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|Industrial leasing in NJ is approaching an inflection point, with leasing velocity slowly improving and rental rates stabilizing. These early indicators of improvement signal a call to action for tenants looking to capitalize on favorable market conditions, CBRE senior managing director Jeff Hipschman tells us.|
|Five quarters of leasing velocity improvement means owners will begin to opportunistically raise asking rents. Others will begin to pull back on free rent and TI packages, resulting in a rise of overall occupancy costs for tenants and improved operating income for owners. How fast will this happen and to what degree? Right now, the average asking rent is at a 20-year low of $5.45/SF (adjusted for inflation), according to CBRE. But Jeff says the real measure is the taking rent, and we're seeing a sharp decrease in the amount owners are willing to discount off asking rents. The current ask-take spread is 15%, down from 25% a quarter ago, he tells us.|
|For the first half of â10, overall leasing velocity (new leases and renewals) totaled 13.5M SF, well below the levels we were seeing in '04 to â06, when the market was averaging 21M to 25M SF. But while leasing activity is down, it's shown improvement over the past six quarters, increasing from 3.7M SF in Q1 '09 to 7.2M SF in Q2 '10, Jeff says. While leasing velocity has improved, overall availability has stabilized at 11.9% as many tenants look to consolidate when they execute new leases and renewals. Recent CBRE deals include Volkswagen's 925k SF renewal at 47 Station Rd. in Cranbury and East Coast Warehouse and Distribution Corp.'s 312k SF renewal and expansion at 150 Industrial Dr. in Jersey City.|