Industrial sector in Central Jersey rights the ship
The state's lukewarm commercial real estate market found a bright spot in the second quarter, thanks to a burst of positive activity in central New Jersey's industrial sector.
A report by brokerage firm Cassidy Turley recorded more than 2.3 million square feet of positive absorption among the region's warehouse and distribution spaces. That caused vacancy to drop to 8 percent, from 8.9 percent — back to pre-recession levels.
"For a single quarter, I think that is a healthy amount," said James R. Murray, vice president for Matrix Development Group. "And given where we've been, it feels very good, it feels very positive. In the last couple of years, it's been exactly the opposite."
Large deals by the Cranbury-based firm and other developers helped drive the industrial activity in Central Jersey, according to Cassidy Turley's report. At 24 Applegate Drive, in Robbinsville, which is managed by Matrix, Global Equipment Co. and apparel maker Li and Fung Limited moved into separate 500,000-square-foot spaces.
Activity in the Exit 7A submarket also included a 400,000-square-foot expansion by Kenco, a logistics company, at 100 W. Manor Way, in Robbinsville, the report said. The large deals follow Petco's 780,000-square-foot lease in Cranbury during a first quarter that was also strong for Central Jersey.
"There's definitely good action right now in the marketplace," said Chuck Fern, an executive vice president with Cassidy Turley's office in the Somerset section of Franklin. He noted that interest is strong even during the slower summer months, adding he expected "a handful of good deals" to close in the near future.
By comparison, North Jersey recorded about 183,000 square feet of positive absorption in the second quarter, keeping vacancy flat at 7.7 percent, according to the Cassidy Turley report for that region. Year to date, the market's total amount of occupied space has increased by only about 400,000 square feet.
Fern said the availability of labor and more modern facilities are causing some tenants to migrate to Central Jersey from the state's northern region. He also pointed to real estate costs that are 20 percent to 30 percent lower and the availability of a direct route, via the New Jersey Turnpike, that is still only about 20 miles from the port region.
Those factors helped Matrix secure the two 500,000-square-foot deals at its Robbinsville location, Murray said.
"They both came to market and wanted to move quickly," he said. "And having a building that was up, with plans already prepared and ready to go, made it that much easier for them to sort of pull the trigger."
Central Jersey also has sites that could be home to Amazon.com's two 1.2 million-square-foot fulfillment centers. The online retail giant is planning to set up shop in New Jersey in exchange for an exemption from collecting sales through July 2013.