INDUSTRIAL PRODUCT EXHIBITS IMPROVING MARKET FUNDAMENTALS AMID PANDEMIC
As the COVID-19 pandemic slowed commercial real estate activity in New Jersey, the industrial market continued its steady momentum of new deals and development projects, outpacing other asset classes during the current environment. Industrial demand has been boosted by e-commerce transactions, creating even more of a shortage of big-box warehouses. Stay-at-home orders have accelerated the shift toward online shopping, a trend that will likely stick and be a permanent part of consumer buying habits. This will eventually increase demand for distribution space, particularly cold storage if online grocery shopping persists. While the growth of e-commerce has driven demand, headwinds remain, particularly for smaller logistics companies that service industries negatively impacted by the pandemic such as leisure, hospitality, and restaurants. New Jersey’s industrial market has seen a significant uptick in new sublease availabilities during 3Q 2020 from such firms, and we anticipate this trend to continue as pandemic related closures persist.