Investment properties in New Jersey, especially industrial properties, have shown resilient performance amid the COVID-19 pandemic. The rapid growth of e-commerce and online consumption has driven up the demand for warehouses and logistics centers in major metro areas of New Jersey like Northern/Central NJ and NJ I-78/81 Corridor. Rental rates went up while vacancy rates dropped across all property types. Investors worldwide are paying more attention to commercial real estate in New Jersey given the robust industrial market fundamentals.
New Jersey’s Industrial Market Performed Strongly in 2020 Despite the Pandemic
The industrial property sector outperformed all other commercial real estate sectors in New Jersey in 2020. According to Cushman & Wakefield, the total leasing volume in New Jersey’s industrial property market reached 417 million square feet in 2020, increasing by 26.9% year-over-year. The robust leasing activities led to record-high net absorption of over 270 million square feet. At the same time, asking rents increased by 0.27 dollars per square foot to $7.66, while vacancy rate dropped to 5.4%.
E-Commerce Drove Up the Demand for Warehouses and Logistics Centers
The rapid emergence of e-commerce is the main driver behind the strong demand for industrial properties, especially warehouses and distribution centers leased to major e-commerce companies like Amazon and Walmart. These companies continued their aggressive expansion during the pandemic to meet the surging online purchase demand. They either built new facilities or leased existing warehouses close to metropolitan areas to achieve faster delivery.
Market Fundamentals Remain Strong Heading into 2021
According to commercial real estate services firm CBRE, market fundamentals will likely remain strong for industrial real estate in 2021. Net absorption is expected to once again top 200 million square feet. Although new construction will continue adding to inventory, it is still not likely to satisfy the market given the magnitude of demand. As such, market rents will continue to climb while vacancy rates decline across most metro markets in New Jersey.
In summary, investment properties, especially industrial properties, represent robust opportunities in New Jersey real estate market. The accelerating growth of e-commerce and resilient market fundamentals point to strong capital appreciation potential and stable cash flow. Investors worldwide have been flocking into New Jersey’s industrial properties.