Demand for warehouse space in NJ is robust despite rising rental prices
New Jersey’s industrial vacancy rate fell to 3.4% in the third quarter, new report says, and analysts don’t expect demand to ease for at least a year or two .
This, even as the average asking rent for warehouses rose 15.6%, more than six percentage points above a five-year moving average. calculated by Newmark.
“We don’t really see a cap, especially on asking rents, as long as the vacancy rate is this low,” said Colin Hyde, research analyst at Newmark.
According to Hyde, as businesses recover from the COVID-19 pandemic, they are finding that e-commerce is an ever-growing part of their business.
He said even Williams-Sonoma, which has a long history of physical stores, now makes 70% of its sales online and earlier this year leased 1 million square feet of warehouse space near Exit 8A. of the New Jersey Turnpike, in the Monroe-Sud-Brunswick area.
New Jersey is and always has been a major gateway, Hyde said, and so the artery that is the toll highway remains desirable for businesses to find land.
The problem is that land is becoming increasingly scarce, especially in the northern half of the span.
“As you head south on the Turnpike Corridor, I think you see a lot of modern space, the new build that has really been in demand,” Hyde said. “As the developers start to build, these tenants immediately take over everything online. “
Hyde said if available land dries up completely in New Jersey, businesses can go one of two ways: west to Pennsylvania, where rents would be lower, or to the five boroughs of New Jersey. York, to put consumers at their feet.
But for now, supply constraints will only push rents up here.
And that’s fine with most retailers, according to Hyde, citing a “ripple effect” from Amazon, now the state’s largest private sector employer with around 50,000 workers spread across 24 million feet. property squares.
“Other companies are trying to compete with them and reconfigure their supply chains, in order to meet demand,” he said.
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