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News release

EAST RUTHERFORD, NJ

New Jersey Industrial Leasing Activity Leads to More Speculative Development

Intensifying Class A leasing activity encourages greater speculative development around the state


EAST RUTHERFORD, N.J., April 12, 2016 — Industrial leasing activity in Northern and Central New Jersey in the first quarter of 2016 remained significantly above historic levels, particularly in the Class A segment of the market, according to JLL. As a result of sustained demand for state-of-the-art industrial space, developers looked to build new facilities to meet demand. At the end of the first quarter more than 2.9 million square feet of space was under construction, a year-over-year increase of 25.8 percent.

Continued strong demand for high-quality industrial assets in Northern and Central New Jersey pushed overall vacancy rates down to 5.9 percent in the first quarter of 2016. Large industrial transactions include Fabuwood Cabinetry Corp.’s signing of 706,083 square feet in Newark and FedEx SmartPost’s deal for 695,000 square feet at 25-53 Talmadge Road in Edison.

“With vacancy rates dropping below 6.0 percent, landlord optimism has reached new heights,” said David Knee, senior managing director at JLL. “Year-over-year growth in rents reached double digits during the past year as fundamentals tilted to landlord-favorable conditions. With absorption set for another tremendous year, asking rental rate growth is expected to accelerate. However, a wave of new speculative construction may offer some relief to tenants that would otherwise have limited space options.”

As a result of record-setting Class A big-box leasing activity, the outlook for absorption in both Northern and Central New Jersey remains positive. At the current pace, the market may challenge the high-water mark for absorption set in 2014. The state’s industrial sector recorded nearly 1.4 million square feet of positive net absorption in the first quarter of 2016, a year-over-year increase of 12.5 percent from 1.2 million square feet.

Developers throughout New Jersey continued to break ground on speculative projects to meet the burgeoning demand for industrial space. Bridge Development Partners broke ground on another speculative project in the first quarter of 2016. The developer expects to deliver the 487,240-square-foot facility in South Brunswick before the end of the year. River Terminal Development also began construction of a 189,000-square-foot speculative project within the Port submarket, where vacancy rates have declined by 260 basis points during the past 24 months.

For more news, videos and research resources from JLL, please visit the firm's U.S. media center Web page. Bookmark it here: http://bit.ly/18P2tkv.

JLL is a leader in the Northern/Central New Jersey commercial real estate market, with more than 1,000 professionals and support staff providing agency leasing and property marketing, tenant representation, industrial services, strategic consulting, occupancy planning, workplace strategies, project and development services, property and facility management, and investment sales/capital markets services to New Jersey's leading corporate tenants, investors and landlords. The firm, which assists clients from three full-service offices in Parsippany, Iselin (Metropark) and East Rutherford, also acts as a local service provider for JLL’s global and national corporate clients in need of real estate assistance in New Jersey. JLL’s New Jersey operations were honored by NJBiz magazine as one of its 2015 Best Places to Work in New Jersey.

About JLL
JLL (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. A Fortune 500 company with annual fee revenue of $5.2 billion and gross revenue of $6.0 billion, JLL has more than 230 corporate offices, operates in more than 80 countries and has a global workforce of more than 60,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 4.0 billion square feet, or 372 million square meters, and completed $138 billion in sales, acquisitions and finance transactions in 2015. Its investment management business, LaSalle Investment Management, has $56.4 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.