Economy
- Unemployment, as of June, decreased to 6.1% in NJ (5.3% nationwide) which is the lowest unemployment has been since ‘08. According to the Bureau of Labor Statistics, approximately 223,000 jobs were created in June. Transportation, warehousing, retail trade, health care and business services were among business sectors seeing growth. According to the US Censor Bureau, Manufactured goods and spending indicators accelerated their pace 1.8%, GDP increased 2.3% and the PCE increased 2.2%. The US trade gap grew as exports decreased and imports increased 7% due to the strong dollar. Labor costs rose at its slowest pace since ’82, according to the Employment-Cost Index.
- The Central Bank left its short term interest rates near zero, despite rising consumer confidence and job growth improvement. Low inflation remained one of the main concerns for not raising interest rates. Rates are predicated to tick up in the second half, albeit forecasts have the pace at which it will rise to be slow and gradual.
Office
- The office market has been relatively flat, however there have been a few positive signs, including fundamentals that point to an increased demand. Scarcity of new development, coupled with increased job opportunity and the rise of GDP should compress vacancy rates. We are still
cautiously optimistic due to the large blocks of space coming to market in the near future.
Retail
- The Northern NJ vacancy remains steady at 5.5% with 482,095 SF positive absorption. Kmart and Pathmark moved out of large blocks while Walmart, ShopRite and Value City Furniture expanded.
Industrial
- Shipments are heading for the East Coast ports even before the Panama canal expansion is completed. According to Zepol data specialists, imports from China alone were up over 20% as some carriers steered clear of West Coast terminals affected by severe delays. Containers are on the rise 11% however, the amount of chassis available has only risen a quarter of that percentage, according to industry data.
- Supply has tightened as the demand for space has exceeded expectations in an explosion of leasing activity. Surging markets and state incentive programs such as Grow NJ has helped the vacancy rate decrease to 7.2% and increase rental rates six cents overall to $6.02 PSF (up $0.94 in the last 4 years). Positive absorption was over 2MSF, which is the second largest increase in 2 years. The NJ Turnpike continues to be the backbone of NJ’s industrial market, where most of the product under construction is being delivered on a speculative basis.
