SADDLE BROOK, NJ—Higher demand and an increasingly scarce supply of industrial properties in the central and northern part of the state continue to drive activity among Garden State industrials, according to CBRE's latest MarketView analysis of the sector.

Led by multiple large lease transactions, 6.24 million square feet of leasing velocity in the second quarter drove a 21.8 percent increase in velocity over the previous quarter. Especially notable, class A leasing accounted for 51.8 percent of total activity in Q2 2015.

“While class A assets account for only 8.7 percent of the overall New Jersey industrial market, more than half of the leasing activity recorded this quarter involved class A inventory,” says Thomas Monahan, senior vice president, CBRE. “This remarkable statistic supports the trend of industrial occupiers heavily relying on the state's supply of class A space.”

Demand this quarter continued to center around New Jersey's core industrial markets. The Route 287/Exit 10, Carteret/Avenel, Meadowlands and Hudson Waterfront submarkets saw 1.43 million square feet, 1.08 million square feet, 971,000 square feet, and 930,000 square feet of velocity respectively.

In Q2 2015, Amazon became a market-driving tenant in New Jersey as it expanded its total footprint in the state to 3.12 million square feet. The company committed to an additional 1.20 million square feet this quarter between three requirements, including 1.06 million square feet in the Carteret/Avenel submarket. Amazon also is looking for 60,000 square feet to support its two-hour delivery operations in the New York metropolitan area.

“As consumer demand for same day delivery increases, warehouse operations like Amazon will further fuel demand throughout the New Jersey industrial market,” says Scott Belfer, senior vice president, CBRE. “Supply chain logistics and warehouse operations are continually evolving to meet customer expectations and New Jersey's growing stock of Class A inventory will continue to support such needs.”

Additional notable transactions in Q2 2015 included Romark Logistics' commitment to 359,950 square feet in Route 287/Exit 10, FedEx's addition of 315,389 square feet in the Waterfront submarket and YMF's commitment to 200,000 square feet at Exit 8A.

Strong industrial leasing performance drove New Jersey's overall availability rate down from 9.2 percent in Q1 2015 to 8.7 percent—the lowest mark since Q2 2008, resulting in 2.91 million square feet of positive net absorption. The drop in availability represents the biggest quarterly improvement since Q2 2011.

In Q2 2015, four projects totaling 994,276 square feet were delivered to the market and six new projects totaling 879,700 square feet broke ground. Of the 16 projects totaling 3.65 million square feet under construction, 77.9 percent is slated for completion by the end of 2015.