SADDLE BROOK, NJ-Despite a hiccup in improving marketfundamentals within New Jersey’s industrial market for the thirdquarter, which closed with 3.29 million square feet of new leasingactivity across the state, locally based CB Richard Ellis' ThirdQuarter 2010 New Jersey Industrial MarketView report concludes thatnew leasing and renewal velocity will remain on pace to exceed 2009and 2008 totals by 18% and 31%, respectively.

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"The national economy continues to rebound slowly in terms ofjob growth, increased consumer confidence and capital investmentexpenditures, which is illustrated by New Jersey's weakerindustrial market third quarter fundamentals," says WilliamR.Waxman, senior vice president of CBRE. "However, we have seenstable returns throughout the past nine months, in terms of newleases, renewals and sale activity. Ultimately, we remain confidentin the state's industrial marketplace and we project strength inthe fourth quarter and beyond."

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Additionally, the report shows positive signals in the number ofuser sales completed, with 26 transactions occurring in the thirdquarter alone, which amounted to a 34.6% increase from the thirdquarter of 2009. And, a continued upward trend is reported in blendand extend transactions throughout New Jersey, as tenants race tolock in attractive rental rates over the long term for theremainder of the year.

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Furthermore, a seven-cent decline in average net asking rentalrates was reported in New Jersey in the third quarter, down fromlast quarter's $5.45 per square foot to $5.38 per square foot,which represents a 20-year inflation adjusted low and a continueddecrease over 10 consecutive quarters.

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The Central New Jersey marketplace experienced a more severedecline in asking lease rates (nine cents to $4.65 per square foot)compared to properties located in Northern New Jersey (seven centsto $6.27 per square foot). As the gap between the asking rentversus the taking rent continues to narrow, the report predictsthat asking lease rates will bottom out in the near future.

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Average asking sale prices also trended downward in the thirdquarter, with Central New Jersey experiencing a 5.3% declinecompared to properties in Northern New Jersey, which reported justa 1.9% decrease. As average asking prices continue to decline,cash-flush companies are well-positioned to take advantage of theopportunity to own.

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Despite consistent sale and lease velocity, the report alsoreported a significant increase in the overall availability rate,which closed the quarter at 12.2%, or 30 basis points higher thanlast quarter's 11.9%. The negative absorption rate, which remainsin negative territory for the tenth consecutive quarter, was mostnotably impacted by the newly available space of 15 large assets tothe New Jersey marketplace (11 of which were located in Central NewJersey), each totaling more than 100,000 square feet.

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"Construction activity remained flat in the third quarter,with six active projects currently under construction totaling258,800 square feet, two of which are located along Central NewJersey's Route 287/Exit 10 submarket," comments Mindy Lissner,senior vice president of CBRE. "As rental and sale rates continueto decline, the current buyer's market will allow for significantopportunities to arise for investors and user/buyers to continue totake advantage of, which will ultimately lead to an increase inleasing and sales velocity."

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