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E-commerce drives NJ industrial market to record 2018

The New Jersey Industrial market is going strong — and breaking records — heading into the fourth quarter of 2018.Third quarter reports from both commercial real estate company Cushman & Wakefield and privately held real estate firm Transwestern identified e-commerce as the main impetus for raising the bar in vacancy rates, rents and absorption in the Garden State.

Overall, vacancies were at an all-time low, averaging at 3.6 percent between data from Cushman and Transwestern. Despite new industrial construction and Cushman-cited dispositions of properties like the 1.4 million-square-foot Toys R Us distribution center in Flanders, 82 percent of new construction delivered in 2018, has received commitments, according to Cushman.

Both reports named the Exit 8A submarket king, with a record-low vacancy rate of 0.4 percent.

Average industrial rents hit all-time highs in both reports, up 14.4 percent from 2017 according to Cushman, and reaching more than $8 per square foot for the first time ever, Transwestern said.

Year-over-year rents were up in 20 of 25 submarkets, according to Transwestern, and were 7.4 percent higher than in 2017 and 50 percent higher than five years prior. It was also the 13th consecutive quarter in which rents in the industrial sector increased, with rates in five submarkets averaging in excess of $9 per square foot, Transwestern said.

New marks in industrial-absorption rate were also established by both Cushman’s and Transwestern’s standards: The former indicated 13.6 million square feet to date in 2018, the highest on record for this time of year and beyond the annual total for 2017. Transwestern offered 17.1 million square feet for the past 12 months, surpassing a previous year-over-year mark of 14 million square feet set in the previous quarter.

Looking forward, Cushman says 2018 is on pace for the largest annual new industrial development total in this century, with 5.6 million square feet currently being built and over 2 million square feet anticipated to break ground in the fourth quarter.

Transwestern has a New Jersey office in Florham Park; Cushman & Wakefield has New Jersey offices in Iselin, East Rutherford and Morristown.

Jessica Perry
Jessica Perry
Jessica is the managing editor and covers commercial real estate for NJBIZ.