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NORTHEAST SNAPSHOT, DECEMBER 2005
Northern New Jersey Industrial Market
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Mitchell Katz
Vice President
Trammell Crow Co.
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Developers in the Northern New Jersey industrial market have slowed their production somewhat over the past few months due to a flurry of activity that occurred approximately 12 to 24 months ago. They are waiting for the projects built during that time frame to absorb before embarking upon new developments. Despite the fact that production has slowed and there is space on the market, vacancy rates in the Northern New Jersey industrial sector stand at 8.3 percent. The great majority of asking rents currently range from $4.25 per square foot to $8.00 per square foot, while the overall average remains closer to $6.35 per square foot.
Catellus Development Corporation, recently acquired by ProLogis, is a new developer in the market. The newly merged companies are endeavoring upon an industrial development called Port Reading, a significant project in the Northern New Jersey industrial sector as it is the first development to market in the Carteret, New Jersey, area. Located at 50 Middlesex Avenue, this industrial space is 356,765 square feet. Higgins Development Partners and Panattoni Construction also are new developers to the area.
A majority of development in the market is occurring in two areas of Northern New Jersey. In the Exit 8A and South submarkets, land availability and land prices are driving the market trends, thus developers are seeing opportunities there. In addition, development is flourishing near the ports, as industry is experiencing a record year for imports. As a result, users are willing to pay higher prices in order to locate in closer proximity to the ports.
Most recently, the primary users in this market have included consumer goods, logistics, retail, warehousing and distribution tenants, all of whom have played a strong role in driving demand.
As of late, The Home Depot and Barnes & Noble have been major players as far as activity in the industrial market; however, in a 900 million-square-foot sector, no single tenant really can have too significant an impact. For a list of major leases signed recently, please see the chart “Recent Leases Signed in Northern New Jersey.”
In the future, the port area will continue to be a prominent site for industrial development, not only due to the high level of activity at the port itself, but also to the State of New Jersey's “Portfields” initiative, which is a joint effort being undertaken by the New Jersey Economic Development Authority (NJEDA) and the Port Authority of New York and New Jersey (PANYNJ). Another area that will remain strong in the future is the Turnpike Corridor between exits 8A and 7A.
— Mitchell Katz is a vice president with Trammell Crow Company in Florham Park, New Jersey.
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