But no one in real estate laughs when you say "Exit 8A." That's because, according to a new report by the Garibaldi Group, Chatham, NJ, the industrial submarket surrounding Exit 8A of the Turnpike now totals a whopping 37 million sf of mostly big box space. The report was prepared by Gerald E. Bower, associate vice president of Garibaldi's Financial Services Group, and William C. Harrison, an analyst for the firm.

The submarket, located roughly halfway between New York and Philadelphia, and encompassing South Brunswick, Dayton and Cranbury, continues to put up some very large numbers. Net absorption, for example, has been almost three million sf a year since 1998. The vacancy rate, which peaked at 13.8% in 1998, is currently about 4%, "which can be attributed to the strong regional market combined with developers' unwillingness to overbuild," according to Bower.

Indeed, most of the big box space being built is coming with tenants in place. For example, the Rockefeller Group nabbed Pearson Books for a 900,000-sf distribution building in Cranbury; Cabot is developing a 928,000-sf distribution center for Volkswagen in Cranbury (VW and Cabot recently held a steel-signing ceremony); and the Sudler Cos. has secured Tommy Hilfiger for a 500,000-sf building.

Other facilities, either through development or acquisition, have been gobbled up by Barnes & Noble, Cooper Tire, GE Appliance and Fleming Foods. In the last two years alone, over eight million sf of industrial space has been leased. Rental rates, according to Bower, are in the $4.50 to $4.75 per sf range for new buildings, and $4.25 to $4.40 for older buildings.

On the sales side, recent deals include Keystone Properties' buy of 813,000 sf and 62 additional acres for $32.3 million. Opus Northeast sold 115 Interstate Blvd. to a local investment group for $27.1 million, or $51.48 per sf at an 8.47% cap rate, the highest ever paid for a property in the market. The new owner promptly leased the building to Fleming Foods.

For land sales, according to the Garibaldi report, the price per acre is in the $150,000 range with a diminishing supply that has sent some developers and users further south along the Turnpike. "The scarcity of land should drive prices higher and encourage redevelopment of older properties," says Bower.

But new construction continues: 17 big box buildings have been built in the last three years, adding an estimated six million sf. Eight more buildings currently under construction will add a similar amount, and a dozen planned construction projects total 8.5 million sf. If everything comes to fruition, the Exit 8A market could total more than 45 million sf by two years from now, according to estimates.