NORTHEAST SNAPSHOT, JULY 2008
Central New Jersey/Jersey Shore Industrial Market
With a vacancy rate of 6.4 percent, it is safe to say that the Central New Jersey and Jersey Shore industrial markets have been weathering the recent economic downturn quite well. Growth has continued within the Western Monmouth County area in cities such as Freehold, Manalapan and Marlboro due to strong residential growth in the last 5 to 10 years.
The majority of recent industrial development has been flex in nature to meet the needs of small start-up businesses, service industries and recreational users — industries which have been driving most of the current activity. Small-to-medium-sized, owner-operated businesses are generally looking for headquarter/warehouse locations; whereas, some national companies have been vying for smaller branch sites. There has also been quite a bit of activity from recreational users such as gymnastics, baseball, basketball and other like users, as well as service businesses that cater to homeowners and local businesses.
Rental rates on flex facilities are running from $6 to $8 for warehouse and $12 to $16 for office space. Landlords are able to realize higher rents in these markets because flex users normally have 30 percent or greater office components, which bring the blended rental rates up. In the Central Jersey market, there has been a slow down in the leasing of units 25,000 square feet and greater, while leasing in smaller sizes has been very active.
Several new developments were recently completed in Freehold: High Grade Beverage, a beer distributor, just completed construction of a new state-of-the-art warehouse and distribution facility; Donato Construction recently completed construction of a new 70,000-square-foot flex building on Paragon Way; and Asbury Avenue Partners has built and leased more than 104,000 square feet at its eight-building flex development, Freehold Industrial Park East. In nearby Manalapan, Vision Developers, a new developer to the area, recently built two leased buildings totaling 45,000 square feet.
Sales and leasing activity has also remained strong in the Central New Jersey/Jersey Shore area. A 127,000-square-foot industrial building located at 569 Halls Mills Road in Freehold was leased for 5 years at a rate of $4.61 NNN, and 7,000 square feet of space was leased for a 3-year term at a rate of $8 NNN per square foot at 670 Madison Avenue in Manalapan. In addition, a 32,400-square-foot industrial building was sold at 4168 Dunroamin Road in Wall.
Industrial and flex space within the Route 33 corridor, which runs between Freehold and East Windsor, has been in demand because of its proximity to the New Jersey Turnpike and the growth of the residential market. Over the last few years, this area has fueled the need for more flex/industrial product; thus, more activity is expected within this growing corridor in the future.
As it stands, as long as industrial developers continue to build the right type of building, the Central New Jersey and New Jersey Shore industrial market will continue to be a strong market in an otherwise slow period.
— Robert Pine is a senior associate at CB Richard Ellis.
Northern and Central New Jersey Market Forecast
First Quarter 2008
• LEASING ACTIVITY is currently on pace to reach 2007 totals, but a slowdown is expected as economic uncertainty will affect tenant expansions and relocations.
• INVESTMENT SALES have experienced a spike as investors have become aggressive in a soft market.
• CONSTRUCTION: 3.9 million square feet of new construction is expected to be completed in 2008, but demand is low.
Source: Cushman & Wakefield’s 2008 First Quarter Marketbeat Industrial report for Northern and Central New Jersey
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