The New Jersey industrial market has stabilized on the macro level. As a result, there is a lot more confidence for landlords and tenants to do business. Overall there has been a mind shift to the positive. Demand is growing. Confidence is driving deal completion. Buying is up compared to leasing. Financing is gaining strength. Lending dollars are still not plentiful but if the deals and properties are solid, the transactions are attainable.

Vacancy rates are stabilizing, though we’d like to see it decrease another 2 to 3 percentage points. Every submarket is seeing improvement when compared to last year. From first quarter 2011 to second quarter 2011, the overall industrial vacancy rate remained unchanged at 9.3 percent. The Northern New Jersey industrial vacancy rate increased 40 basis points to 8 percent. The Central New Jersey industrial vacancy rate decreased 30 basis points to 10.6 percent. The largest recent lease took place in Robbinsville, New Jersey, along the New Jersey Turnpike: Kenco Logistic Services signed a lease for 500,000 square feet off of Exit 7a.

At the end of second quarter, the average asking rent for industrial space was $5.62 per square foot, with averages in Northern New Jersey at $6.17 and Central New Jersey at $5.08. Rents are beginning to rise in some submarkets as space is absorbed, such as in port markets East Newark and Elizabeth, and the Route 80 Industrial Corridor.

Property values are improving and we are seeing more investment activity. In March, KTR purchased I-Port 12 in Carteret and then leased 800,000 square feet to Wakefern Food Corporation. Additionally, BlackRock sold a five-building, 1 million-square-foot portfolio in the 8a market to Morgan Stanley. These deals are significant because they signal the desire of companies to buy in strong port area with a strong consumer base.

Over the next year, we will see continued growth. Property values and rental rates will continue to rise, vacancies will diminish. However, we still won’t see any spec developments.

It’s a simple business; we don’t make things in New Jersey, we consume everything.  We process the products and it’s a good place to do business because it’s an essential operation to our region. I am very optimistic about the future. However, we need lower taxes. We also need more infrastructure improvement projects, like the Bayonne and Goethals Bridges.  We need more business-friendly legislation to incentivize companies to come and/or stay in New Jersey.

— Joseph Nitti is executive managing director of Colliers International New Jersey.

©2010 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.

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