New Jersey’s industrial rents have soared approximately 32% year-over-year. Why?
Lack of supply – expanding demand due to the e-commerce boom creating an imbalance in the equilibrium.
Need for additional warehouse space due to the e-commerce boom.
Fierce competition for space has created a frenzy in high-demand locales.
Fear of not having sufficient space to meet expansion/staffing needs.
Increasing transportation and construction costs.
Owners’ reluctance to ink deals prior to construction completion because rents continue to soar even on a monthly basis.
Willingness to overpay while business is booming for fear of spacing issues curbing business growth.
Year-to-date leasing activity has reached over 22MSF which surpasses year-end totals of 2020.
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.
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.
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.
Overall vacancy rate increased to 25%.
Delayed office re-entry due to the delta variant has continued to place constraints on leasing activity.
The New Jersey unemployment rate had a modest decline to 7.2%.
Sublease vacancies remained flat as some tenants pulled back their space for re-entry.
Demand for healthy buildings will continue to grow.
Retail is continuing to show signs of recovery. Recent CoStar reporting shows strong momentum coming out of the 3rd quarter fueled by expansions from companies like Burlington Coats, Planet Fitness, and Crunch Fitness, among others.
Retail bankruptcies are down from 70 retailers filing for protection and closing nearly 5000 stores in 2020 to 10 retailers filing and less than 100 store closures so far in 2021
Nationally leasing trend is showing an upswing, with almost 60 million SF leased to date in 2021.
The gradual return to offices is and will continue to help retail rebound as consumption demand will naturally increase.
The multifamily market in Northern New Jersey is continuing to experience a consistent demand.
We continue to see new multifamily projects move ahead.
Rents in Northern New Jersey have increased in the past 12 months and investment activity continues to remain steady through 2021.