(Save the date: RealShare Industrial 2012 comes to The Bankers Club, Miami, December 5 – 6.)
HASBROUCK HEIGHTS, NJ — Given that New Jersey is attracting serious interest from major electronic commerce retailers facing the imposition of state sales taxes, Jones Lang LaSalle predicts a bit of a building boom in its Q3 industrial market report.
The firm, which has offices in Hasbrouck Heights, said that more developers will soon begin speculative and build-to-suit development projects, particularly along the New Jersey Turnpike industrial corridor.
Amazon announced earlier this year that it will build a 1 million-square-foot warehouse/distribution facility in central New Jersey. It has not yet selected a site, however.
David Knee, JLL’s managing director in New Jersey, said Amazon’s quest for a construction site is a sign of things to come. “As retail powerhouses such as Amazon work feverishly to provide their customers with same-day or next-day delivery in lieu of the upcoming online state sales tax mandate, New Jersey’s industrial market is expected to experience a significant boost in demand, particularly for big-box space,” he said.
“Despite the sluggish economic recovery,” Knee noted, “retailers are rapidly undergoing a transformation as traditional retail sales decline and online sales skyrocket.”
Since e-commerce fulfillment operations require high-cube warehouses that are usually separate from traditional in-store fulfillment centers, Knee said, there is a new burst of demand for such space.
Right now, an estimated 2.1 million square feet of industrial space is under construction at or near port areas in the state. Work on two large speculative projects began only recently:
- Clarion Partners’ 277,000-square-foot Elizabeth Logistics Center on Dowd Avenue in Elizabeth, expected to be competed in May.
- The Morris Companies’ 350,000-square-foot building with rail service at 60 Lister Avenue in Newark, slated to be complete in November 2013.
While demand was down in the Meadowlands and Port submarkets in the third quarter compared to the first half of the year, JLL said all signs point to 2013 being “a year of continued growth in northern New Jersey.”
“Another wave of significant leases that were inked in the third quarter is expected to positively impact future absorption rates,” said the company’s report.
Other highlights from JLL’s industrial market analysis:
- There was 8.2% vacancy, up from 7.9 % in the second quarter for northern New Jersey. In central Jersey, overall vacancy was 8.8%, down from down from 9.5%.
- Average asking rent was $5.05 per square foot at the end of third quarter, compared to $4.97 per square foot in the second quarter. In northern New Jersey, asking rents were $5.66 psf, and in central Jersey $4.28 psf.
The largest industrial sale transaction in the state so far this year occurred in the third quarter, JLL said. That was Avidan Management’s sale to Cohen Asset Management/New York Life of its nine-building, 2.5-million-square-foot portfolio.