Newmark Knight Frank (NKF) has announced its findings in its 4Q2017 industrial market analysis of Northern New Jersey, which shows new construction being met with robust demand. During 2017, 8.6 million square feet of industrial product was completed, which is more than the market has seen in over 10 years.
New supply was outpaced by 11.8 million square feet of annual net absorption, causing vacancy to decline to 4.8% from 5.4% one year ago, and there were 12 leases over 100,000 square feet signed during the fourth quarter of 2017, totaling 3.7 million square feet. In light of this, asking rents continue their steep upward trajectory, increasing by 14.3% over the past year.
Exit 8A and the emerging I-287 Corridor continue to be hotbeds of construction and leasing activity, with 8A seeing higher net absorption and more new construction than any other submarket over the past year. In one of the largest leases of the fourth quarter, Home Depot leased the entirety of 58 Station Road in Cranbury, a 504,600-square-foot development. Clarion partners is also making an investment in Exit 8A with its purchase of 44 and 48 Station Road in Cranbury for $168.5 million.
The Bayonne Bridge raising project completed in June, allowing the port to accommodate larger container ships. This should continue to drive increased trade in the region, further stimulating industrial demand.
“Unprecedented demand for modern big-box warehouses has been the needle mover for market statistics” said Research Manager Mark Russo. “So long as activity in this size range remains strong, the market should continue to exhibit low vacancy and upward pressure on rental rates for the foreseeable future.”
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