New Jersey’s industrial real estate market has emerged as a national leader in the first quarter of 2025, showcasing robust growth in both sales volume and rental rates. According to data from Yardi CommercialEdge, the state recorded a staggering $832 million in industrial property transactions, marking a 60% increase from the $520 million reported in Q1 2024.
Key Highlights:
- Sales Volume Surge: New Jersey topped the nation in total sales volume for industrial space during Q1 2025, surpassing Dallas, which recorded $711 million in transactions.
- High Sales Prices: The state’s industrial properties commanded an average sales price of $256 per square foot, more than double the national average of $126 per square foot.
- Rental Rate Growth: Year-over-year rent growth in New Jersey reached 11.3%, lifting in-place rents to $11.74 per square foot, compared to the national average of $8.44 per square foot.
Factors Driving Growth:
- Strategic Location: Proximity to the Port of New York and New Jersey, one of the busiest ports in the U.S., enhances the state’s appeal for logistics and distribution centers.
- E-commerce Demand: The surge in online shopping has increased the need for last-mile distribution centers, driving demand for industrial space.
- Limited Vacancy: Despite a vacancy rate of 9.6%, which is above the national average of 8.5%, the strong demand continues to support rental rate growth.
Notable Transactions:
- Prologis Acquisition: In one of the largest deals of the quarter, Prologis acquired a 600,000-square-foot warehouse in South Brunswick for $166.8 million, expanding its footprint in the New Jersey market.
Market Outlook:
While the market has experienced a supply boom in recent years, with over 36 million square feet of new industrial space completed between 2022 and 2024, there are signs of moderation. With only 6.2 million square feet currently under construction, the market may see a stabilization in vacancy rates and rental growth as leasing activity picks up.
In conclusion, New Jersey’s industrial real estate market remains a dynamic and attractive sector for investors and developers, driven by strategic location, strong demand, and a resilient economy.
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