Industrial Submarket Report: Kearny
Ed English, Real Estate Advisor to Industrial Companies
Advisor to CEOs and CFO's of companies that lease or own industrial real estate for their operations
The Kearny Industrial Submarket remains a vital hub within New Jersey’s industrial real estate landscape. Spanning the townships of Kearny, Harrison, and North Arlington, this submarket comprises 15.8 million square feet across 104 buildings. Strategically positioned near Exit 15W of the New Jersey Turnpike, it provides excellent connectivity to key transportation hubs, including Port Newark, Newark Liberty International Airport, and the New York metropolitan area.
What sets Kearny apart is its blend of historical charm and modern functionality. Some properties in this submarket date back to the early 20th century, while others represent cutting-edge developments tailored for logistics and distribution. This diversity allows tenants to choose spaces that align with their operational needs, whether they require traditional warehouses or state-of-the-art facilities with advanced specifications like 36- to 40-foot clear ceiling heights.
The submarket’s proximity to the densely populated Northeastern United States gives tenants access to a vast labor pool and an extensive consumer base. Major occupiers, including Amazon, Keystone Automotive, FedEx, and Lineage Logistics, underscore Kearny’s appeal to industries ranging from e-commerce to cold storage. Recent trends, such as rising vacancy rates and moderating rent growth, suggest that tenants have more leverage in securing favorable lease terms. With a mix of modern developments and strategic location advantages, the Kearny submarket remains a compelling choice for businesses looking to optimize their logistics and distribution operations.
Trends and Forecasts
Recent Deliveries
Kearny saw three major industrial developments delivered in 2024, representing a significant addition to the market:
1)?936 Harrison Avenue, Kearny: This Class A facility offers 211,287 square feet on a 17-acre site. Features include 38-foot clear ceiling heights, 41 tailgate loading docks, 64 trailer stalls, and 251 car parking spaces. Delivered in Q2 2024, the building remains fully available for lease, with divisions down to 82,000 square feet to cater to a broader range of tenants.
2)?100-140 Lincoln Highway, Kearny: This 164,000-square-foot building includes 4,800 square feet of mezzanine office space and features 40-foot clear ceiling heights, 34 loading docks, and 2 drive-in doors. Also delivered in Q2 2024, it remains vacant, with divisions starting at 61,820 square feet.
3)?Porete Meadowlands Logistics Park, North Arlington: Delivered in Q1 2024, this development offers 108,000 square feet, including 5,000 square feet of speculative office space. Fully leased in February of 2024 to Wang Globalnet for a 15-year term, the facility highlights strong tenant interest in modern logistics properties. The starting base rent for this lease is $23.06 per square foot, with occupancy commencing in January 2025.
These recent completions have contributed to a broader inventory of Class A spaces, giving tenants more options to secure high-quality facilities tailored to their needs.
The Kearny Industrial Submarket has experienced notable fluctuations in asking rents over the past five years. In 2019, total market rents averaged $12.46 per square foot, with Class A spaces commanding $14.00. Rents surged in the following years, reaching between $20.23 and $28.00 for total market and Class A properties, respectively, by 2022. This growth was largely driven by increased demand from e-commerce and logistics firms.
However, 2023 marked a shift in rent dynamics. Total market rents peaked at $23.06 before softening to $20.53 in 2024. Projections for year-end 2024 suggest further moderation, with total market rents averaging $19.78 and Class A rents at $25.40. This decline reflects increased availability due to recent deliveries and rising vacancy rates.
For tenants, this trend represents an opportunity to negotiate competitive lease terms in a recalibrating market. With more high-quality spaces available, businesses can secure modern facilities while optimizing operational costs.
Vacancy Rates
Vacancy rates in Kearny have mirrored the fluctuations in rent trends reflecting the balance of supply and demand. In 2019, the total market vacancy rate stood at 4.9%, while Class A properties had a higher rate of 8.1%. By 2022, total market vacancies dropped to a low of 2.0%, with Class A spaces effectively fully occupied.
The tide turned in 2023, as vacancy rates began to rise due to new deliveries and economic pressures. By 2024, total market vacancies reached 8.8%, with Class A properties seeing a dramatic increase to 23.5%. This spike indicates an oversupply of premium spaces, giving tenants a unique advantage in securing favorable deals, especially those with footprints over 100,000 square feet. As landlords adapt their strategies to attract occupiers, tenants can expect more flexible terms and potential concessions, such as months of free rent or reduced escalation clauses.
Investment Sales
The Kearny submarket’s investment landscape has evolved significantly in recent years. Between 2020 and 2022, transaction volumes exceeded $350 million, driven by robust demand for industrial assets. However, the momentum slowed in 2023, with less than $10 million transacted. In 2024, activity showed modest recovery, with under $30 million recorded through Q3.
This slowdown reflects a broader trend in New Jersey, where high borrowing costs and a mismatch in buyer and seller expectations have impacted deal flow. Cap rates in Kearny have adjusted upward with properties that traded at around 6% in 2021 now trading closer to 6.5%.
For tenants, these shifts signal potential opportunities. Rising vacancies and subdued investment activity may lead landlords to prioritize occupancy over aggressive rent growth, creating a tenant-friendly market environment.
The Tenant’s Perspective
The Kearny industrial submarket offers tenants a strategic blend of accessibility, modern infrastructure, and flexibility. Kearny provides seamless connectivity to regional and national markets given its close proximity to the New Jersey Turnpike, Port Newark, and Newark Liberty International Airport, making it an ideal location for logistics and distribution operations.
Rising vacancy rates and moderating rents
Total market vacancies have increased, including a surge in Class A vacancies and market rents have softened to $20.53 per square foot, with more declines projected. This is allowing tenants to explore a broader range of options and negotiate favorable lease terms, including potential concessions such as free rent or tenant improvement allowances.
Looking ahead, tenants should remain proactive in evaluating their space requirements and leveraging market conditions to optimize their real estate strategies. With the Kearny submarket continuing to recalibrate, occupiers have a prime opportunity to position themselves advantageously in one of New Jersey’s key industrial hubs.