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Industrial Report

United States | Northern New Jersey

Report | New Jersey Industrial Outlook - Q1 2011

Summary

Central New Jersey

The Central New Jersey industrial market continued to show significant interest from national and regional tenants and institutional organizations, although net absorption moved back into negative territory. However, several significant transactions occurred during the quarter which could be a bellwether for future market strength. A Phoenix-based I/O Data Center leased an entire 830,000 square-foot facility in the Exit 10 submarket, which will serve as the world’s largest modular data center. A six-building industrial portfolio totaling in excess of 1 million square feet in the Exit 8 submarket was sold to Morgan Stanley Primary Property Fund, a leading institutional investor.  The Central New Jersey Industrial market is expected to improve due to increased tenant activity and the lack of any new speculative construction. Landlords appear to be gaining back their confidence slowly. Current opportunities for tenants to enjoy relatively low occupancy costs may come to a close in coming quarters.

Northern New Jersey

Despite the fact that overall net absorption swung back into negative territory, overall market conditions appear to be stabilizing. After several sluggish quarters of negative absorption, the Meadowlands submarket, the second largest submarket, moved into positive territory, with 857,789 s.f. of absorption. This market strength could foreshadow a healthier outlook for the overall Northern New Jersey Industrial Market in coming quarters. As the Port of Newark continued to grow at a steady pace in global trade volume, the Port submarket -- driven by the distribution and warehousing of imported consumer-related products -- will lead the way in demand and further market improvement. Significant investment interest in industrial properties appears to have emerged in the market. Several substantial sales transactions occurred during Q1 2011, including the sale of a 330,000 s.f, industrial property to a West Coast REIT.

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