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News release

EAST RUTHERFORD

New Jersey Posts Highest Volume of Positive Net Absorption Since 2001


EAST RUTHERFORD, N.J., January 13, 2017 — Industrial leasing velocity in Northern and Central New Jersey continued at a historic pace, particularly for high-end product, according to JLL. Positive net absorption for the year reached 10.1 million square feet, marking the highest level of positive net absorption the state's industrial market has seen since 2001.

Strong, ongoing demand for Northern and Central New Jersey industrial product pushed overall vacancy rates down to 4.5 percent in the fourth quarter of 2016. During the past 12 months, the state's overall vacancy rate has fallen 200 basis points. 

"New Jersey's primary industrial submarkets have posted swift declines in vacancy rates, fueled by an average of 2.5 million square feet of positive net absorption every quarter of the year," said David Knee, Senior Managing Director at JLL. "During the final quarter of 2016, however, vacancy rates were buoyed by an escalation in speculative deliveries, and only ticked down slightly. With speculative development on the rise, vacancy rates could once again be propped up despite substantial leasing activity."

Large industrial leases — those 500,000 square feet or larger — accounted for more than 6.4 million square feet in leasing activity and positive net absorption in 2016. E-commerce companies and related last-mile operations represented 51.7 percent of big-box space transactions, a trend which is expected to continue through 2017.

With vacancy rates at fresh lows and tenant demand remaining resolute, robust rental rate growth is expected to persist through 2017. During the past year, overall asking rental rates have increased an astonishing 13.6 percent, representing nearly half of the total rental rate growth Northern and Central New Jersey have witnessed during the past five years. The sharp spike in asking rental rates is a result of an imbalance in supply and demand levels, as well as an increase in speculative construction.

Northern and Central New Jersey recorded 6.9 million square feet of new industrial construction at year-end 2016, with 4.2 million square feet being developed on a speculative basis. Central New Jersey remained the focal point of new development, particularly within the Exit 10 and Exit 8A submarkets. The largest of these projects was Clarion's speculative development site on Brickyard Road at Exit 8A. With little developable land remaining in traditional industrial submarkets, developers are beginning to build-out new locations along the Turnpike Corridor. During the fourth quarter, the Exit 8 submarket witnessed more than 900,000 square feet of product breaking ground, making it one of the most active areas for new construction. Once delivered, these new buildings will increase the market's industrial inventory nearly 20.0 percent.

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. JLL is a Fortune 500 company with, as of December 31, 2015, revenue of $6.0 billion and fee revenue of $5.2 billion, more than 280 corporate offices, operations in over 80 countries and a global workforce of more than 70,000. On behalf of its clients, the company 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. As of September 30, 2016, its investment management business, LaSalle Investment Management, has $59.7 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.