North American industrial absorption is increasing while vacancy declines and rental rates continue their upward pace. New Jersey’s Northern and Central markets are following this same pattern as the economy recovers from the recession.
The positive optimism has resulted in a number of “spec” development projects, particularly along the NJ Turnpike Corridor. A number of the more substantial projects include: 550,000 SF in South Brunswick by Matrix Development Group; 450,000 SF in South Brunswick by IDI; 571,000 SF in Edison by J.G. Petrucci Co.; 695,072 SF in Edison by the Morns Companies; 305,751 SF and 227,042 SF in Piscataway by Clarion Partners; 737,620 SF and 582,965 SF in Woodbridge by Prologis; 460,000 SF in Carteret by the Hampshire Companies; 494,360 SF in Linden by Duke Realty Corporation; 352,000 SF in Newark by the Morris Companies, and 481,644 SF in Elizabeth by Prologis.
During the previous “spec” development cycle between 2005 and 2008 certain submarkets were overbuilt, and as the economy began its downward trend, the projects completed last suffered the most. So far this cycle appears to be much more measured, with developers proceeding with caution and patience in submarkets with strong fundamentals.
Significant recent transactions fueling the current optimism include: Genco: 218,300 SF in Cranbury; Mobis: 309,925 SF in South Brunswick; Piramal Glass: 209,106 SF in South Brunswick; Personality Handkerchiefs: 209,107 SF in South Brunswick; Amazon: 1,039,500 SF in Robbinsville; HD Supply: 470,640 SF in Edison; FedEx: 232,000 SF in Carteret; NFI: 405,256 SF in Woodbridge and Macy’s: 393,000 SF in Edison.
The delivery of new “spec” inventory will likely cause a temporary increase in vacancy rates through the second and third quarters of 2014. However, due to a lack of Class “A” product, the space will be absorbed at increasing rental rates.
Colliers monitors industrial market conditions and services clients in 77 North American markets from Miami to Montreal, totaling 16.1 billion square feet of inventory.
Colliers International, 731 Alexander Road, Suite 302, Princeton. www.colliers.com. See ads, pages 14, 15, and 18.