Newmark Knight Frank (NKF) has released its Third Quarter 2017 Industrial Market Report, which details continued strength in the leasing market, including 16 recent transactions over 100,000 square feet throughout Northern and Central New Jersey.Robust demand for logistics space is keeping availability low and putting upward pressure on asking rents, which have grown 17.1% over the past year.
Wayfair, an e-commerce company that sells home goods, leased 1.3 million square feet at 1 Brick Yard Road in Cranbury. The property is in the Exit 8A submarket which saw seven additional deals over 100,000 square feet close during the quarter. Development activity continues to ramp up across the market and especially at Exit 8A, where 5.2 million square feetis currently under construction. Developers are scrambling to meet requirements for modern big-box warehouses, and a scarcity of land sites adjacent to the turnpike is pushing activity to up-and-coming submarkets, such as the I-287 Corridor which has seen availability fall from 12.3% to 6.4% over the past two years.
“Demand for warehouse space in Northern and Central New Jersey’s industrial market is expected to remain strong for the foreseeable future, fueled by its strategic location within the nation’s largest consumer market along with the growth of e-commerce and relocations from New York”, according to Mark Russo, NKF research manager. New Jersey’s relatively affordable labor,accessibility, and state economic incentives continue to attract New York City based companies. Brooklyn-based Damascus Bakeries was awarded an $18.6-million Grow NJ award to create 150 jobs and lease 200,400 square feet in Clifton, while a combined $22.1 million in tax credits was approved in September for Schuster Meat Corp., Gourmet Nut Inc. and Elite Décor Inc.to move to New Jersey.
Despite robust demand, availability increased by 50 basis points during third-quarter 2017 to 8.2 percent due to new supply. More than 14 million square feet of new product are currently under construction, up from 8.6 million square feet one year ago. “While availability inched higher this quarter as a result of new construction, the market is unlikely to become overbuilt, given the region’s land constraints,” Russo concluded. The near-term outlook calls for availability to stay low, along with steady net absorption and rising rental rates.
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Newmark Knight Frank (NKF) is one of the world's leading commercial real estate advisory firms. Together with London-based partner Knight Frank and independently-owned offices, NKF's 15,000 professionals operate from more than 400 offices in established and emerging property markets on six continents.
With roots dating back to 1929, NKF's strong foundation makes it one of the most trusted names in commercial real estate. NKF's full-service platform comprises BGC's real estate services segment, offering commercial real estate tenants, landlords, investors and developers a wide range of services including leasing; capital markets services, including investment sales, debt placement, valuation and advisory services; commercial mortgage brokerage services; as well as corporate advisory services, consulting, project and development management, and property and corporate facilities management services. For further information, visit www.ngkf.com.
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