By Joshua Burd
Large industrial sites in northern New Jersey now cost an average of nearly $1.8 million per acre, CBRE found, as surging demand and the scarcity of land continue to drive up pricing.
The figure represents a 17 percent year-over-year increase in the region, according to a recent CBRE survey of the 10 most active markets for warehouse construction. In central New Jersey, the average price per acre is up to $650,000, representing a 10 percent jump from a year earlier.
The trend is similar in many of the country’s other densely populated regions that serve as magnets for e-commerce and other users of large distribution centers.
“As a result of the shift in consumer purchasing, there’s been a change in the tenant requirements of industrial occupiers who service those consumers,” said Thomas Monahan, an executive vice president based in CBRE’s Saddle Brook office. “Demand for buildings greater than 600,000 square feet on the (New Jersey) Turnpike Corridor remains frothy.
“Scarcity of both existing inventory and larger sites to accommodate these buildings has placed upward pressure on pricing, pushing land prices and rents to unprecedented levels.”
In the report, CBRE researchers noted that the prices for “prime new warehouse construction” in northern New Jersey equated to achieved, triple net lease rents of $11.50 per square foot. In Central Jersey, those costs translated to $8 per square foot.
All told, northern and central New Jersey are among eight major markets that saw double-digit, year-over-year percentage increases in prices for industrial land, the report found. For large industrial parcels of 50 to 100 acres, which are usually earmarked for construction of large, regional warehouses, the average price increased to more than $100,000 per acre from roughly $50,000 a year ago.
Industrial plots of five to 10 acres, which can accommodate smaller, infill distribution centers in urban or suburban settings, increased to more than $250,000 per acre from roughly $200,000 a year earlier, CBRE found.
By comparison, average prices for large industrial parcels in California’s Inland Empire rose 35 percent year-over-year to $980,000 per acre. In Chicago, prices jumped 16 percent to $250,000 per acre.