By Joshua Burd
Industrial rents in northern and central New Jersey continued to soar in the third quarter, amid ongoing demand for relatively few spaces and locations near the New Jersey Turnpike, fueling deals such as Samsung’s lease for more than 735,000 square feet in Linden.
Those are among the findings of new research by Savills, the commercial real estate services firm, which found that average asking rents have grown by 40 percent over the past year to $15.63 per square foot. That represents another all-time high, while submarkets such as Linden and Elizabeth, the Hudson waterfront and the Interstate 280 and suburban Essex region have seen rates hit the low to mid-$20-per-square-foot range.
As the report noted, Linden was the site of the largest lease of Q3, thanks to Samsung’s commitment at the seven-building, 4.1 million-square-foot Linden Logistics Center. The electronics giant is taking 735,220 square feet at 700 Linden Logistics Way, which is being developed under a joint venture of Advance Realty Investors, Greek Development and PGIM Real Estate, while the overall campus has just 1.6 million square feet of remaining availability.
Meantime, Savills found that vacancy in Q3 held steady from the previous quarter, hovering at what the report described as a cyclical low of 2.4 percent.
“Economic uncertainty has grown over the past six months due to rising interest rates and negative GDP growth,” Savills’ Rutherford-based team wrote in the report. “With a construction pipeline making up just 2.9 percent of inventory, compared with the national figure of 4.8 percent, northern New Jersey is well prepared to absorb a slowdown in demand. With over half the pipeline going up in submarkets already at asking rents over $15 (per square foot), landlords will see price insulation in the near term.”
A separate report by Cushman & Wakefield’s New Jersey office also pointed to a slowing pace of leasing activity in the market, but highlighted rising rents as well as historic container volume by the Port of New York and New Jersey. The region moved more than 843,000 twenty-foot equivalent units in August, outpacing both the ports of Los Angeles and Long Beach and spurring continued demand in the face of unease about the economy.
The report also noted that renewal activity persisted in the state’s industrial market, with five out of the top 10 transactions being stay-in-place renewals.
“Although warehouse leasing activity slowed, demand for industrial outdoor storage surged as the Port of New York and New Jersey handled a historic number of containers,” said John Obeid C&W’s senior research manager for the New Jersey region. “Overall, strong underlying market fundamentals persisted, leading to an increase in pricing despite slower demand.”