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SADDLE BROOK, NJ-According to CB Richard Ellis’ “First Quarter 2009 New Jersey Industrial MarketView” report, despite the downward pressures resulting from poor domestic consumption and weaker international trade-flows during the first quarter of 2009, there exist significant windows of opportunity for entrepreneurial tenants and smaller foreign companies that are looking to lock in longer term leases at lower rates in New Jersey’s industrial market.

“Despite weakening fundamentals, we still remain confident that stability will return to New Jersey’s industrial market due to the strong buying power of private and public companies, particularly smaller foreign companies and entrepreneurial tenants that will be in a position to take advantage of the current market softness by locking in longer term lease rates at a lower cost throughout the state,” says Bill Waxman, senior vice president, CBRE. “In addition, the ports remain a desirable inbound destination for companies, as supply chain cost reductions become a priority and the drop in demand for durable goods continues to impact global manufacturing, which has brought development demand back to New Jersey for new industrial facilities.”

The Northern New Jersey industrial market ended the quarter with an overall leasing activity of 921,766 square feet, with the highest activity reported in the Hudson Waterfront, the Route 46/23/3 Interchange and the Morris Region submarkets, which had a combined total of 527,014 square feet.

The prominent transactions in these areas included Continental Terminals’ 240,255-square-foot lease at 112 Port Jersey Blvd. in Jersey City; Ferguson Enterprises Inc.’s 124,933-square-foot lease at 1 Colony Rd. in Jersey City; and Dr. Pepper/Snapple Group’s 125,366-square-foot lease renewal at 100 Electric Ave. in Secaucus. The two largest sales on record in this region for Q1 were SSP’s purchase of 156,300 square feet of space at 360 South Van Brunt St. in Englewood and 2 Bergen Turnpike LLC’s purchase of 2 Bergen Turnpike in Ridgefield Park.

Posting slightly higher performance numbers than Northern New Jersey, CBRE found that the Central New Jersey industrial market ended the quarter with 1.14 million square feet of leasing activity. Submarkets with the most impressive performance included the Route 287/Exit 10, Exit 8A and Somerset submarkets, which had a combined total of 873,496 square feet of leased space.

Notable leasing transactions in these markets included Cory Furniture’s 432,140-square-foot renewal at 666 Front St. in Elizabeth and Prologis’ 192,829-square-foot lease at 1 Nixon Ln. in Edison, while the most notable sale was Black Rock’s purchase of 583,379 square feet of space at 140 Docks Corner Rd. in South Brunswick.

Asking net lease rates in this quarter stood at $5.90 per square foot, which represented only a $0.26 decrease from the average asking rents posted a year ago, according to the report. In Northern New Jersey, the Route 46/23/3 Interchange submarket experienced the highest lease rate drop, down $0.84, while the Northeast Bergen submarket enjoyed significantly higher asking rent increases, up $1.39 per square foot. Additionally, asking rents in Central New Jersey stayed relatively stable, with the Trenton/295 submarket yielding the highest asking rate increase, up $0.18 per square foot, while the Brunswick/Exit 9A submarket decreased at the close of the first quarter, down $0.66.

“There is no denying that closing deals in today’s industrial markets is more challenging then ever before, but we continue to see and advise our clients on the silver lining that we are witnessing during this unprecedented period of economic decline,” senior vice president Mindy Lissner tells GlobeSt.com. “For example, there are new pricing benchmarks that have been set due to the continuous and precipitous decline in asking rents throughout the duration of 2008 and the beginning of 2009,” she says. “As a result, many more markets are beginning to see longer periods of free rent and increasing tenant improvement dollars which will, in turn, result in lower net effective rents.” Lissner adds that companies are beginning to take advantage of these opportunities by securing long-term leases at attractive rates, which will continue throughout 2009. If all goes well, this will lead to a decrease in vacancy rates as the market starts to return to equilibrium.

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