Momentum in central New Jersey’s industrial market continued in the third quarter, as vacancy continued to fall while interest grew among prospective tenants around the New Jersey Turnpike, according to a new report from Cassidy Turley.
The firm’s Franklin office recorded 584,000 square feet of positive absorption from July through September, a modest but strong total in the normally slow summer months. Overall vacancy fell to 7.8 percent from 8 percent, following 2.3 million square feet of second-quarter activity that brought vacancy to pre-recession levels.
Central Jersey continued to fare better than the state’s northern market, where the amount of occupied industrial space fell by nearly 815,000 square feet, Cassidy Turley found. Vacancy in the market rose to 7.9 percent, up 0.2 percentage points.
“Generally, you just get a better quality of buildings and pricing when companies come north to south,” said Chuck Fern, an executive vice president with the firm’s New Jersey office. He added that “from the port to Edison or South Brunswick, it’s not a long drive.”
Fern also predicted continued momentum, citing transactions coming in the next 30 to 60 days that would potentially take “a few million square feet” off the market. Notably, central New Jersey is buzzing with the impending arrival of Amazon.com, which is reportedly close to a deal for a new distribution site in the Exit 7A submarket.
Third-quarter activity was strong in South Brunswick and Exit 8A, including a deal by Argix Logistics to expand and fill out a 324,000-square-foot facility, and a 167,000-square-foot lease by Preferred Freezer at 20 Tower Road.
Doug Bansbach, a Cassidy Turley senior vice president, said “the key to the market is that the average asking rates finally had an uptick.” Rents had not increased in Central Jersey recently, even with the robust second quarter activity.
“Vacancies were going down, but the asking rates were not going up, so it was good to see,” Bansbach said. In North Jersey, rents have ticked up for two consecutive quarters, which, despite its recent struggles, “always shows a strengthening of the marketplace”
Sales activity and ongoing speculative development were other bright spots for northern New Jersey amid its negative absorption, analysts said. The port area has several speculative projects under way, including a 277,000-square-foot facility in Elizabeth by Clarion Partners and a 350,000-square-foot warehouse in Newark by the Morris Cos.