6B — December 12 - 18, 2014 — New Jersey — M id A tlantic

Real Estate Journal


N orthern N ew J ersey By Jeffrey Furey and Matthew Dolly, Transwestern New Jersey Exit 8A – Where bigger is still better


he New Jersey Turn- pike Exit 8A submar- ket is

in Northern and Central New Jersey has grown by 83.7 mil-

industrial buildings. In 1995, the rentable building area av- eraged 144,916 s/f. That figure increased to 159,705 by the end of 2000, 203,481 in 2005 and 213,280 by 2010. Currently, the average building size is 216,196 s/f, a 50% increase from 1995. This is due to properties built during the same period averag- ing nearly 400,000 s/f, includ- ing five buildings measuring more than one million s/f, four of which remain fully occupied. In addition to the growth in size, newly constructed proper- ties and renovated buildings also feature higher ceilings,

early suppression fast response (ESFR) fire sprinklers and in- creased trailer and container parking. For example, Ter- reno Realty Corporation re- cently renovated 130 Interstate Blvd. in South Brunswick, expanded it by nearly 200,000 s/f, increased ceiling heights, added trailer and container parking and upgraded the sprinkler systems throughout — all to meet today’s market demands. Strong, Steady Demand Opportunity for Growth Recent leasing activity has reaffirmed the prominence of

the Exit 8A submarket. Long- time occupants include Barnes & Noble, Costco, Volkswagen of America, Home Depot and LG Electronics, while tenants who moved in more recently include Petco, Tory Burch, Hankook Tire and Williams- Sonoma, which moved into a new 1.35-million s/f distribu- tion center in South Brunswick in 2010. Unlike most other areas of New Jersey, the Exit 8A sub- market has experienced funda- mental market shifts. In 1995, the overall vacancy rate was 11.3%, and improved greatly to 5.8% by the end of 2000, spurring the new development between 2000 and 2002. The increase in overall inventory, coupled with the recession during 2001 and continued em- ployment losses for two years following, contributed to an overbuilt market and a peaking vacancy rate of 18.5% in 2003. As the economy strength- ened, the vacancy rate im- proved to 6.8% by the end of 2004, commanding another wave of new construction. Nearly 10 million s/f was de- livered by the time the “Great Recession” hit in 2008, and a reduction in overall demand resulted in another overbuilt market. The market has im- proved since then, and with very limited land available for new construction, the vacancy rate has tightened to a historic low of 5.4%— for the first time in 10 years, less than the aver- ages for Northern and Central New Jersey. Demand persists, as there are three or four one-million-s/f requirements in the market. The New Jersey Turnpike Au- thority has also responded to demand, allocating $2.5 billion to widen the Turnpike from six to 12 lanes in the area between exits 6 and 9. The project began in June 2009 and was finally completed in October 2014. Timing was pretty close to perfect, as Amazon recently opened its one-million s/f mega warehouse at Exit 7A in Rob- binsville. As the leasing dominos begin to fall, developers are moving southbound with hopes that they will capitalize on the new, prime location for warehouse and distribution inNewJersey. JeffreyFurey serves as the managing director andMat- thewDolly is the director of research in Transwestern’s New Jersey office. n

lion s/f since 1995, wi th the Exit 8A subma rke t contributing 30.6 million — or 36.5% — o f t h e growth. More than half of

the nucleus of the state’s i n d u s t r i a l market. How- e v e r , Ex i t 8A wa s n ’ t always the m a s s i v e , 58.4-million s/f distribution center it is today. Total inventory throughout the Exit 8A submarket has more than doubled since 1995. In fact, the industrial market Jeff Furey

Matt Dolly

this new inventory at Exit 8A was constructed between 2000 and 2005. As the size of the Exit 8A market has increased tremen- dously, so has the size of the


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