Future Cities

2022 North America Industrial Big Box Review & Outlook: Northern/Central New Jersey

March 11, 2022 5 Minute Read

Northern/Central New Jersey has the most active seaport on the East Coast. With one of the lowest vacancy rates in the country and dwindling land availability, the region’s big-box leasing activity lags the record-setting demand being seen across North America. Demand is driven by both e-commerce and traditional retail occupiers seeking to place product close to the vast Northeast consumer base. As a result, rents continue to reach record highs.
Jeffrey HipschmanCBRE Senior Managing Director / NE Industrial & Logistics Leader


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The Northern/Central New Jersey market serves the largest population base in the U.S. The region leads North America in population within the 50-, 100- and 250-mile radius areas. Population within 50 miles of the market core is expected to increase by 1.7% over the next five years. The region leads North America in total households within a 50-mile radius of the market core (6.6 million).

Figure 1: Northern/Central New Jersey Population Analysis

Image of data table and chart

Source: CBRE Location Intelligence.

According to CBRE Labor Analytics, the region has 250,778 warehouse workers—the most in North America. This workforce is expected to grow by 2.3% by 2030. Because of robust demand for labor, the average wage for a non-supervisory warehouse worker is $17.00 per hour—14% higher than the national average.

Figure 2: Northern/Central New Jersey Warehouse & Storage Labor Fundamentals

Featured statistics with text and icons

Source: CBRE Labor Analytics.
*Median wage (1 year experience); non-supervisory warehouse material handlers.

Location Incentives

According to CBRE’s Location Incentives Group, the state of New Jersey's new Emerge Program provides state corporate income tax credits for new and retained jobs for up to seven years under the following conditions:

  • Tax credits can be used, sold or transferred for not less than 85% of value. Instead of selling to a third party, a company may sell the credits for 90% of value to the New Jersey Treasury instead.
  • A letter of support from the subject municipality and a public hearing for approval is required.
  • Among additional program requirements, target industries must create at least 25 net new full-time jobs and non-targeted industries must create at least 35 net new full-time jobs. Projects that are in certain qualified areas must retain 500+ full-time jobs and projects in non-qualified areas must retain 1,000+ full-time jobs.

Industrial investment requires that at least $60 per square foot must be spent on new construction, while at least $20 per square foot must be spent on existing warehousing, logistics, industrial or R&D facilities.

Additionally, local governments may have other funding tools for more specialized needs in the form of tax abatement and tax increment financing for selected projects.

Figure 3: Northern/Central New Jersey Top Incentive Programs

Source: CBRE Location Incentives Group.
Note: The extent, if any, of state and local incentive offerings depends on location and scope of the operation.

Logistics Driver

The Port Authority of New York and New Jersey is the busiest seaport on the East Coast and the third most active in the U.S., with the infrastructure to move cargo by air, land, rail and sea. The port has direct access to more than 28 million consumers.

Five airports have direct cargo lines to the port, including John F. Kennedy, Newark Liberty, LaGuardia, New York Stewart and Teterboro. Numerous bridges and tunnels near the port provide access to the tri-state area and beyond.

The Port Authority of New York and New Jersey is the busiest seaport on the East Coast and the third most active in the U.S.

Image of Port Authority of New York and New Jersey

Capital Markets

Northern/Central New Jersey attracts investors from around the world. Historically low vacancy has pushed market rental rates to new highs. Coupled with increasing barriers to entry for development and an extremely limited supply of functional space, this lowered Class A and B cap rates by more than 100 basis points in 2021. Consistently improving market fundamentals allow investors to underwrite aggressive rental rate growth and raise pricing on all industrial assets. Land valuations have doubled over the past year. With a large amount of capital allocated to industrial acquisitions and development in Northern and Central New Jersey, big-box rental rates and land valuations are expected to increase in 2022.
Brian FiumaraCBRE Vice Chair

Figure 4: Cap Rate Comparison

Chart of year over year percentage changes

Source: CBRE National Partners.

Supply & Demand

With 388 million sq. ft. of total inventory, the Northern/Central New Jersey industrial market is the fourth largest in North America. The market’s proximity to the largest population concentration in the U.S. has attracted occupiers for years, and 2021 was no exception with nearly 30 million sq. ft of leasing activity, double the previous year’s total. The market posted a vacancy of 0.8%, the fourth lowest in North America.

3PLs were the most active occupiers in 2021, accounting for 45.1% of total leasing activity—the second-highest 3PL market share in North America. Continued robust demand increased the average first-year taking rent to $11.00 per sq. ft. in 2021, 30% higher than in 2020 and the second-highest rate in North America behind Los Angeles County. As demand for new supply remains strong, redevelopment of obsolete manufacturing and distribution facilities will increase. The lack of available land and continued strong demand should keep vacancy below 1% in 2022.

Figure 5: Share of 2021 Leasing Activity by Occupier Type

Multicolored circle chart

Note: Includes new leases and renewals 200,000 sq. ft. and above.
Source: CBRE Research.

Figure 6: Leasing Activity

Bar chart with text and numbers

Note: Includes new leases and renewals 200,000 sq. ft. and above.
Source: CBRE Research.

Figure 7: 2021 Construction Completions vs. Overall Net Absorption

Image of bar graph

Source: CBRE Research.

Figure 8: Direct Vacancy Rate by Size Range

Image of bar graph

Source: CBRE Research.

Figure 9: Under Construction & Percentage Preleased

Image of data table

Source: CBRE Research.

Figure 10: Historical First Year Taking Rents (psf/yr)

Note: Includes first year taking rents for leases 200,000 sq. ft. and above.
Source: CBRE Research.

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