By Joshua Burd
Owners of high-end industrial space are riding a wave of rent growth — nationally and globally — and landlords in New Jersey are among the biggest winners.
That’s according to new research from CBRE, which found that rents for top-tier space in the Garden State grew 9.5 percent, to $8.26 per square foot, in the year ending March 31. That year-over-year growth ranked third among U.S. submarkets, behind only Oakland and Seattle, and seventh worldwide.
The CBRE report examined rents in what it describes as “prime logistics” buildings — facilities larger than 100,000 square feet with clear ceiling heights greater than 26 to 36 feet. The buildings also must be purpose-built for logistics and distribution, with an office-to-industrial space ratio of no more than 10 percent and at least one loading dock for every 10,000 square feet.
Such buildings are benefiting from strengthening economies around the world and greater demand for distribution of goods bought both online and in stores, CBRE noted. In New Jersey and elsewhere, supply has dwindled as high-end spaces are gobbled up by tenants in third-party logistics, food and beverage, building supplies and consumer goods.
“New Jersey continued to experience tightening supply and strong demand from industrial users, resulting in a robust increase in prime logistics rents,” said Thomas Monahan, an industrial broker and vice chairman with CBRE. “With home to one of the country’s busiest seaports, and one of the most populous regions in the United States, New Jersey is well positioned to see logistics rents climb to new record highs.”
By comparison, Oakland and Seattle saw prime rent growth of 14 percent and 13.4 percent, respectively, the report found. The submarkets boast prime logistics rents of $9.96 and $7.56 per square foot.
To compile the report, CBRE examined rents in 71 global logistics hubs. Of those markets, 49 recorded an annual increase in prime rents, while 11 had decreases and 11 saw no change.
In the U.S., prime logistics rents increased by an average of 4.8 percent during the survey period, propelled by gains in coastal markets.
Europe, the Middle East and Africa posted a 4.3 percent gain over that time, outpacing the Americas and Asia as well as its own 1.2 percent gain from the previous 12-month period, CBRE said. Researchers attributed much of that increase to improving economies in that region and resulting gains in consumption.
The report also noted that Asian markets accounted for six of the 10 most expensive prime logistics markets, led by Hong Kong at a rate of $30.99 per square foot.