JERSEY CITY, NJ−CBRE's Kevin Welsh says, “The word 'historic' gets tired when you are talking about growth in New Jersey's industrial market” over the past 18 months. At NAIOP's national industrial market conference here Thursday, he told the huge crowd that investor interest in Class B property right now is unprecedented, and swelling.

Speaking as a panelist on a panel about “Counter Trends,” the CBRE capital markets expert predicted that this will become a national trend.

“I never would have thought two years ago that people would talk about industrial as the preferred real estate class,” said Welsh at the I.Con: The Industrial Conference that continues today at the Hyatt Regency here. “And Class B is the most preferred of all in this region right now.”

One big reason for this, Welsh said, is that interest rates remain so low that investors have become fervent in the search for higher-yield investments.

“In January , we were all talking about a 10-year Treasury rate of 3% and worried the rates might be going up,” Welsh said. “Guess what, they didn't go up. Last Friday, the 10-year Treasury was 2.44%.”

The New Jersey industrial market saw the strongest growth since 2006 last year, and there were 17 deals for more than 250,000 square feet. Of the deals done last year, 60% were for Class B properties, according to Welsh.

There is also unprecedented growth in rental rates for industrial property at this time in the Garden State, he said. He said that last year the prevailing wisdom was that $7.50 per-square-foot “would not happen” in secondary submarkets such as Carteret and Exit 10 off the New Jersey Turnpike. “Today,” Welsh told the crowd, “I would say that's about market rate.”

“A lot of investors are looking to buy below market-rate and ride this wave to higher yield,” he said.

Welsh also offered that the official definition of Class B property remains mysterious, and only applies within a submarket. Real estate professionals have to know what the “functional” definition is on their turf, he said.

“In The Meadowlnds 18-foot ceiling height is fine,” Welsh said. “At (NJ Turnpike Exit) 8A, 18-foot ceilings are – I don't know – maybe Class F?”