A photo of construction (as seen in early January) at Crow Holdings at Veronica Ave., a 925,000-square-foot industrial development in Franklin by Crow Holdings Industrial — Photo by Aaron Houston for Real Estate NJ
By Joshua Burd
Vacancy at newly delivered industrial buildings in New Jersey was among the lowest in the nation in 2019, in yet another sign of the ongoing demand for modern logistics space.
Those are among the findings of a new report by CBRE, which said that northern and central New Jersey ranked fifth among markets nationally with the lowest vacancy rate for 2019 completions. The firm recorded a 22.2 percent vacancy rate within the 6.3 million square feet of warehouse and logistics space completed last year, noting that a vacancy rate of less than 50 percent is considered healthy for newly delivered industrial properties.
Nationwide, CBRE said developers completed 289 million square feet last year, but only 39 percent of that space was available at the time of the report.
“As New Jersey’s industrial market continues to break leasing and rental rate records, new developments are being snapped up by space users at a rapid pace,” said Thomas Monahan, an industrial broker and vice chairman with CBRE. “While the development pipeline remained robust with 28 buildings and 10.3 million square feet currently under construction, the demand for high-quality product is far outpacing supply.”
The firm noted that the increase in built-to-suit development was contributing to the strong absorption of new construction. This segment made up 28.1 percent of new construction activity, as companies increasingly need unique requirements to meet their specific demands.
In markets with more than 4 million square feet of new development, Kansas City finished with the lowest overall vacancy rate for 2019 construction completions at 7.3 percent, CBRE said. That was followed by Miami, Baltimore and Greenville, South Carolina, which all had vacancy rates for newly constructed product under 20 percent.
CBRE added that supply fundamentals should remain stable this year, as 33 percent of the 309 million square feet under construction nationwide is already accounted for. A preleasing rate of 25 percent for under-construction space is typically indicative of a solid leasing environment, the firm said.