Real Estate Journal — New Jersey — November 14 - 27, 2014 — 7B
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C entral N ew J ersey Quarter closes with 6.8 msf of leasing; space users, investors seek class A properties Colliers NJ Q3 industrial report: Increased demand absorbs new construction properties
ARSIPPANY, NJ — The Northern and CNJ industrial markets con- tinued their positive move- ment in the third quarter of 2014 even as new space contin- ues to come online and second generation space is returned to the market, according to new research from Colliers International . The Port Authority of New York and New Jersey contin- ues to upgrade various facili- ties on both sides of the Hud- son River, bolstering the local industrial market in the short term, with likely longer-term benefits linked to the widening of the Panama Canal starting in 2015. The third quarter registered 6.8 million s/f of industrial leasing activity, up 48.9% from 4.5 million s/f in the second quarter, and up 31.4% from 5.1 million s/f the year prior. Despite this strong activity, the overall availability rate for Northern and CNJ re- mained at 12.2% for the second straight quarter, as nine new properties were delivered this quarter, adding more than 2.1 million s/f of vacant space to the market. The average asking rent for Northern and CNJ continued to rise, closing the third quar- ter at $6.30/s/f, up from $6.19/ s/f in the second quarter and $5.95/sf from the prior year. Most notably, CNJ matched its 2007 peak asking rent, of $6.16/sf, up from $5.93/sf in the second quarter and $5.53/ sf the year prior. Meanwhile, average third quarter asking rents in Northern New Jersey were $6.43/sf, up just a tick from $6.41/sf and $6.33/sf in the second quarter and year- over-year, respectively. Most of the activity was focused in CNJ, driven by the large number of users seeking new class A facilities typi- cally found in the tpke. corridor market, while extensions and renewals drove activity in the northern part of the State. In the largest industrial transac- tion so far this year in North- ern and CNJ, Veeco renewed its lease at 6801 West Side Ave. in Secaucus, occupying the entire 667,882 s/f building. Other notable third quarter in- dustrial leases included Wake- fern’s 419,500 s/f renewal at 60 Tower Rd. in South Brunswick; Promotion in Motion’s 324,337 s/f lease at 1 Heller Park Ln. in Somerset; and Occidental P
Chemical’s 310,000 s/f at 760 Jersey Ave. in NewBrunswick. Construction activity re- mained strong in the third quarter, with 13 properties underway totaling in excess of 4 million s/f , 3.3 million s/f of which is being built on spec., all in CNJ. While this level of activity may raise concerns over vacancy in the coming quarters, two major space us- ers have already signed leases in these under-construction properties: Dawn Foods leased 130,681 s/f at 30 Knox Dr. in Piscataway, and Amazon leased 391,650 s/f at 275 Omar
Ave. in Avenel. The third quarter also saw an increase in second genera- tion space hitting the market as users moved into new facilities. New third quarter availabilities include: 345,880 s/f at the former Farmland Dairy site at 520 Main Ave. in Wallington; 167,032 s/f at 20 Tower Rd. in South Bruns- wick after Preferred Freezer announced its 190,000 s/f build-to-suit at 275 Blair Rd. in Woodbridge; and 124,933 s/f at 1 Colony Rd. in Jersey City after Fergusen Supply announced that it will be
moving into the newly rede- veloped former Panasonic site in Secaucus. The sales market had anoth- er robust quarter in Northern and CNJ, with $247 million in total activity. In the largest industrial property this quar- ter, Pure Industrial Real Es- tate Trust purchased Scannell Properties’ FedEx Portfolio at 5 Commerce Dr. in Barrington and 1 Commerce Center Dr. in Dover for $67.8 million, or $184.16/s/f. This sales price tripled the $66.77/s/f average asking price for industrial properties in
Northern and CNJ, up from $63.83/s/f the year prior. Also, with land for industrial devel- opment being scarce, coupled with heavy investment activ- ity in the class A industrial market, many investors need to look to class B product with the intention of rehabbing those properties. Additional highlights from Colliers International’s 2014 Q3 New Jersey market analysis: • The overall industrial avail- ability rate in CNJ was 12.9%, up from 12.5% in the second quarter, but down from 13.3% year-over-year . n
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