Northeast Industrial Demand Remains Strong As Tenants Seek Resilient Supply Chains
Daunting headlines and economic headwinds aren’t slowing the Northeast industrial market, where leasing activity is on pace for its strongest year since 2021.
That’s according to a new report by JLL, which cited resilient demand from ecommerce users, logistics firms and others seeking quality warehouse space. More than 80 million square feet of active tenant requirements are in the market, the firm found, defying concerns about inflation, conflict in the Middle East and rising freight costs.
As the firm’s Rob Kossar notes, “companies still need resilient supply chains.”
“That’s why we’re seeing occupiers make long-term real estate decisions instead of waiting for perfect economic conditions,” said Kossar, vice chairman and head of JLL’s Northeast industrial region. “Businesses are prioritizing network efficiency, modern facilities and proximity to consumers, and those factors continue to support healthy demand across the Northeast despite the uncertainty.”
With just over 2 billion square feet of inventory, the firm’s Northeast industrial region includes New York, New Jersey, Pennsylvania, Delaware and Connecticut.
“Looking ahead, we expect leasing activity to stay healthy and vacancy to gradually trend lower as we near the year-end, particularly for Class A assets,” he added.
Kossar, who is based in the firm’s East Rutherford office, pointed to “noticeable increase in large leasing requirements from investment-grade tenants.” That includes 19 requirements in New Jersey that are greater than 300,000 square feet, accounting for 14.2 million square feet of current demand, versus 4.2 million square feet a year ago.
Amazon continues to gain parcel market share from legacy carriers, the report also found, while Chinese 3PL and ecommerce companies have leased 22.7 million square feet across the region over the past 2.5 years. What’s more, occupiers are prioritizing newer Class A facilities, driving strong absorption to keep regional vacancy at 5.9 percent for the past 15 months, while spaces of at 900,000 square feet or larger remain in short supply.