What does the year 2019 have in store for New Jersey’s commercial real estate market? We recruited some of the most influential developers, professionals and thought leaders in New Jersey commercial real estate to give us their predictions for the year ahead.
Incredible fundamentals surrounding the New Jersey industrial real estate market has resulted in record investor demand, resulting in Class A cap rates steadily dropping since the end of the great recession to cycle lows, with some buildings trading with cap rates below 4.0 percent.
More than 2.3 million square feet leased during Q3 compared to a lagging 1.4 million square feet in Q1 2018. A 33.0 percent increase in active tenant requirements from one year ago represents nearly 6.0 million square feet. Accelerated leasing velocity is expected to continue in Northern and Central New Jersey through year-end 2018 and into 2019.
A drought in modern space options is rippling through the New Jersey Industrial market, creating challenges for logistics users while providing opportunities for developers. Class A availability has fallen to cycle lows of 5.5 percent, a far cry from last cycle’s peak when Class A availability reached 27.5 percent.
Enacted as part of the 2017 federal Tax Cuts and Jobs Act, the Opportunity Zones program will bring development into low-income areas. While investors and developers take steps to form Qualified Opportunity Funds (QOFs), Langan is well positioned to support substantial improvement projects among the 169 tracts within 73 towns in New Jersey. In fact, because of our near half-century of providing engineering and environmental services in our state, we have the right experience and site knowledge to help maximize investments in our OZs.
The proliferation of e-commerce spiked leasing velocity in 2016 and 2017 due to significant demand for big-box and mega-box spaces.
Limited supply of big-box space across the state has stalled leasing velocity for YTD 2018.
There are only five (5) availabilities in excess of 500,000 square feet in the state.
Tenants have expanded the geographic scope of requirements into Southern New Jersey and Lehigh Valley to accommodate immediate needs.
Transit hub markets continue to report lower vacancy rates and higher rental rates compared to the suburban New Jersey office market. Green signals expected to return as companies pursue office space in proximity to walkable amenity-rich areas with access to mass-transit.
Office buildings within the state’s transit hub market record lower vacancy rates and higher rents compared to suburban spaces, according to JLL’s annual research report. Companies continue to pursue office space in proximity to walkable amenity-rich areas and with access to mass-transit options for their workforces and clients.
Now in its 22nd year, the 2018 Governor’s Conference on Housing and Economic Development takes place October 2-3 at Harrah’s Waterfront Conference Center in Atlantic City with over 100 dynamic speakers and a special keynote address by Governor Murphy.
At mid-2Q 2018 only three Class A industrial buildings larger than 500,000 square feet were available for lease throughout New Jersey. The shortage of space caused leasing to slow down at the start of the year without any big-box leases signed in first five months of 2018. On a positive note, five buildings greater than 500,000 square feet are set to break ground in 2018.