8.10.16: Demand for Industrial Space in New Jersey Continues to Soar

In May 2016, CBRE Group, Inc. (CBRE) reported that developers saw a need for large industrial buildings in New Jersey and responded by developing speculative (not pre-leased) projects. While speculative development is very risky, tenants responded by gobbling up the space at a rapid rate. Demand actually exceeded the supply of new buildings. CBRE noted that five leases in excess of 500,000 square feet were recorded in the first quarter of 2016 compared with four new leases of that size for the prior 24 months.

CBRE recently updated its statistics for the N.J. industrial market and found that strong demand continued into the second quarter of 2016 as demand continues to outstrip supply. CBRE reported a vacancy rate of 7.2%, the lowest level recorded since 2007.

“It’s my 30th year in the industry, and I’ve never witnessed as much tenant leasing velocity as I have in the past 12 months,” said Thomas Monahan, executive vice president at CBRE. Some of the demand is attributable to companies relocating from New York, tax incentives offered by New Jersey and growth in e-commerce. In fact, e-commerce companies were responsible for 35% of the new leases in the second quarter, according to the CBRE report.

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