Overall rental rates for the Northern/Central New Jerseyindustrial/flex market ended the quarter averaging $6.27/sf NNN, adecrease from the previous quarter's rate of $6.37/sf NNN, butstayed the same from last year's rate of $6.27/sf NNN. Averageindustrial rents posted a decrease from the previous quarter's rateof $5.93/sf NNN ending the quarter at $5.83/sf NNN, and were upminimally from the $5.78/sf of a year ago. Buildings in some areascontinue to command much higher rents. Average asking rents in theMeadowlands submarket, for example, currently average $7.15/sfNNN.

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One area that offers moderate rents and a growing inventory ofwarehouse space is Middlesex County. Properties clustered along theturnpike have seen strong leasing activity of late. MiddlesexCounty closed the quarter with an average asking rent of $5.69/sfNNN. The region's largest project currently underway is located inPerth Amboy in Middlesex County. 105 Amboy Avenue (Building One),scheduled to deliver in the next few months, is a 614,500 sf classB industrial warehouse building in Morris Companies' AmboyCorporate Center. US Foodservice has pre-leased nearly 500,000 sfin the building. Twenty buildings totaling 5,800,842 square feetwere delivered to the overall market during the last two quartersleaving 2,927,015 square feet currently under construction. Thelargest completed project was Industrial Ave. at Salt MeadowRd.-Building A, a 1,064,515-sf class A industrial warehousebuilding that was delivered in October 2007. The building iscurrently 0.0% leased leaving all 1,064,515 sf available. This timelast year there was 7 million square feet under construction.

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Owner-user sales accounted for much of the recent sales activityas firms try to consolidate locations. Driscoll Foods acquired 174Delawanna Avenue, a 217,139 sf industrial warehouse, for $28.0million, or $129 psf. Closing in February was 365 S RandolphvilleRd a 264,792 sf flex building which Digital Reality Trust purchasedfor $20.4 million ($77 psf). Cap Rates for industrial propertieswithin the Northern New Jersey area are currently averaging 6.7%with a low of 5.9% to a high of 7.5%.

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Statistics compiled with the support of The CoStarGroup.

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Thomas Carragher is senior vice president andbranch manager for Studley.

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