Commercial real estate firm Cushman & Wakefield found that the industrial real estate market continued to reach historic highs in the first quarter of 2017, as demand pushed vacancy 3 percentage points lower, to 4.7 percent.
Overall net absorption saw its 17th consecutive quarter of occupancy gain, with central New Jersey seeing 75 percent — 1.2 million square feet — of the 1.6 million square feet absorbed in the first quarter.
“New construction deliveries for industrial space in northern and central New Jersey are anticipated to reach record levels this year,” Andrew Judd, Cushman & Wakefield’s New Jersey market leader, said. “Yet demand is so strong — and Class A big-box options are so scarce in the Garden State — that much of the new product could already have tenants in place by the time they deliver. Barring any major geopolitical events, the New Jersey industrial sector is in line for another robust year.”
There are only eight big-box availabilities over 300,000 square feet, with a handful of other spaces to become available in the next quarter, the firm found.
And while the submarkets along the New Jersey Turnpike saw a 4 percent vacancy rate, the remainder of the market closed the quarter at 5.9 percent vacancy.
“The need to be in close proximity to the Port or the Turnpike and other major highways to reach the most populous region in the country (the tri-state area) has helped the local industrial boom remain on its current track,” Judd said. “E-commerce, logistics and last-mile delivery companies have absorbed much of the space during this expansion cycle.”
This year’s Q1 marked the second-strongest in recent history, only behind 2016, the firm said.
Class A warehouse space reached $7.22 per square foot in the primary submarkets in the Meadowlands, lower Interstate 287 and Exit 8A. Warehouse and distribution product rose 8.1 percent from the 2016’s Q1, to $6.94 per square foot.