8B — April 2024 — New Jersey — M id A tlantic Real Estate Journal
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N ew J ersey
CARA announces 2024 sees a huge surge in deliveries of brand-new constructed properties New Jersey’s class A Industrial Real Estate Conundrum!
he industrial real es- tate sector in NJ faces a significant challenge. Many new industrial spaces are slated for completion in 2024, just as tenant prefer- ences shift because of concerns about a slowing economy that potentially complicates the market landscape. Currently, 19.2 million s/f (about half the area of Central Park in NYC) of industrial space are under construction in New Jersey, equivalent to roughly half the size of Cen- tral Park in NYC. 34 “New Class A Type Buildings” are T
properties are at least 200,000 to approximately 1,200,000 s/f. This influx of new space, par- ticularly concentrated in North- ern New Jersey, is expected to impact market dynamics nega- tively. Predictions suggest that the average vacancy rate for industrial spaces could increase to 5.1% in 2024. This would be a notable rise and the first of its kind since 2012. Middlesex County is at the forefront of this new construction wave, with 4.7 million s/f underway, akin to nearly half the total floor
space of the Pentagon . Alarmingly, 90% of this up- coming space has not yet been leased. This added “Brand New” Industrial Real Estate that is now destined for the NJ Market(s) creates tremendous opportunities for tenants and purchasers as the formerly “tight markets” start loosening up the developer’s/landlord’s firm grip on pricing any avail- able space. However, the State of NJ’s industrial real estate develop- ers still have a growing pref- erence for developing larger, mega-sized properties (over 200,000 s/f) — equivalent to about twice the size of a Manhattan city block . These properties, which represent 67% of ongoing construction, have a low pre-lease rate of just 8%. Unless deal velocities pick up, this situation could lead to increased leasing concessions by developers as more “shell buildings” enter the market. Tenant preferences are also evolving, with a noticeable trend towards midsized build- ings, ranging from 50,000 to 150,000 s/f (about half the area of the Lincoln Memorial Reflecting Pool) — compa- rable in size to an NFL football field . This shift is challenging the leasing land- scape for larger spaces, po- tentially leading to long-term vacancies or necessitating a reevaluation of use for these larger, from developers hop- ing to hit the “homerun” with a single-tenant rather than having more capital-extensive multi-tenanted or possibly repurposed developments. Such changes underscore NJ's industrial real estate market's dynamic nature and signal a critical adjustment period for developers and property own- ers until more positive signs of increased demands for space akin to 2020- through the heights of demand for space that went into the 1st quarter of 2023. In the face of NJ's indus- trial real estate evolution, the emergence of new class A spac- es presents an unparalleled opportunity for tenants and buyers to capitalize on more favorable market conditions. Our database provides de- tailed information and speci- fications for each property in NJ's expansive industrial real estate market, encompassing over 900 million s/f. MAREJ
17 Thomas J Rhodes Ind Dr, Hamilton NJ: 117,000 s/f, 8 acres site sold to developer-2022 "Spec Building- Pre-leased"- Completed-2023. Broker: Corporate America Realty & Advisors (CARA).
now under construction or are planned to be delivered in 2024.
These “Brand New Class A Type” single-story Industrial
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