By Joshua Burd
The cost to lease industrial space in New Jersey skyrocketed in 2021, with average asking rents for high-end buildings jumping by more than 50 percent from the previous year.
Those are among the findings of a new market report by CBRE, which cited the ongoing lack of inventory, unceasing demand and a construction pipeline that is struggling to keep up. According to the firm, asking rents for Class A industrial space in northern and central New Jersey ended the fourth quarter at $17.06 per square foot — up 19 percent from the third quarter and 55 percent year over year — as availability for top-tier buildings fell to 2 percent.
The report showed rents escalating throughout the region:
- In northern New Jersey, average Class A asking rents surged 29 percent quarter-over-quarter and 55 percent annually to $22.44 per square foot.
- The Meadowlands submarket had the highest Class A average asking rents at $24.38 per square foot, up 8.6 percent quarter over quarter and 62 percent year over year.
- Average Class A asking rent in Central Jersey also continued to appreciate, hitting $17.61 per square foot at year-end for a 37 percent increase from Q3 and an 84 percent jump year over year.
- Asking rents for all industrial asset classes increased by 4.3 percent quarter over quarter and 37 percent year over year to $10.21 per square foot.
Overall availability in the region settled at 4.8 percent by the end of 2021, CBRE said, after 25.5 million square feet of leasing activity during the year. That total likely would have been higher if more space were available.
“New Jersey’s industrial market continues to surpass all expectations with insatiable demand, strong leasing and record-breaking rents quarter after quarter,” said Thomas Monahan, a broker and vice chairman with CBRE.
Northern and central New Jersey recorded 723,000 square feet of net absorption in Q4 and 12.2 million square feet for the year, CBRE said. Leasing activity during the final three months totaled 3 million square feet, excluding renewals, with wholesale and retail companies dominating tenant activity.
Among the largest leases completed in Q4 was a 1 million-square-foot renewal by Petco at 257 Prospect Plains Road in Cranbury, the report found. The largest investment sale of the quarter was Square Mile Capital’s $157 million disposition of 703 Bartley Chester Road in Flanders to Saadia Group, capping a year that saw $3.04 billion in sales volume in the asset class.
CBRE added that developers delivered eight new industrial facilities during the quarter for combined 2.17 million square feet. Nearly half of that space was preleased.