 2016, while overall absorption in 2017 reached 9.5 million square feet.
JLL also tracked vacancy of 3.6 percent at year-end, a drop of 90 basis points from 12 months earlier.
“Demand for New Jersey industrial space continues to outpace supply despite significant levels of construction activity,” said David Knee, executive managing director at JLL. “Persistent demand, combined with dwindling existing availabilities, has forced tenants to sign leases early to fulfill their space requirements.
Knee added that nearly 90 percent of new industrial construction was leased upon delivery in 2017, while 60 percent of projects currently under construction are build-to-suit. That demand has pushed landlords to try to keep up, as developers broke ground on 5.9 million square feet of new space in Q4.
Meantime, more than 12 million square feet of industrial space is expected to be delivered in northern and central New Jersey in 2018, JLL found, making it the strongest year for construction activity in the state since 2001. The demand has also corresponded with a rise in average asking rental rates to $7.48 per square foot, 13.7 percent higher than in 2016.
