E-commerce users led the charge in fourth-quarter industrial leasing in New Jersey, setting up what could be another record-setting year for owners and developers of logistics space.
New Jersey’s transportation and warehousing workforce is on the rise, putting the state in position to remain attractive to the ever-growing e-commerce and logistics sectors.
Developers and owners have reaped the benefits of rent growth in New Jersey’s surging industrial market, but they’ve also scored big with increasingly longer lease terms.
Changes in consumption patterns continue to shift retailer demand away from brick-and-mortar storefronts to industrial facilities with immediate access to large swaths of the U.S. population. In 2017, traditional and e-commerce retailer requirements exceeding 200,000 square feet totaled 7.8 million, representing a 120 percent increase over the 2016 total of 3.6 million.
Retailers accounted for more than a third of all industrial gains in northern and central New Jersey at the end of 2017, according to JLL, fueling what amounted to the second-highest net absorption total of any year since the recession ended.
At the close of 2017, 12 separate 750,000-square-foot tenant requirements were active in New Jersey. Over the past two years, 21 leases in excess of 500,000 square feet closed, with traditional and e-commerce retailers remaining the biggest contributors to big-box leasing activity.
Twelve leases greater than 500,000 square feet closed throughout northern and central New Jersey, an increase of 33.3 percent year-over-year and a pace expected to outpace year-end totals for 2016. Big-box leasing has tripled as traditional retailers and e-commerce companies —representing 75.0 percent of big-box leasing for 2017 — continued to expand their distribution networks.
The proliferation of e-commerce and its labor-intensive fulfillment centers contributed to a 97.0 percent compounded annual growth rate in the number of job postings for distribution-related jobs since 2011.
The rising demand for sites that will support urban logistics centers has driven growth in Northern New Jersey, while also creating competition among developers, as forgotten industrial markets reemerge. Retailers, parcel carriers and food and beverage companies have all increased their demand for industrial space less than ten miles from Manhattan. Formerly obsolete locations throughout New York’s boroughs are reemerging as competitive alternatives to the New Jersey markets.
Over the last three months, New Jersey’s industrial market recorded nearly 10.0 million square feet of leasing activity, with big-box markets like Southern New Jersey and Exit 8A seeing a flurry of activity.