U.S. industrial market rents are at an all-time high, inching up to $5.35 per square foot in Q2. Rents continue to escalate. Below are three things to look out for in the coming months.
- E-commerce and logistics and distribution continue to dominate leasing activity in new construction, an indication of a sustained need for a modern “big box” product.
- Rents inched up, reaching $5.35 per square foot – an all-time high. Along with the lowest vacancy levels we have seen, rents are accelerating at a fast pace.
- For the first time in seven years, total net absorption fell behind new deliveries, but this is not necessarily a sign of weakening market conditions.
Northern and Central New Jersey
Demolitions and conversions of industrial product exacerbate already tight market conditions.
- Nearly 18.3 million square feet of industrial product was demolished over the last four years, approximately 3.0 percent of the market’s total inventory, making an already tight industrial market even tighter.
- Robust tenant demand kept leasing steadfast while bringing preleasing rates to new levels.
- Rental rates continued to climb as supply and demand remain out of equilibrium.
With net absorption reaching 3.5 million square feet and a multitude of big-box spaces being leased at the midpoint of the year, the outlook for Northern and Central New Jersey becomes even stronger. However, current supply constraints and strong pre-leasing rates have made it difficult for many tenants to find space in nearly all size ranges. As a result, tenants with leases rolling over in the next 24 months will be forced to start planning earlier in order to ensure they will have enough space when their current leases expire.
Download the full Industrial Outlook report.