A new market report by Grubb & Ellis suggests continued momentum in New Jersey’s industrial real estate market, with positive absorption of 6.9 million square feet in 2011.
That indicates a second consecutive year of growth, with 9.4 million square feet absorbed in 2010, a slow turnaround from the 22.2 million square feet that opened up the year before.
Stephen Jenco, director of research and marketing for Grubb & Ellis and author of the report, said most of the activity driving absorption can be attributed to the Central Jersey market, specifically along the New Jersey Turnpike.
Jenco said the area surrounding interchange 8A “was one of the strong performers” in 2011, with 2.1 million square feet absorbed in over the course of the year. L’Oreal, Central Garden & Pet Co., Cooper Electric Supply and Genera Corp. all completed large-scale transactions at the end of the year in the submarket.
The market was helped, he said, by a slowdown in construction.
“We’re not being flooded by a large amount of new supply of empty buildings,” Jenco said. “It was positive to see the industrial availability rate in the 8A market dropping below 17 percent. We’re at our lowest level now in four years.”
Asking rents for space have continued to decline, Jenco said, but as more modern warehouses in the region are snapped up, the demand should push rental prices up. Jenco said demand also will encourage new industrial construction, especially surrounding an expected increase in shipping activity at the Port of New York and New Jersey.
“We’re still going to have a level of growth. I think everyone is still staying optimistic that the Bayonne Bridge will be raised in time, coinciding with the Panama Canal expansion being completed in 2014,” Jenco said. “When you look at the industrial market now, it has been growing without the raising of the Bayonne Bridge yet. In many cases, shipping companies have adapted to the challenges of the port.”