EAST RUTHERFORD, NJ-A look out the rearview mirror on the past two years shows that the industrial market has absorbed 43% of the space that went vacant during the crash of 2009-10, says Cushman & Wakefield in a new analysis. C&W’s analysts predict the pace of absorption this year will continue to be lumbering.
“While we anticipate occupancy to continue rising in most of the major submarkets through 2013, the improvements will be gradual,” says the East Rutherford-based company’s latest report. C&W offers no timetable full recovery, except to say “it will still be some time” before the state returns to status quo after the dramatic decline in demand of 2009-2010.
During those two years when leasing slowed to a crawl and numerous companies vacated space, there was a total of 22 million square feet of negative absorption of industrial space in the state. Since the start of 2011, the market has absorbed 9.1 million square feet, well under half the space lost during the record bad market period.
During recovery, the Lower I-287 Corridor has had the most robust leasing activity-particularly in 2011 when Wakefern Food Corp. leased 1 million square feet and the I/O Data Center in Edison filled up 830,000 square feet. The submarket has seen two consecutive years of strong positive absorption and falling vacancy rates, according to C&W. The overall vacancy in turn has fallen by 5.3 percentage points during the 24-month period
Investors show continued strong interest in occupied industrial property in the area. Just last month, Bussel Realty Corp. brokered the sale of a 185,000-square-foot multi-tenanted industrial facility in New Brunswick for $4.6 million.
“As a fully-occupied, functional industrial facility, 475 Jersey Avenue was an ideal investment for the buyer who was seeking an equity presence in the lucrative New Jersey industrial market,” said Bussel’s Earl Lapides, who did not disclose the identity of the purchaser.
The weakest market area in recent years has been the Meadowlands, C&W reports. Overall vacancy in the submarket rose dramatically from 2008 to 2010, climbing by 4.9%. Although the area had slightly positive net absorption for the most recent two-year period, the market has absorbed only 6% of the lost during the recession.
Last year, the Meadowlands market was flooded with mid- to large-sized blocks of space, which offset healthy leasing activity. Vacancy has fallen only marginally over the past two, dropping only 0.8%.