By Joshua Burd
Average asking rents across the state’s booming industrial market have eclipsed $6.50 per square foot, continuing a steady climb that is now five years and counting.
That’s according to researchers with CBRE, who noted that industrial rents have been growing in northern and central New Jersey since 2012. With historically low vacancy and the surging demand for infill warehouse and distribution space, asking rates have surpassed the market’s prerecession peak of $6.23 of per square foot and reached $6.64 by the third quarter.
At the highest end, peak asking rates for some buildings have topped $14 per square foot.
Developers show no signs of backing off from their quest to seize on that growth, CBRE found. The firm tracked roughly 7.9 million square feet of development across 24 active construction projects, with tenants having already preleased more than 60 percent of that space.
Among the 14 largest projects, which are at least 200,000 square feet, CBRE said eight have been fully leased by single tenants. That means vacancy, which has fallen to a post-recession low of 6.8 percent, will likely hold steady in spite of the new construction.
New projects in the state have totaled more than 37 million square feet since 2007, the firm said, driven by the surge of e-commerce and tenants seeking to tap into the region’s dense consumer market. That represents a nearly 5 percent increase in total market inventory, but with little impact on the market availability rate.
CBRE noted that demand has tapered off slightly in the near term, following deals that satisfied several large requirements. Yet the firm said the market looks to remain tight into 2018, as rents are expected to stay at or near current levels for older buildings and continue to escalate for newer properties.
