NJ Warehouse Market at Historic Levels
The growth of online shopping, which is stretching package delivery systems across the U.S., is sparking a frenzy in New Jersey’s commercial real-estate market.
Despite a feverish pace of construction in recent years, tight inventories and surging demand are driving rents for New Jersey warehouse space to new highs, according to a report from CBRE Group Inc.
By the third quarter of this year, developers added about 7.8 million square feet of space, 83% more than in all of last year, according to CBRE. By the end of 2017, new industrial space completed is expected to reach 11.2 million square feet, more than twice the amount built in 2016 statewide.
Rents have been on an upward march since 2012, surpassing a 2004 high of $6.23 a square foot last year and reaching $6.64 in the third quarter of 2017.
The demand for space isn’t expected to let up anytime soon, real-estate brokers and consultants said, and so rents could keep rising.
Demand for New Jersey Warehouse Space Skyrockets
Behind the growing demand, in addition to online shopping and the drive for faster deliveries, is the ability of larger ships to get to local ports, expansion of food and beverage delivery, and displaced warehouse tenants from New York, said Bill Waxman, an executive vice president at CBRE.
“It has been nonstop,” he said of businesses’ hunt for space. “From paper companies to packaging companies to internet sellers, brick-and-mortar sellers…everybody is looking at their supply chain. New Jersey is unique in its location and ability to service a huge consumer zone.”
New Jersey’s real-estate market is being swept up in a sea change that is reshaping the U.S. retail sector as online shopping gains ground. Department-store chains and clothing retailers have been among the most prominent casualties, shuttering thousands of store locations across the U.S. in recent years, leading mall landlords to scramble for new tenants.