Woodbridge, NJ, – Thanks to strong leasing activity across the Northern/Central New Jersey market relative to recent years, NAI DiLeo-Bram & Co. (NAIDB) is reporting market resiliency bolstered by industrial and retail leasing activity as well as rents that are holding steady. Furthermore, new project groundbreakings have ceased across each of these property types, limiting supply-side pressure during the near term.
According to the NAIDB 2024 Spring Market Review, sourced by NAIDB Research, the direct-vacancy rate for industrial and retail is hovering just under 5% (4.9% and 4.8%, respectively). While the office market has seen increased leasing activity during the spring, the area’s negative absorption numbers illustrate that more space is being vacated than leased year-after-year.
“Northern and Central New Jersey’s industrial and retail sectors benefit as a result of the state’s high median incomes, educated workforce and strong consumer-spending numbers,” said NAIDB COO David A. Simon, SIOR.
NAIDB’s Market Review focuses exclusively on Northern and Central New Jersey across the seven counties in which the firm is most active. These include Morris, Essex, Union, Middlesex, Somerset, Mercer and Hunterdon.
In the market report, NAIDB details the following for the industrial, office and retail sectors in Northern and Central New Jersey:
- Industrial: This property category’s fundamentals remain healthy despite a retraction from the explosive pandemic-demand environment and tapering rent-growth fundamentals. Average asking rents were $13.62/SF [as of May 2024]. This is a slight decrease from the average rental rate of $13.72 in 2023, and the first decrease observed in the past 5 years.
- What does this mean?: This may signal the scales are starting to tip in the tenants’ favor.
- Office: This sector has recorded relatively consistent leasing activity throughout Spring, 2024 across the seven counties analyzed by NAIDB. Through May, 438 leases have been signed totaling 2.13M SF. Rent growth continues to be positive with Class A and Class B buildings commanding approximately $27.72/SF and $22.19/SF, respectively. While leasing activity is occurring, net absorption continues to be negative (-656K YTD), with vacated space outpacing leased space – a consistent trend each year starting in 2020.
- What does this mean?: The limited supply of new office projects should curb supply-side risk for some time, giving existing projects time to lease or be repurposed for new uses.
- Retail: Northern / Central New Jersey continues to be a healthy environment for existing retail to thrive and new retail concepts to expand. With approximately 230 new leases being signed across the region between January and May, 2024, the market’s overall asking rents are holding near $21/SF on a NNN basis.
- What does this mean?: Northern / Central New Jersey continue to be a good bet for retailers looking for a six-figure, affluent customer base with disposable income.
Based in Woodbridge, N.J., NAIDB is a member of NAI Global, a leading global commercial real estate advisor with 325+ offices and 5,800 professionals. NAI Global completes in excess of $20B in worldwide commercial real estate transactions annually. Leveraging the powerful support of the NAI Global platform, NAIDB offers a full suite of commercial real estate services backed by the personalized service and knowledge of a local firm with the resources of a global company.