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Strong market fundamentals, cheaper financing propel capital markets activity
HASBROUCK HEIGHTS, NJ, July 1, 2013 — New Jersey’s industrial sector saw a flurry of investment sales in the second quarter of 2013, with at least 10 significant transactions recorded. Capital markets activity was particularly strong, as investors were fueled by the state’s desirable industrial market fundamentals and the availability of cheaper financing options.Duke Realty Corp. recorded the most noteworthy purchase of the quarter, acquiring two adjacent Class A warehouse facilities in Cranbury. The 949,580-square-foot portfolio is fully leased long-term to Crate & Barrel. Exeter Property Group purchased the International Trade Center in Mount Olive, a 1.2 million-square-foot portfolio, from JPMorgan Chase & Co. Sitex Group continued to expand its footprint in the Meadowlands, acquiring the fully leased, 287,000-square-foot 200 Riser Road warehouse facility in Little Ferry from Mack-Cali Realty Corp.Duke Realty purchased the portfolio for $75.3 million, representing a cap rate of 6.0 percent, which may indicate that cap rates have begun a descent in Central New Jersey. This is particularly notable as investment sales in the Central New Jersey market had not yet achieved the low cap rates recently recorded in Northern New Jersey, particularly in the Meadowlands submarket.“The good news is the leasing market for high-quality space remains tight along the Turnpike Corridor,” said David Knee, managing director at Jones Lang LaSalle. “However, because there are so few high cube ‘big box’ spaces available, tenant demand for these properties and the lack of demand for lower-quality properties may have contributed to a macro-level lull in leasing volumes. Touring activity has remained brisk for the Class A and Class B spaces available, which means that further tightening and additional construction activity may be forthcoming.”New Jersey’s industrial market posted total net absorption of 279,501 square feet in the second quarter of 2013. The Northern New Jersey submarket recorded 87,515 square feet of negative net absorption, while Central New Jersey recorded 367,016 square feet of net absorption.Industrial development activity will continue to flourish during the summer, with a number of new projects expected to break ground along the Turnpike Corridor. KTR Capital Partners has begun construction on a 1 million-square-foot build-to-suit for Amazon.com in Robbinsville, with completion slated for mid-2014. The facility represents the largest industrial construction project in the state since 2007. IDI completed construction on the 750,000-square-foot Middlesex Center II, 101 Middlesex -more-Boulevard in South Brunswick during the quarter. The warehouse/distribution facility is fully leased to Williams-Sonoma Inc. In addition, The Hampshire Cos. completed construction on a 232,000-square-foot distribution center at 200 Milik Street in Carteret.Other highlights from JLL’s second quarter 2013 industrial market report include:• The overall industrial vacancy rate for Northern and Central New Jersey increased 10 basis points to 8.8 percent this quarter from 8.7 percent in the first quarter of the year. Industrial vacancy rates have fallen 1.2 percent, from 8.9 percent, year-over-year.• The average investor-owned asking rental rate for Northern and Central New Jersey fell 2 percent to $5.27 per square foot this quarter from $5.38 per square foot in the first quarter of the year. Average asking rents have increased 2.1 percent year-over-year.JLL is a leader in the New York tri-state commercial real estate market, with more than 1,600 of the most recognized industry experts offering brokerage, capital markets, property/facilities management, consulting, and project and development services. In 2012, the New York tri-state team completed approximately 23.8 million square feet in lease transactions, arranged capital markets transactions valued at $1.57 billion, managed projects valued at nearly $7.0 billion, and oversaw a property and facilities management portfolio of 102.1 million square feet and an agency leasing portfolio of 76.0 million square feet.
About Jones Lang LaSalleJones Lang LaSalle (NYSE:JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual revenue of $3.9 billion, Jones Lang LaSalle operates in 70 countries from more than 1,000 locations worldwide. On behalf of its clients, the firm provides management and real estate outsourcing services to a property portfolio of 2.6 billion square feet and completed $63 billion in sales, acquisitions and finance transactions in 2012. Its investment management business, LaSalle Investment Management, has $47.7 billion of real estate assets under management. For further information, visit www.jll.com.
George Shea, Mark Faris - Shea Communications