SADDLE BROOK, NJ-There is big news in CBRE’s latest industrial market report: The words “boom” and “construction” are used in the same sentence. Furthermore, the statistics fairly pop and sizzle.
“Overall construction activity in the New Jersey industrial marketplace is up 361% compared to this time last year, as developers look to stay ahead of the increased demand for new product,” says the Saddle Brook-based company in its “New Jersey Industrial MarketView Report.”
It cites four significant projects totaling 1.9 million square feet that are currently being constructed completely on-spec. One of those – IDI’s Middlesex Center 2- had a ground-breaking in the fourth quarter of 2012, when construction increased 59% over the third quarter.
IDI is building a 751,450-square-foot warehouse at the Middlesex Center, at Exit 8A of the New Jersey Turnpike. The building is expected to be complete in July. Another building, the 450,000-square-foot Middlesex Center 3, will also be constructed this year.
“2013 will be characterized by increased demand for new construction, due to a limited supply of large existing class A availabilities, and stabilizing lease rates,” said William Waxman, executive vice-president, CBRE. “Tenants continue to face limited space options, especially those seeking large, class A warehouses, and developers are actively responding to this market scenario with new construction projects.”
Right now, while competition for space is intense, lease rates are heading upwards, according to CBRE. Currently at $5.32 per square foot, the average asking lease rate for New Jersey industrial space increased $0.13 in Q4. Northern New Jersey’s asking rate increased to $6.02 per square foot, while the asking rate in central New Jersey increased to $4.61 per square foot.
Sales volume spiked last year, too, CBRE reports: Last year saw the highest volume of sales in four years, driven mostly by investors. In Q4, investors accounted for 75% of sales activity.