Press Release

On to the next one: While North, Central NJ industrial closes year at record levels, brokers warn of supply for 2018

09 1 2018


For CBRE executive vice president Tom Monahan, the diminishing supply of new product and its distribution will be the key to 2018’s industrial market. After the 16 consecutive record-setting quarters, Monahan expects continued growth in rents, but foresees extreme constrains in the size of the product delivered this year.

“The trend is scarcity of large assets,” he said. “If you look at buildings 600,000 square feet and greater, which would be for (a large tenant), there really are zero availabilities in terms of buildings that are sitting idle that size. There are two under construction that will be available, one in Hillsborough and one in Newark. One is 700,000 square feet and one is at 651,000 square feet.

“If you’re looking for 600,000 square feet or greater, you don’t have that availability. Getting down into smaller units, from 400,000 to 600,000 square feet, it is still scarce, but you have three available. Below that, you have 200,000 to 400,000 and 100,000 to 200,000. There is somewhere between a handful and 10 to 11 properties in each category.”

Jules Nissim, executive managing director of Cushman & Wakefield, concurs with Monahan, but is still hopeful of growth at Exit 8, 8A and Exit 10 of the New Jersey Turnpike.

The new product delivered along Interstate 287 will be able to allocate new tenants like Best Buy in Piscataway, but foresees a lack of sizeable product being available this year, too.  

Scarcity and demand for sizeable product, Nissim said, has begun to push tenants as far south as Exit 6 of the turnpike, where the New York metro and Philadelphia metro appear to be meeting.

Despite location and constraints in product, however, the scarcity of sizeable space, and the demand for warehousing near New York is expected to keep driving costs in both North and Central Jersey.

According to Colliers International, a surge of activity in industrial leasing led to the fifth consecutive year total leasing activity surpassing 40 million square feet in northern New Jersey. In its year-end Market Snapshot, Colliers reported leasing to have reached 13.9 million square feet, bringing the total industrial leasing for 2017 to 44.8 million square feet, representing a 52.8 percent jump in activity quarter-over-quarter.

“2017 industrial leasing was up 7 percent over the previous five-year average of 41.7 million square feet,” said David A. Simon, executive managing director and New Jersey market leader for Colliers International. “Robust tenant demand continues to drive down the availability rate, even though new product is being brought to the market at a rapid pace.

“With just 6.1 percent industrial availability, developers have accelerated their construction schedules. During the fourth quarter, 10 projects totaling 4.5 million square feet broke ground, bringing the total construction pipeline to 45 properties totaling 17.1 million square feet.”

According to Colliers, the largest deals of the quarter included a renewal for 1.4 million square feet by William Sonoma in South Brunswick and a pre-lease by Best Buy at 171 River Road in Piscataway at a site being developed by Rockefeller Group.

In North Jersey, 5.5 million square feet was leased in Q4, which brought the availability rate to 7 percent.

In Central Jersey, 8.4 million square feet were leased during Q4, closing out the year at a total 27.1 million square feet of leased.

According to CBRE, both Central and North Jersey closed out the year at record-levels in land pricing, too.

In its U.S. MarketFlash, CBRE ranked North Jersey as the most active warehouse construction market, prime industrial pricing and achieved leasing rates.

North Jersey, Followed by Southern California (Inland Empire) and Central Jersey topped the charts in average price-per-acre for a typical large parcel for prime warehouse development land.

At $1.75 million per-acre, Northern New Jersey was ranked No. 1, while Central New Jersey was ranked No. 3 at $650,000. The submarkets, according to CBRE saw a year-over-year growth of 17 percent and 10 percent respectively.

Inland empire saw a year-over-year growth in pricing of 35 percent.

“Distinct development patterns have emerged to support e-commerce fulfillment, and are reflected in the increasing cost of land,” CBRE said in its US MarketFlash. “In 2017, land prices rose sharply for development of warehouses – both ‘first-mile’ and ‘last-mile’ – due to strong demand and a diminishing supply of viable sites. In the 10 most active warehouse construction markets, rising land prices are contributing to higher rental rates, which remain a small component of total logistics costs.”
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2021 revenue). The company has more than 105,000 employees (excluding Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at