Joshua Burd
Industrial tenants in central New Jersey are facing a nearly 64 percent rent hike from leases they signed five years ago, CBRE found, marking the highest such figure of any region in the U.S.
In a new report, the real estate services firm noted that the surging market for warehouse and logistics space has fueled an unprecedented pace of rent growth. That has created sticker shock for tenants that are coming to the end of a typical five-year lease and are finding rents an average of 25 percent higher nationwide, as they look to either extend their deals or move to new space.
The increase is most pronounced in central New Jersey, the report notes, where average triple net asking rents now stand at $9.57 per square foot, up 63.5 percent. Next on that list are California’s Inland Empire and Philadelphia, both around 62 percent, while North Jersey has seen an increase of 40 perent.
“Industrial occupiers’ options are more limited at lease expiration, with most faced with paying a significant increase in rent for the same space,” said John Morris, a CBRE executive managing director and industrial and logistics leader. “With vacancy so tight, we will continue to see this trend in rents in the near term. Many are willing to pay those higher rates now, because of the critical nature of the space involved.
“More construction deliveries could help ease the situation in 2022. Some occupiers, particularly retailers, will start to pass these costs along to consumers.”
In its report, CBRE noted that leasing has been historically robust in 2021, with 750 million square feet of transactions through the third quarter, a new record.