After a slight decline during the first three months of 2024, North and Central Jersey’s industrial sector was back in positive form during the second quarter with 5.9 million square feet leased – a 16% quarterly increase, according to commercial real estate firm CBRE’s New Jersey Industrial Figures report.
Strong demand by smaller tenants, particularly third-party-logistics (3PL) companies, which accounted for 47% of the market’s total leasing activity, helped push absorption to a positive 1.7 million square feet, according to the report. As a result, occupancy increased for the first time since early 2023 – the vacancy rate jumped by 10 basis points (bps) to just 5% due to the delivery of two million square feet of new product entering the marketplace, the slowest increase in vacancy since the same time last year.
“New Jersey’s industrial market continues to exhibit resiliency despite economic concerns and lingering inflation felt earlier this year,” said CBRE’s Chad Hillyer in a news release. “Smaller leases by 3PL and food and beverage companies accounted for most of the leasing activity during the quarter, which once again was strong, especially in the 50,000 to 100,000 sq.-ft. range.”
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Given that 1.6 million square feet of space was absorbed in properties built after 2021, strong leasing activity in the second quarter was a boon for developers of new facilities. The largest two leases in the market during were DSV’s 355,000 square-foot commitment at 300 Salt Meadow Road in Carteret, and JW Fulfillment’s 342,000 square-foot lease at 99 Callahan Boulevard in Sayreville.
While the vacancy rate was up slightly, sublease availabilities reached the highest level since the third quarter of 2020 at 6.5 million square feet. The average asking rents remained relatively stable quarter-over-quarter with Class A space rents at $19.40 per square foot. Industrial space in Class B and C properties experienced an increase of 3% due to strong demand for smaller units, to end the quarter at $16.62 per square foot.
Brad Wadlow is a staff writer for MyCentralJersey.com
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