6D —September 23 - October, 20, 2022 — Fall Preview — M id A tlantic Real Estate Journal
www.marej.com
By Michael F. Schipper, SIOR, The Blau & Berg Company Demand in New Jersey’s Industrial Real Estate Market N ew J ersey C ommercial R eal E state
N
ew Jersey, home to nearly nine mil- lion people, and in
place despite the prospect of greater efficiency in greener pastures. On the tenant side, when faced with limited sup- ply and lease rates greatly exceeding that which may be offered for renewal, the deci- sion to renew prevails. This is a repeat circumstance that drastically reduces the avail- ability of products that other- wise may have been brought to market. Conversely, the purchaser who has exhausted all efforts to acquire, out - priced by business counter- parts and investors alike has been forced to continue with the status quo, often shifting into new space or continuing their existing lease. The seats required for musical chairs have ceased to exist. As the market continues to exhibit signs of robust growth, the question has become whether this continued de- mand growth is truly upon the heels of organic expansion or bolstered by an inherent lack of supply. There are tens of millions of square feet planned or under construction slated for delivery over the next eighteen months. Meanwhile, the economy has exhibited two consistent quarters of negative GDP growth and the Federal Reserve Bank is on a mission to quell inflation by seemingly any means possible. While it is predicted that demand growth will continue in existing fash - ion over the next eighteen months and beyond, the pace of absorption upon delivery of the product underway will be the true determining factor as to whether the demand for industrial real estate in New Jersey is simply the benefac- tor of robust business growth or has been heavily supported by the lack of existing supply. Michael F. Schipper, SIOR is senior executive director with The Blau & Berg Company. MAREJ Ridge Farms Townhomes over Flats offers . . . for outdoor living. These for- sale residences will provide the ability to have simplified living within walking distance of the adjacent neighborhood center, including restaurants and professional services. Drew Romanic, AIA is a principal at The Martin Ar- chitectural Group. MAREJ continued from page 4D
Greatly supported by the rapidity in which e-commerce has taken a more significant stake in retail consumption, New Jersey’s industrial real estate demand has significantly outgrown the existing supply of quality products.
direct prox - imity to one of the most densely pop- ulated cities in the nation has in turn become one of the most attractive in-
industrial real estate demand has significantly outgrown the existing supply of quality prod - ucts. Tenants and prospective owners alike have consistently found themselves in competi- tion for functional space, often losing to the higher bidding prospect, cash deal, or fast- est and easiest transaction without much consideration
by the landlord or seller for much else. This anomaly has tremendously diminished the depth of supply and thus cre- ated a glut of willing and able occupiers in need of space. Naturally, we have seen price appreciation exceed market standards with sev- eral market subsets doubling the value of their industrial
real estate assets or market lease rates within a few short years. Occupiers have been forced to look harder, further, and be more willing to accept the necessity above want, to secure space and continue to operate their businesses efficiently. Often the path of least resistance has become a reluctant decision to stay in
Michael F. Schipper
dustrial real estate markets in the country. Greatly sup- ported by the rapidity in which e-commerce has taken a more significant stake in retail consumption, New Jersey’s
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