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By Joshua Burd
Industrial rents near Port Newark-Elizabeth are still rising despite a pullback in leasing, thanks to new development and the continued dominance of the East Coast’s top shipping hub.
Those are among the findings of a report by Cushman & Wakefield, which said that asking rates for warehouse and distribution space in the Port submarket rose to $21.10 per square foot in the first half of 2023, representing a year-over-year jump of nearly 70 percent. At the same time, vacancy in the region climbed by 360 basis points from a year earlier to 4.7 percent, driven by the delivery of new buildings and a pace of leasing that has reverted to pre-pandemic norms.
The trends came as the Port of New York and New Jersey saw its own normalization in the first half, C&W said, noting that volume fell 23.7 percent year over year to 3.74 million twenty-foot equivalent units of cargo. Still, the region continues to be the busiest port of the East Coast and the second-busiest in the nation, with an additional bump expected as retailers prepare for the winter holiday season.
“The Port Region is one of the most mature submarkets in New Jersey and has seen demand for space increase as cargo volumes and ship sizes grow in response to heightened consumer demand,” C&W wrote in the report, which was authored by the firm’s John Obeid and Felix Soto. “The submarket offers tenants a superior location within proximity to the New Jersey ports and the busiest thoroughfares in the State.”
As the researchers noted, the Port submarket saw negative absorption or a net decline in occupied space of 253,554 square feet during the first half of 2023. Cushman said that, similar to the overall market, leasing activity has returned to pre-pandemic norms after demand spiked in 2021, translating to a total of 749,248 square feet at midyear for a drop of 34 percent from the same point in 2022.
Yet tenant demand and asking rent increases in the submarket remain tethered to container activity at the Port of New York and New Jersey, fueling the record asking rent swell of 68.2 percent year over year, the report said. It added that both asking and taking rents have surged briskly over the last 12 months, specifically within centrally located new developments and higher-quality space.
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