By Joshua Burd
The northern New Jersey industrial market saw another quarter of rising vacancy despite strong demand, as new construction deliveries continued to outrun leasing volume.
A new report by NAI James E. Hanson said as much, noting that tenants in the market took more than 6 million square feet during the third quarter. Yet the overall vacancy rate rose to 5.8 percent from 5 percent at the end of the second quarter, thanks largely to the completion
of 3.5 million square feet of new space from July through September.
“In what is typically the slowest part of the year, demand for industrial space remained robust through the third quarter,” NAI Hanson wrote in the report, later adding: “Rising vacancy rates have come amid new construction deliveries, resulting in another quarter of negative absorption. Average asking rents, which experienced a sustained period of growth over the last several quarters, have leveled off across northern New Jersey.”
The real estate services firm added that, despite the increase in vacancy in northern New Jersey, the rate remains below the national average of 6.1 percent. Notable deals in Q3 included US E-Logistics’ 806,000-square-foot lease at 1183 Florence Columbus Road in Mansfield, part of a new three-building campus by Clarion Partners and MRP Industrial, plus a 406,669-square-foot lease by RK Pharma at 148 Princeton Hightstown Road in East Windsor.
Landlords will need leasing activity to remain strong to balance the continued influx of new inventory, with NAI Hanson noting that there is 11 million square feet under construction that will deliver in the next 12 to 18 months. The submarket with the most amount of square footage currently under construction is the region around New Jersey Turnpike Exit 9.
“The last time absorption was positive was back in the first quarter of 2023,” NAI Hanson wrote. “Year-over-year leasing activity was up by 1.5 million square feet as a result of several large deals, but was outpaced by more space coming onto the market.”
The report also found that average asking rents, which ticked downward by 1.6 percent, remained above $14 per square foot for the overall market. Some actual starting rents are considerably higher with several transactions commanding more than $17 per square foot, NAI Hanson said, adding that rates range from $9 to $10 in smaller markets to more than $16 per square foot in the Meadowlands and Port regions.