By Joshua Burd
Industrial leasing in northern and central New Jersey topped 40 million square feet for the third consecutive year, Colliers International said Friday, thanks to a surge to close out 2017.
The real estate services firm reported the strong fourth quarter for warehouse and distribution space demand, helping to make up for a summer slowdown. All told, industrial tenants in the region leased 44.8 million square feet in 2017, including 13.9 million square feet in Q4.
The total for the last three months represented a 52.8 percent jump quarter-over-quarter, Colliers wrote in its year-end market snapshot. The activity was led by a nearly 1.4 million-square-foot renewal by Williams Sonoma at 340 Middlesex Center Blvd. in South Brunswick, which is owned by IDI, along with a 725,400-square-foot prelease by Best Buy at 171 River Road in Piscataway, part of an industrial park being developed by the Rockefeller Group.
Additionally, Amazon leased nearly 597,594 square feet at 18 Applegate Drive in Robbinsville.
“Robust tenant demand continues to drive down the availability rate, even though new product is being brought to the market at a rapid pace,” said David A. Simon, executive managing director and New Jersey market leader for Colliers. “With just 6.1 percent industrial availability, developers have accelerated their construction schedules.”
Simon noted that 10 projects totaling 4.5 million square feet broke ground during Q4, bringing the market’s total construction pipeline to 45 properties totaling 17.1 million square feet.
Colliers also found that 2017 industrial leasing in northern and central New Jersey was up 7 percent over the previous five-year average of 41.7 million square feet. Meantime, average asking rents continued to rise, jumping to a record high of $7.23 per square foot from $6.43 at year-end 2016.
Simon and John Obeid, Colliers’ senior director for tristate suburban research, said northern New Jersey recorded 5.5 million square feet of industrial leasing in Q4. That represented its 16th quarter of positive absorption and led to an all-time low availability rate of 7 percent.
Central New Jersey recorded 8.4 million square feet of activity to close out the year, bringing the region’s 2017 total to 27.1 million square feet.
“In the northern counties, properties located near the ports and the New Jersey Turnpike continue to attract the most demand,” Simon said. “Activity in Central New Jersey is being driven by the large number of users seeking new class A facilities, typically found along the New Jersey Turnpike and I-287. With extremely limited available space, users are expanding their search south of Exit 8A as well — a trend we expect will continue in 2018.”
