People are snapping up new constructions while rental prices and vacancy rates start to climb as New Jersey’s real estate market heats up in the central and northern regions. This is especially true for buildings with solid overhead garage doors that will last for years. A rebounding economy, as well as a residential construction surge in NYC, are responsible for this growth, according to industry experts. They also attribute this situation to businesses that are relocating across the famous Hudson River as well as a push for faster home delivery.
Companies are feeling confident about what’s going on in the real estate market, so they are breaking down the pent up demand these days, according to Clark Machemer, president of New Jersey’s NAIOP chapter – a real estate association in the commercial field. Mr. Machemer is also Rockefeller Group Development Corporation’s vice president.
The average asking rent in the state of New Jersey has increased for the industrial market from $5.68 per square foot to $5.73 for this year’s second quarter, according to Transwestern Transwestern, a commercial real estate firm with offices in Parsippany. Over this same time period, the commercial real estate’s vacancy rate fell to 7.5 down from 8 percent.
New construction is booming in New Jersey, with millions of square feet underway.
Quarterly reports from Bussel Realty Corp., Newmark Grubb Knight Frank, Cushman & Wakefield and other firms show similar trends.
E-commerce, 3PLs (third-party providers of logistics services) as well as grocery and food firms are driving up this demand, according to Matthew Dolly, director of research at Transwestern in New Jersey
Because his current building is just getting redeveloped, Romark Logistics’s president Marc Lebovitz said that he has just signed a new lease for a property of nearly 360,000 square feet.
“We are taking even more space as we are moving out of these premises,” Marc Lebovitz added. He needs additional space because the economy is improving and his customers are keeping even more inventory.
As companies need to move inventory even closer to their customers, this is the situations that drives up demand in New Jersey, according to Alex Previdi, one of the many managing directors working for Transwestern.
“Customers want their iPhones by tomorrow in the event that they break after falling off a desk. So companies are moving their products closer to population centers,” Mr. Prevedi added.
Since demand is so strong, companies are finding hard to find good warehouse space these days in New Jersey, according to the Forsgate Industrial Partners’ director of leasing in Teterboro, Andrew Moss.
Many companies, unable to compete with the booming residential development in New York City, have moved out of NYC, according to Mr. Moss. He also said that the improving economy has something to do with the upward trend in the demand of warehouse space in New Jersey.
Most of the things ending up inside the new buildings in NYC come from New Jersey, Mr. Moss also said. He does not expect this demand to wane in the future anyway. He cannot see the horizon yet, he also said.