By Joshua Burd
Demand for industrial space is still robust in New Jersey despite concerns about the economy, as rents and occupancy grew in 2022 even amid a slowdown from prior years.
A new report by CBRE found that availability in northern and central New Jersey was a record low of 4.1 percent heading into 2023, following 19.9 million square feet in total leasing activity last year and 6.1 million square feet of positive absorption, or overall growth in occupancy. According to the firm, annual leasing was down 22 percent from 2021 due to fears of a recession and a lack of quality industrial space available to meet tenants’ needs.
Average industrial rents in the region ended the year at $19.02 per square foot, up 3.4 percent from the prior quarter and 8 percent year over year, CBRE found.
“While New Jersey’s industrial market remained strong in 2022, fears of a recession, climbing interest rates and an overall market unease started to create headwinds by the end of the year,” said Thomas Monahan, a vice chairman at CBRE. “One indicator of this is the market’s overall absorption. While the market recorded its 24th consecutive quarter of occupancy growth as 2.48 million square feet was absorbed in Q4, it was a figure 7.6 percent below the five-year quarterly average of 2.69 million square feet. Despite the quarter’s improved net absorption, 2022’s total was only 6.1 million square feet, the lowest annual total since 2017.”
CBRE noted that leasing during the fourth quarter totaled 5.36 million square feet, fueling positive net absorption of 2.5 million square feet. Transaction volume in northern New Jersey grew 45 percent from the third quarter, thanks in part to deals in the Meadowlands such as Goffa USA’s 109,000-square-foot commitment at 50 Broad St. in Secaucus.
The firm also found that leasing activity in central New Jersey grew 5.9 percent from Q3, with the largest boost coming from Home Depot’s 1.28 million-square-foot deal at 904 Cranbury South River Road in Monroe. On the flip side, CBRE said, the delivery of two large Class A buildings in Central Jersey without preleasing caused the market’s Class A availability rate to climb 70 basis points.