By Joshua Burd
In a year that only reaffirmed the strength of New Jersey’s industrial sector, availabilities in the market reached an all-time low as demand surged further through the end of 2020.
A new report by CBRE said as much on Wednesday, noting that the state’s industrial market posted a record high net absorption of 11.8 million square feet in 2020. That resulted in a new low availability rate of 5.7 percent, 10 basis points below the previous quarter and the lowest rate ever recorded in the market, according to the firm’s fourth-quarter data.
What’s more, Class A average asking rents ended the year at $11.07 per square foot, up 5.8 percent year-over-year, while overall annual leasing volume for 2020 reached 22.2 million square feet.
“New Jersey’s industrial market continues to be the brightest spot across all sectors in commercial real estate,” CBRE Senior Vice President Larry Schiffenhaus said. “Despite the challenges caused by the pandemic, the market posted strong leasing, net absorption and climbing rents. Looking forward, low interest rates paired with the passage of the second fiscal stimulus bill should further buoy consumer confidence through the winter and support demand for warehousing space.”
The firm tracked 5.9 million square feet of leasing activity in the fourth quarter of 2020, the second-highest quarterly total of the year. The full-year total of 22.2 million square feet was 15 percent lower than the five-year average, CBRE said, but the report noted that the results were skewed by the initial effects of the pandemic in the first half of 2020.
The research also noted that overall leasing volume for the year was down due to a severe lack of supply and the fact that top tenants with good credit quickly snapped up space that was under construction. As a result, there was less competition for top-tier industrial spaces, CBRE said, even as higher pricing pushed some occupiers out of northern and central New Jersey and further out to Rockland County, the Lehigh Valley or Burlington and Gloucester counties.
According to CBRE’s report, New Jersey saw 14 leases of 100,000 square feet or greater signed in Q4, down from 20 in the third quarter.
