New Jersey is a key market for the industrial sector. While occupancy rates in New Jersey’s industrial sector are down 30 percent to 50 percent from 2007 peaks, according to William Waxman, senior vice president for CB Richard Ellis Group (CBRE), the state has faired very well when compared to the rest of the country.

“Due to New Jersey’s ports, airports, highway, and labor market, it is a strategic location to serve the number one consumer zone in the U.S. This helps insulate the state against severe downturns such as you are seeing in Detroit and Atlanta, for example,” Waxman said.

CBRE’s “Second Quarter 2010 New Jersey Industrial MarketView” report shows that fundamentals throughout the state rebounded in the second quarter of 2010. According to the CBRE report, improved sales activity and steady lease renewals lead the improvement, despite a slight increase in availability.

"Despite improving demand, especially for blocks below 500,000 square feet, the unabated supply of newly available space continues to leave a negative mark on the availability rate and on asking lease rates in key submarkets like the Meadowlands, Route 287/Exit 10 and Exit 8A," said Mindy Lissner, senior vice president for CBRE.

Lissner maintained that the availability rate – which has remained at roughly 11 percent for the last five quarters – coupled with an improving pipeline of new activity suggests that the numbers will improve slowly and steadily in the near future.

After three consecutive quarters at 11.7 percent, the combined new leasing and renewal activity for New Jersey rose 14.7 percent to 7.23 million square feet. Renewals took a larger share of the total than in previous quarters, racking up 3.43 million square feet, nearly matching the 3.8 million square feet of new leases.

In addition, sales activity rose 127 percent over last quarter, climbing to 2.82 million square feet, which represents a major jump from the 400,000 square feet recorded during the second quarter of 2009 and is the highest since the first quarter of 2008.According to the report, most tenants are taking advantage of the current market to lock themselves into favorable lease terms.

Given that the national economy has hit another slowdown in the beginning of the third quarter, there is concern that the state’s industrial market will start to slowdown as well. According to Waxman, it is too early to tell.

“There are some deals in the pipeline, but I believe it will be more of the same,” Waxman said. “Entrepreneurial occupiers are taking advantage of the down markets and opportunities. Many are upgrading from Class C to Class A warehouse space at better rates and many are locking into today’s rates for long terms. Sales are still strong for buyers with cash and not in need of financing.”