The New Jersey industrial market continued its record-setting trend set last year servicing the largest population concentration in the country. Despite the supply constraints the net absorption registered 2MSF, the lease rate increased to $12.00 PSF NNN overall and pushed the vacancy rate ever downward to a historic level of 2.3%.
Demand for space continued to push rents, most prominently along the NJ Turnpike which is evident in the lack of available space. Tenants have looked toward less expensive options such as the tertiary markets off Route 24, 280, 80, 33, 18, and 46.
Developers have ramped up the construction pipeline to keep up with the activity. Some speculative developments include Morris Companies’ 1.2MSF in Avenel, Rockefeller 345ksf in Easthampton, Lincoln Equities 332KSF in Jersey City, Bridge’s 358KSF in Belleville, amongst others.
With the scale of war in Ukraine, inflation, and the Covid pandemic, the country may be looking toward a future recession. The war has created a food shortage (wheat) for countries such as South Africa and Egypt, among others, and companies have scaled up quickly to meet new demand, but recessionary trends could lead to a market downturn.
Shippers are moving up their peak shipping season into late June to avoid delays and last year’s substantial container backups, but this introduces a new potential issue as this new peak coincides with back-to-school and other seasonal imports. Managing this process will go a long way toward showing the White House is making strides against a fragile economy and rising inflation.
Vacancy rates remain at 25 percent, but absorption has been offset by 10 MSF of office space being torn down to make room for new industrial and residential projects. The return to the office has been slowly trending upwards, while companies downsize their overall office footprint.
Demand for green and healthy buildings with parking continues to grow.
Short Hills and Summit areas are among the most sought-after areas for space from relocating Manhattanites.
As we move towards the ”Post Covid Era” retail and restaurants continue to struggle as finding employees make it near impossible to fully staff the struggling sector. Ecommerce has slowed, but its long-term effect on brick and mortar continues to reshape the industry.
Conversions from vacant big box to last-mile delivery warehousing continues to grow.
Second-generation restaurant space leads the way for expansion of existing brands and startups as the CAP X is often only 1/3 the cost of new box retail.
Ghost kitchens are swallowing up former restaurant space as food delivery services grow.
As remote work schedules are being reduced and workers are moving back closer to the city, the multifamily market in Northern New Jersey has stabilized in the first quarter of 2022 and is expected to be on solid ground in the short term despite new uncertainties in the market.
Both rents and sale price PSF have slightly increased quarter over quarter mainly due to inflationary impact.