NORTHEAST SNAPSHOT, SEPTEMBER 2004
Northern New Jersey Industrial Market
With real estate development mirroring the steadily recovering
economy, northern New Jersey is experiencing an increasing
amount of industrial development. We have seen positive
net absorption in the last two quarters as well as an increase
in rental prices, notes Neil Gewirtzman, executive vice
president at Sheldon Gross Realty Inc., headquartered in West
Orange, New Jersey.
Gewirtzman adds, There is great demand for the purchase
of industrial buildings ranging from 10,000 to 50,000 square
feet. The region does not have enough product currently available
the current glut of buyers, the market is strong for larger
properties as well. The larger buildings are also selling
for higher prices as the cap rates have dropped under 7 percent.
This can be traced to the problems in the equities markets
and low interest rates, explains Gewirtzman. Many of
these buildings are filling up before construction is complete,
helping absorption and vacancy rates. A number of big businesses
are acquiring space throughout the area. Landlords are looking
for large big box users, as companies are trying to centralize
inventory and keep stock low in most locations. Barnes &
Noble is moving into more than 900,000 square feet of a new
1.1 million-square-foot building at Cranbury South River Road
and The Home Depot is taking over 800,000 square feet of property
at Mack Cranbury Road.
According to Gewirtzman, one growing market is the area around
exit 8A of the New Jersey turnpike, which continues
to be developed because of available land that is more affordable
than further north, and its location is equidistant between
New York and Philadelphia. In the near future, expect
increased development from the always-strong port market.
Industrial tenants are attracted to the area for both its
water-borne transportation system and its close proximity
to New York.
Developers in the region are trying to attract tenants to
their properties with more flex buildings, as New Jersey becomes
more and more a services state. Rental rates for typical industrial
buildings range from $5 to $7 per square foot, with flex space
sitting on a blended rate of more than $10. Vacancy rates
are stable at approximately 7.5 percent.
With demand currently outpacing supply throughout the region,
industrial development in northern New Jersey is strong and
showing no signs of slowing any time soon.
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