Vacancy rates in the northeast remained steady in the second quarter at 6.6 percent despite the ongoing coronavirus pandemic, according to a new CBRE report.
Leasing in the industrial sector decreased at the start of 2020 in comparison to last year, though leasing regained momentum in the second quarter as a result of demand from retailers, logistics providers and e-commerce firms.
Average rents for Class A facilities remain at peak levels in the northeast, particularly in The Meadlowlands in New Jersey and Lehigh Valley in Pennsylvania. The Class A vacancy rate remains highest in Pennsylvania, which increased to 12 percent in the fourth quarter in 2019, dipped to just over 10 percent in the first quarter of 2020 and increased slightly in the second quarter of 2020. New Jersey has seen its vacancy rate in Class A facilities drop steadily since 2018.
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New construction and development has regained momentum in the second quarter with almost 38 million square feet of new development under construction in the second quarter. Numbers for pre-leasing of new development remain strong. Retail properties have also been converted to industrial use in New Jersey and Pennsylvania. The conversion of retail space into industrial properties is an ongoing trend propelled by the coronavirus pandemic, as shoppers reject traditional retail properties by avoiding in-store shopping, instead opting for online shopping. This opens the need for logistics centers and warehouses. Industrial properties had returned about five percent at the end of June, despite still trending down, and total office vacancy increased to 13 percent in the second quarter and businesses and office workers shifted their focus online.
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Pearl Wu
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