New Jersey's industrial market continued to benefit from a shift in consumer buying habits that resulted in a record first half of the year. Leasing activity reached 29.1 million square feet (MSF) at the halfway mark, compared to 19.3 MSF last year and 21.3 MSF during the same period in 2019. Strong demand reduced the availability rate to record lows, which drove the average asking rent to an all-time high.
Class A Space Remains Most Sought-After Property Type
Leasing activity during the second quarter totaled 13.4 MSF and was driven by occupier demand for class A product, as the top nine of the top 10 transactions occurred in class A properties. Demand for Class A product and new construction has been strong this quarter, as supply constraints continued to impact the industrial market. Several transactions completed during the quarter underscored tenant preference for new product. The largest was OmLog’s 607,279 SF lease at 1000 Rand Boulevard in Phillipsburg followed by Dream on Me’s 544,050 SF pre-lease for both proposed buildings at 47 Veronica Avenue in Somerset. After a quiet first quarter, Amazon made its presence felt in the second quarter, signing five new leases totaling 1.2 MSF of class A space, the largest of which was a 400,000 SF pre-lease at 65 Baekland Avenue in Middlesex. At 7.2 MSF, class A leasing accounted for 53.7% of the overall activity, which is notable considering the class A property group accounts for only 20.0% of the total inventory.