By Joshua Burd
Industrial leasing in northern and central New Jersey took a slight step back in the third quarter, but only because demand continues to outpace the amount of big-box space available in the market.
That’s according to a new report by Colliers International, which said the market for warehouse and distribution space continued to shine through the end of the summer. Availability dropped to 6.3 percent in Q3, down from 6.1 percent at midyear, driven by major transactions such as Wayfair’s 1.3 million-square-foot commitment at 1 Brick Yard Road in Cranbury.
The surge has caused a continued rise in asking rents for industrial property, which now average is $7.13 per square foot, Colliers said. That represents a 15.4 percent jump from this time last year.
“At the same time, while activity remains strong, the shortage of existing available inventory has made it difficult for industrial users to find new locations and the result of limited inventory has led to less transactions being completed,” said David A. Simon, executive managing director and New Jersey market leader for Colliers. “In fact, quarterly industrial leasing activity dropped below 10 million square feet, to 9.1 million square feet, for the first time since third quarter 2015.”
Other significant transactions to close during Q3 included Rema Foods’ 320,867-square-foot lease at 2353 Route 130 in Dayton and RAB Lighting’s 264,085-square-foot lease at 10 Broadway Road in Cranbury.
Colliers said diminishing available space has led developers to accelerate their development pipeline. The firm found that, during the quarter, 10 projects totaling 2.6 million square feet broke ground, bringing the total construction pipeline to 43 properties totaling 15 million square feet.
Researchers found that northern New Jersey absorbed 1.3 million square feet of industrial space in Q3, maintaining its positive momentum for the 15th consecutive quarter. Leasing activity totaled 4.1 million square feet, up 4.1 percent from this time last year, with the port and Meadowlands submarkets accounting for 71 percent of the activity within the region.
Leasing volume dropped for the second consecutive quarter in Central Jersey to 5 million square feet, Colliers said, citing the lack of space. Still, the firm said net absorption totaled 2.4 million square feet, driven by preleasing across 1.8 million square feet of newly delivered properties.