Strong leasing velocity in the first quarter of 2017 pushedindustrial vacancy rates to new historic lows, below 2.0 percent in some areas, according to JLL. Northern and Central New Jersey’s industrial real estate sector recorded 1.7 million square feet in positive net absorption inthe first quarter, topping the 1.3 million square feet of positive net absorption posted one year ago.
“Coming off its best year this cycle, Northern and Central New Jersey continued to see market fundamentals accelerate,” said David Knee, senior managing director at JLL. “Overall asking rental rates remained on the rise, as overall vacancy rates hit all new lows. Despite historically low vacancy rates, robust rent growth and marketwide landlord-favorable conditions, leasing velocity held steadfast.”
Industrial users inked 69 new leases totaling 5.16 million square feet in the first quarter of 2017, including two large pre-leases within the Exit 10 submarket.The Exit 10 submarketclaimed 52.1 percent of total industrial leasing activity this quarter.Transactions larger than 100,000 square feet accounted for 69.5 percent of the state’s total leasing activity in the first quarter of the year, an indication that demand for big box distribution space near New York and the Port Newark/Elizabeth remains strong.
Developers had approximately 6.5 million square feet of industrial product underway throughout Northern and Central New Jersey in the first quarter of the year.At the current rate of development, the industrial market is expected to reach new highs in terms of construction, as developers scramble to meet current user demand. Around57.4 percent of the new space has already been pre-leased, significantly above pre-leasing rates logged during previous construction cycles. Furthermore, four new industrial buildings, totaling 1.2 million square feet, were delivered this quarter, with just 19,000 square feet,or 1.5 percent, remainingavailable.
Industrial usersare facing a new normal forthe market, as they renew leases at rents that have increased 34.4 percent during the past five years. Northern and Central New Jersey’s industrial sector has witnessed an average rental rate increase of 11.7 percent during the past year alone, with growth concentrated across the Turnpike Corridor and in primary submarkets such as Exit 8A and the Meadowlands.
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JLL is a leader in the northern/central New Jersey commercial real estate market, with more than 1,000 professionals and support staff providing agency leasing and property marketing, tenant representation, industrial services, strategic consulting, occupancy planning, workplace strategies, project and development services, property and facility management, and investment sales/capital markets services to New Jersey's leading corporate tenants, investors and landlords. The firm, which assists clients from three full-service offices in Parsippany, Iselin (Metropark) and East Rutherford, also acts as a local service provider for JLL’s global and national corporate clients in need of real estate assistance in New Jersey. JLL’s New Jersey operations were honored by NJBiz magazine as one of its 2015 Best Places to Work in New Jersey.
About JLL
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. A Fortune 500 company, JLL helps real estate owners, occupiers and investors achieve their business ambitions. In 2016, JLL had revenue of $6.8 billion and fee revenue of $5.8 billion and, on behalf of clients, managed 4.4 billion square feet, or 409 million square meters, and completed sales acquisitions and finance transactions of approximately $136 billion. At year-end 2016, JLL had nearly 300 corporate offices, operations in over 80 countries and a global workforce of more than 77,000. As of December 31, 2016, LaSalle Investment Management has $60.1 billion of real estate under asset management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.
