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New Jersey’s industrial rents have soared approximately 32% year-over-year. Why?
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Lack of supply – expanding demand due to the e-commerce boom creating an imbalance in the equilibrium.
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Need for additional warehouse space due to the e-commerce boom.
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Fierce competition for space has created a frenzy in high-demand locales.
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Fear of not having sufficient space to meet expansion/staffing needs.
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Increasing transportation and construction costs.
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Owners’ reluctance to ink deals prior to construction completion because rents continue to soar even on a monthly basis.
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Willingness to overpay while business is booming for fear of spacing issues curbing business growth.
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Year-to-date leasing activity has reached over 22MSF which surpasses year-end totals of 2020.
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Rents continue to climb reaching $14.45 PSF NNN overall for class A space which is an increase of 7% quarter-over-quarter and close to 30% year-over-year. Hekemian’s 76,000 SF new construction at 120 Frontage Road in Newark was just leased for +/-$28 PSF NNN to AGI and Centrepoint struck a prelease with Cosco Logistics on their 187,000 SF at +/-$18.25 PSF NNN. Current asking rents in Meadowlands are as high as $22 PSF NNN.
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Efforts to clear the supply chain blockage will include having the ports operate 24 hours a day, particularly in the Port of Los Angeles. September spending on autos and auto parts sales rose in September however the auto unit sales fell due to higher prices and a global shortage in computer chips.
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The leasing activity has continued its strong run in the first three quarters of 2021; however, the lack of supply has put many constraints on tenants.