Rob Kossar, vice chairman and head of JLL’s Northeast Industrial Region, doesn’t hold back when discussing the state of industrial real estate in New Jersey and the area.
“We’re at a high-water mark in rents in every major market — and it’s a significant increase in rent, year-over-year, and has been for the past few years,” he said. “It’s just remarkable.”
Kossar, discussing the recent release of JLL’s Northeast Industrial Outlook for the second quarter of 2021, said the numbers are the result of a basic economic principle.
“It’s driven by the imbalance of supply and demand,” he said. “It’s not like the developers aren’t desperately trying to provide space. They are. And there’s a lot of amazing development projects throughout the region, and a lot more than we’ve ever had before.
“But there’s so much more demand than there is space.” We’ve never had an imbalance like this; we’ve never had a vacancy rate this low. And that’s driving all the rent growth.”
According to JLL, the asking rent rate in North Jersey is $12.06 and the asking rent rate in Central Jersey is $9.84. In South Jersey, it’s up to $7.93. And this all comes at a time when vacancy is between 1%-4%.
The report said JLL is recording 26.3 million square feet of active requirements statewide, up from 25.5 million square feet at the end of Q1. This demand is why JLL is projecting that 2021 will surpass 2020 as the market’s strongest year of leasing in history.
“With Class A vacancy at record lows and incredibly resilient preleasing rates, developers are in the driver’s seat when it comes to lease negotiations,” the report said. “Thus, tenants looking for Class A product should be prepared to act quickly and pay high-water-mark rents in order to secure new construction availabilities.”