By Joshua Burd
Two tenants leased a combined 1.82 million square feet in Cranbury during the first quarter, accounting for the top transactions year to date in New Jersey’s booming industrial market.
The companies, Wayfair and Crate & Barrel, leased 953,595 and 870,950 square feet at 343 and 353 Half Acre Road, respectively, according to market reports from CBRE and Colliers International. Both deals took place as part of a nearly 2.6 million-square-foot development site by Alfieri, as central New Jersey fueled leasing activity during the quarter.
For both northern and central New Jersey, CBRE found that new leasing activity totaled 6.9 million square feet during Q1, marking an increase of 750,000 square feet over the fourth quarter of 2018. The firm also tracked net absorption of 4.5 million square feet to start 2019, which represents the third-highest quarterly total in the past five years and the best first quarter of all time since CBRE began tracking such metrics.
The enduring demand caused a more than 3 percent increase in the average asking lease rate to a new record high of $7.25 per square feet, CBRE found in its analysis of the region.
“The industrial market in New Jersey continued to stand out as one of the hottest and most active markets in the country,” said William Waxman, an industrial broker and executive vice president with CBRE. “The influx of e-commerce and logistics users continued unabated during the first quarter, a trend that is sure to remain given New Jersey’s ideal location in the Northeast, strong market fundamentals and highly qualified labor pool.”
In terms of new development, the firm tracked 19 projects under construction totaling 5.8 million square feet at the end of Q1. Ten buildings were completed during the quarter, which added 3.3 million square feet to the inventory in northern and central New Jersey.
Researchers with Colliers also tracked quarter-over-quarter increases in leasing activity and average asking rents, while highlighting Central Jersey’s dominance to start the year. For its part, the firm identified more than 7 million square feet of leasing in Central Jersey alone, driven by the Wayfair and Crate & Barrel deals.
“Tenants have turned their attention to new construction sites in (central New Jersey) as the availability rate remains at historical lows, with five out of the top seven transactions having occurred in new developments,” Colliers wrote in its Q1 report. “The average asking rent has climbed unabated, even as Class A space continues to be leased prior to completion, not getting a chance to be factored into the average asking rate.”
The report also pointed to something of a setback for northern New Jersey, tracking 3.3 million square feet of leasing activity for the quarter, its lowest total since Q1 in 2017. Colliers attributed the slowdown to the lack of modern available space in the northern part of the state, “leading developers to quickly break ground on development projects to meet occupier demand.”
By the end of Q1, Colliers identified 16 properties with a combined 5.5 million square feet underway in North Jersey.
