NEW BRUNSWICK— Scarcity in virtually all industrial propertyclasses is making tenant concessions shrink and pricing rise, saidmembers of the Industrial Leaders panel at RealShare New Jerseylast week.

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“There is a tremendous push for office property classes whichhas led to lower vacancy rates across markets,” says JordanMetz, vice president of Bussel RealtyCorp. “2013 was a banner year. Everyone was riding thetrain and anticipated that it would continue.”

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July and August, usually regarded as the “doldrums of summer,”were “incredibly busy,” said David Iacobucci,managing director, Woodmont Industrial Partners.“There's disappearing tenant concessions, and tightness we haven'tseen since 2006.”

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According to Marc Petrella, senior managingdirector of Cushman & Wakefield New Jersey,the firm saw 8.7 million square feet of positive absorption in2013, and 5.8 million square feet more so far this year. “There issingle digit vacancy in all of the Turnpike submarkets, with the 8Asubmarket around 6.7% in the second quarter, the best level since2004,” Petrella says. “The market is tight, healthy, and in termsof acquisition, a lot of money is chasing very little product.”

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Despite the market tightness, tenants are still seekingfavorable lease terms and concessions, says WilliamWaxman, executive vice president, CBRE.“Every company wants flexibility, nobody wants to commit anythingtoday,” he says.

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“The one surprise seems to be a disconnect between what userswant and what owners want to give in terms,” saysIacobucci. “That's our biggest challenge. Tenantswant to quote a 3-5 year deal and $7 a foot in concessions.”

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“At the bottom of the market in 2008, 2009, and 2010, strongertenants wanted to go low and long, pushing for 10-15 year terms,”says Petrella. “Now they see upward pressure, sothe guys who didn't want to lock up space for long period are nowlooking at longer deals.”

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Logistics firms are also rethinking the location of theirdistribution centers, panelists said. “The last mile is a hugeissue in logistics these days,” says Waxman. “Themost expensive part of the cost is transportation, that's 62% ofthe cost of running a warehouse. Companies are saying they need tobe where the population is, so PeaPod andAmazon are in Jersey City instead of Carteret, tobe closer to the population.”

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Steve Lubetkin

Steve Lubetkin is the New Jersey and Philadelphia editor for GlobeSt.com. He is currently filling in covering Chicago and Midwest markets until a new permanent editor is named. He previously filled in covering Atlanta. Steve’s journalism background includes print and broadcast reporting for NJ news organizations. His audio and video work for GlobeSt.com has been honored by the Garden State Journalists Association, and he has also been recognized for video by the New Jersey Chapter of the Society of Professional Journalists. He has produced audio podcasts on CRE topics for the NAR Commercial Division and the CCIM Institute. Steve has also served (from August 2017 to March 2018) as national broadcast news correspondent for CEOReport.com, a news website focused on practical advice for senior executives in small- and medium-sized companies. Steve also reports on-camera and covers conferences for NJSpotlight.com, a public policy news coverage website focused on New Jersey government and industry; and for clients of StateBroadcastNews.com, a division of The Lubetkin Media Companies LLC. Steve has been the computer columnist for the Jewish Community Voice of Southern New Jersey, since 1996. Steve is co-author, with Toronto-based podcasting pioneer Donna Papacosta, of the book, The Business of Podcasting: How to Take Your Podcasting Passion from the Personal to the Professional. You can email Steve at [email protected].