THIRD QUARTER 2011

A Note from Jason Crimmins, CCIM, SIOR, Executive Vice President

The New Jersey industrial market overall continues to recover. Activity has slowed but the market continues to show growth and is moving in a positive direction. The dawdling activity is due partly to the uncertainty with the debt crisis in Congress, instability in the European markets and lackluster shipping industry. Large acquisitions from pension funds and REITS have assisted the investment activity albeit at a slower pace than the first two quarters of the year. The pressure on the US equity market persists as the uneasiness of ongoing euro zone debt crisis is being met with resurfacing global economic concerns, courtesy of disappointing manufacturing data out of China and Europe, however, the US dollar is gaining ground. According to the US Department of Labor and Workforce, in October, the private sector job gains were posted in five of ten industry sectors. Industries that recorded significant gains included other services (+2,900), educational and health services (+2,600), and manufacturing (+1,500).

Market absorption overall was positive but mixed throughout the submarkets. The Port area remains one of the more stable submarkets. According to the Port Authority of New York and New Jersey, an increase occurred in its import volume by 3.4% from July and export volume fell 1.5% compared to the same month a year ago. Railroads continue their investment in infrastructure to transport more freight loaded deliveries to its inland ports.

There remains quite a few large blocks of space (big box Distribution Centers) available in the marketplace which provide for a Tenants’ market. However, rents will start to stabilize and increase as these blocks are gradually absorbed throughout the NJTP corridor. It is quite possible that we could wake up one morning in the second or third quarter of 2012 wondering where all the existing space has gone, listening to announcements of new construction projects (speculative and build to suit) sprouting forth.

Q3 Market Trends:

• National unemployment rate is at 9%
• New Jersey’s unemployment rate is at 9.1%
• Average Cap Rate range from 7.5% to 8.5%
• Buyers with no financing contingencies remain at an advantage
• The flight to quality trend continues
• Free rent within landlord concessions remains common
• Average asking rates continue to decline but are steadying the course

3rd Quarter Industrial Availability Rate: New Jersey vs. National

3rd Quarter Top Industrial Sales

3rd Quarter Top Projects Under Construction

3rd Quarter Top Industrial Leases