Overall rental rates for the Northern/Central New Jersey industrial/flex market ended the quarter averaging $6.27/sf NNN, a decrease from the previous quarter's rate of $6.37/sf NNN, but stayed the same from last year's rate of $6.27/sf NNN. Average industrial rents posted a decrease from the previous quarter's rate of $5.93/sf NNN ending the quarter at $5.83/sf NNN, and were up minimally from the $5.78/sf of a year ago. Buildings in some areas continue to command much higher rents. Average asking rents in the Meadowlands submarket, for example, currently average $7.15/sf NNN.

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

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

Statistics compiled with the support of The CoStar Group.

Thomas Carragher is senior vice president and branch manager for Studley.