Leasing Activity Increases by 40% from Q2 2020;AverageAsking Rents for Class A Space Climbed 7%
The New Jersey industrial market beat all expectations in the third quarter, showing incredible resiliency with strong leasing activity and climbing average asking rents, according to CBRE’s Q3 2020 industrial report.
During the past three months, industrial leasing totaled 7.3 million sq. ft., a 40% increase from Q2 2020. In addition, the average asking rent of $11.18 per sq.ft. for Class A industrial space was 7.0% above the average of Q2 2020, while the overall availability rate in North and Central New Jersey continued to fall and now stands at 5.8%. This represents a drop of 13 basis points (bps) for all classes from the previous quarter and a 14 bps decline year-over-year.
“New Jersey’s industrial market came back strong after experiencing a COVID-related setback during the second quarter, and proved once again its resiliency even in light of the many challenges still facing our industry,” said Larry Schiffenhaus of CBRE. “The market broke several records during the third quarter, including leasing activity and net absorption, which at 7.2 million sq. ft. far surpassed the 3.7 million sq. ft. in the previous quarter.”
E-commerce led the way once again with five leases totaling 1.94 million sq. ft., as consumers continued to shop for staples and non-durable goods online, despite the reopening of stores throughout the state. Notable transactions during the quarter included a 900,022sq.ft. commitment by an e-commerce tenant in Edison; a 583,376sq.ft. renewal by G-III Apparel in South Brunswick; and a 308,550sq.ft. new lease for TSG Cabinets in Somerset.
New projects also came online during the third quarter after the COVID-related work stoppage temporarily delayed the delivery of some projects. During the quarter, the industrial market saw a record 6.56 million sq. ft. in new inventory hit the market, 80% of which (5.2 million sq. ft.) was pre-leased. In addition to the new deliveries, there were six new project starts in Q3 2020 totaling 2.7 million sq. ft. With substantial demand for large blocks of modern, high quality space, investors will continueto seek out construction and conversion opportunities in the market, according to CBRE.
On the investment sales front, the market saw transaction volume grow to $304 million in Q3 2020, an increase of 9.0% from the previous quarter. The largest transactions were two deals in the Meadowlands submarket, which together accounted for 40% of the quarter’s total sales. Among these was the sale of Lincoln Gateway Development, a 19.93-acre property located at 2701 Route 3 Way in Secaucus. Clarion Partners acquired the asset from BethenelGreenOak for $63 million.
“Strong industrial leasing fundamentals in New Jersey continue to attract global institutional investors,” said CBRE Vice Chairman Brian Fiumara. “Many of these investors see stability and growth in the market, leading to safelong-term investments.”
To download the full report, click here.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2019 revenue). The company has more than 100,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 530 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated 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 www.cbre.com.
