24A — April 2025 — Southern New Jersey — M id A tlantic Real Estate Journal
www.marej.com
S outhern N ew J ersey By Scott Mertz, SIOR, NAI Mertz Bricks, steel, and staying power: The resilience of industrial real estate in South Jersey
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there is still healthy demand in the market and at activity level consistent with historical standards for the region, albeit abated from the heights of the warehousing boom at the start of the decade. The industrial vacancy rate in Southern New Jersey has been creeping up since the tail end of the pandemic and has now hit double digits at 10.6%. But a good portion of that va- cancy can be attributed to the record number of big box facili- ties that were delivered to mar- ket over the past three years. Where previously these large class A facilities were finding tenants during construction or immediately upon delivery to market, the leasing of these building is taking longer pe- riods and more creativity and flexibility on the part of owners. Landlords are becoming more flexible, subdividing larger
spaces to cater to users seeking spaces in the 100,000 s/f range, and more creative in their leas- ing proposals, offering free rent and other tenant improvement allowances and creative expan- sion structures to continue to capture peak lease rates. As you would expect, large scale development has cooled given the softening of demand. There are still several projects un- der construction that will be delivering this year that may sit vacant for a period if the prevailing economic conditions persist for the remainder of the year. One bright spot for industrial assets has been the perfor- mance of shallow bay ware- housing. These spaces, typi- cally ranging from 15,000 to 50,000 s/f, can be critical for last-mile logistics operators, while also drawing demand from smaller firms that are
nterest rates, inflation and now international in- trigue, in the form of tar-
more locally focused, such as contractors and service providers. These properties have attracted the attention of investors as their multi- tenant composition and regular turnover allow landlords to bring rents in line with current market rates, which remains at an all-time high in South Jer- sey. Because of that value-add potential, variety of product available for acquisition in the shallow bay arena can be limited and competition among buyers intense. Value-add opportunities are central to investors’ strategies in the region at the moment. Both the softened demand and rise in construction costs have led to a pause in new develop- ment and instead shifted focus to renovating older existing industrial product or even converting office or flex build - ings to distribution use. While
capital expenditures are still required for redevelopment ef- forts, they are lower than new construction and that has prov- en more amenable to obtain fi - nancing and ultimately provide more profitable returns. With its strong fundamen- tals and a centralized location in the Northeast corridor, Southern New Jersey is liter- ally in a good place to weather any downward turn in the national or global economy, whether subtle or seismic. The market adapts well to shifts in demand as evidenced by the surge of construction to meet the demand for big box product followed by the rise of shallow bay leasing. Southern New Jersey remains on the radar of tenants and investors as even in periods of uncertainty, deals continue to get done. Scott Mertz, SIOR is presi- dent of NAI Mertz. MAREJ
iffs and trade conflicts are leading to continued uncertainty in commer- cial real es- tate. In a year that was hoped to
Scott Mertz
bring encouraging develop- ments in the macroeconomic factors impacting CRE, we still have more questions than an- swers. That’s kept all players in the market, whether inves- tors, developers, or occupiers, largely on the sidelines waiting for more favorable conditions to address their requirements. Despite that, deals do con- tinue to get done in Southern New Jersey. Looking at the industrial sector specifically,
Klear and Brennan broker leases for the last four remaining units in Cherry Hill, NJ NAI Mertz completes 30,000 s/f lease, bringing Velocity’s Rockhill Industrial Park to full occupancy
led to a swift lease up. Velocity founding partner, Tony Grelli , shared “the
CHERRY HILL, NJ — NAI Mertz , a leading full-service commercial real estate firm
small bay industrial market in our region is alive and well, and we are thrilled to welcome these new tenants to
conducting bu s i n e s s throughout the United States, and globally, from its re- gional offices in New Jer- sey, greater
Jonathan Klear
Ryan Brennan
the Velocity family. Virtu- ally no one is building new product for users in the five to fifty thousand square foot range, and we look forward to continuing to capitalize on this supply-demand imbalance to provide much needed offerings to today’s industrial tenants. Thank you to Jon and Ryan for the hard work in executing our vision at Rockhill.” “Velocity’s construction and asset management teams gave us all the tools we needed to quickly lease this park to a mix of new users. A highlight to our success was a long-term deal with a signage manu- facturer, who chose Rockhill Industrial Park as their east coast headquarters,” added NAI Mertz’s Jon Klear. About NAI Mertz Founded in 1980, NAI Mertz
Philadelphia and northeast- ern Pennsylvania, recently completed a total of approxi- mately 30,000 s/f of leases at Rockhill Industrial Park in Cherry Hill. Listing agents Jonathan Klear , senior vice president, and Ryan Bren- nan , sales associate, complet- ed leases recently for the last four remaining units to bring the 97,000 s/f, eight-building industrial park to 100% occu- pancy for ownership, Velocity Venture Partners . Velocity revitalized the com- plex through a multi-million- dollar campaign to modernize its industrial functionality and deliver turn-key fit outs to new tenants. The site’s location directly on Rte. 70, just yards away from I-295 and the New Jersey Tpke., in conjunction with the renovation campaign,
Rockhill Industrial Park
is a leading full-service com- mercial real estate firm con - ducting business throughout the United States, and glob- ally, from its regional offices in New Jersey, greater Philadel- phia and northeastern Penn- sylvania. The company pro- vides expert services in bro- kerage, leasing, sales, invest- ments, property management, site selection and construction management in the industrial, office and retail sectors. NAI Mertz’s clients include For- tune 500 companies, financial
institutions, private investors, large public corporations and small businesses. Its partner- ship with NAI Global, a top 5 commercial real estate brand, enables the firm to provide large-scale global real estate services. NAI Mertz has been recognized as an Office of the Year for NAI Global selected from a pool of 375 NAI of- fices. NAI Global comprises more than 6,000 commercial real estate professionals and manages over 1.15 billion ss/f of space.
About Velocity Velocity has acquired nearly 10 million s/f of in- dustrial and conversion- to-industrial assets across the Northeast Region of the United States. Their port- folio currently comprises 8 million s/f across more than 100 buildings, where they cater to tenants “priced or sized out” of the class A market. Velocity’s current roster includes 400 busi- nesses ranging from 500 to 300,000 s/f. MAREJ
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