The Wall Street Journal - Tuesday, April 25, 2017
Developers can’t build warehouses fast enough. Industrial tenants absorbed 1.7 million square feet in New Jersey in the first quarter, up about 30% from a year ago, despite an 11.7% increase in rent, according to real-estate services firm JLL, the WSJ’s Keiko Morris reports. The insatiable demand for space is being driven by the needs of e-commerce giants like Amazon.com Inc., which last week announced plans to open three fulfillment centers in New Jersey totaling 2.8 million square feet. Some, including No. 1 industrial real-estate landlord Prologis Inc., predict an increase in speculative construction, where buildings are planned before a tenant is lined up, will cause the market to cool. But JLL noted that in the New York area at least, developers can typically find a tenant well before completing construction on speculative distribution centers. The firm said soaring rents are a “new normal” for industrial tenants. With vacancy rates down to 4%, from 5.9% a year ago, landlords remain firmly in control.