By Joshua Burd
Northern New Jersey is leading the nation in rent growth for industrial and logistics properties, according to CBRE, as the market remains undersupplied with tenant demand still soaring.
A new report by the real estate services firm found that, through May, first-year base rents in North Jersey rose 33.3 percent year over year. That represented the largest increase in the country during that time and placed the region ahead of Southern California’s Inland Empire, where base rents grew 24.1 percent.
CBRE also noted that Philadelphia and central New Jersey ranked third and ninth at 19.7 percent and 13.9 percent, respectively, as coastal markets and the Northeast dominate the list. Nationwide, asking rents increased a record 8.3 percent year over year in the fourth quarter of 2020 and 7.1 percent in the first quarter of 2021 — well above the five-year annual growth average of 6.8 percent.
“Northern New Jersey has one of the lowest industrial vacancy rates in the country at just 2.2 percent, and occupiers are willing to pay more than landlords are asking as they struggle to find available space,” said Thomas Monahan, a vice chairman at CBRE. “Demand for new space is incredibly high and bidding wars for what is available has created a challenge for many occupiers looking to expand or simply renew.”
According to CBRE, the tight vacancies and high demand across the U.S. have driven both asking and taking rent growth to new highs. Taking rents — first-year base rents on industrial leases of 12 months or more — increased 9.7 percent year over year for the first five months of 2021.
The firm also found that bulk warehouses accounted for the biggest increases in taking rents, with leases for buildings of at least 500,000 square feet surging 13.2 percent, while leases for facilities between 100,000 and 499,999 square feet rose 11.6 percent.
