Northern/Central New Jersey Industrial Market Report: Q3 2022
Ed English, Industrial Real Estate Tenant Rep
Advisor to CEOs and CFO's of companies that lease or own industrial real estate for their operations
National and local headwinds may roadblock development
Federal monetary policy has increased the cost of capital, creating a challenging environment for developers seeking construction loans. They are being squeezed by high land costs and inflation that is driving up the cost of material and labor. At the local level, recently introduced state guidelines urge municipalities to revisit ambiguous zoning ordinances to mitigate overbuilding.
Low vacancy rates persist, benefiting owners
Severe land constraints and demand have enabled asking rents to grow 21% YTD. Low vacancy rates played a significant part for owners to offer limited tenant concession packages, i.e free rent, construction allowances, etc.
Demand for modern space remains strong
Occupiers have continually absorbed new supply, often pre-leasing during construction. This led to nearly 97% of existing high-quality space being unavailable as occupiers?continued to acquire modern, class A development projects (40' ceilings, cross-docking, higher dock to SF ratios, sustainable buildings) to satisfy space requirements.