New Jersey’s industrial market cooled off slightly in the first quarter, recording negative absorption for the first time in more than a year, according to a new report by Grubb & Ellis.
The Fairfield-based firm found that northern and central New Jersey recorded about 371,000 square feet of negative absorption in the first three months of 2012. But Stephen Jenco, the firm’s director of research and marketing, said the figure should not cause alarm, as the market had absorbed around 10 million square feet of space since fourth quarter 2010.
“While it is negative … it’s not necessarily raising any huge red flags here when we’re talking about the third-largest market in the country,” Jenco said, noting that several submarkets saw significant pockets of activity.
Those regions included the Exit 8A submarket, where nearly 740,468 square feet of space came off the market in the first quarter, Jenco said. The Meadowlands submarket also saw about 352,000 square feet of positive absorption, driven by a nearly 200,000-square-foot lease signed by Donna Karan, the apparel company, in Carlstadt.
The losses for the quarter were led by the Piscataway and Newark submarkets, which recorded about 449,325 and 471,000 square feet of negative absorption, respectively, the report said. Jenco attributed the activity to “just a few blocks of space that came on the market, combined with some diminished demand.”
Overall vacancy in northern and central New Jersey ended up at 11.5 percent for the quarter, Jenco said, noting that the market was still in a position of strength after last year’s gains.
“This could just be a temporary blip on the radar screen, and the market could roar back to life in the second quarter of this year,” he said.
