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May 28 2018

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68 The Journal of Commerce | May 28 2018 JOC Top Importers and Exporters will prompt some port-related companies looking for space to con- sider the Central Jersey area around exits 7 and 8a on the New Jersey Turnpike, about 35 miles southwest of the port, she said. But the high demand for space in that market has pushed the boundary of the market farther south in the last 18 to 24 months, with some companies located as far away as the state's southernmost border, she said. In addition, some companies may consider moving to the Lehigh Valley, 60 to 80 miles west of the port, Lissner said, adding that the Lehigh Valley market tends to at- tract those seeking more than 1 million square feet of space. Mark Shearer, senior vice pres- ident in the New York-New Jersey o‹ce of Prologis, said he expects some companies to conclude that The property, acquired in March by Lincoln Equities Group, is expected to create 1.6 million square feet of space, mainly for port use. About 10 miles away in Linden, New Jersey, a 250-acre site that includes land used in the past by GAF Corp. and DuPont, is ready for development into upward of 3.2 million square feet of ware- house, CBRE said. Not yet on the list is a property for which the Port Authority of New York and New Jersey recently solic- ited proposals: a 53-acre site in the heart of the port in Newark, called Port Newark South Terminal, which the port authority expects to be used for warehouses, or open space purposes, such as vehicle processing. Jules J. Nissim, executive vice president for Cushman & Wakefield, said he foresees no easing of rents or increased vacancy, even with these projects coming online. "With the lack of available space and even less available quality class A space, coupled with demand outpacing supply by at least 3-to-1, I think new development will be easily absorbed and healthy for the mar- ket," he said. JOC email: Twitter: @HughRMorley_JOC paying the higher rent in and around the port is the best option. "Rental costs account for just 5 percent of our customers' overall supply chain costs, while transpor- tation accounts for over 50 percent," he said. "Therefore, customers are willing to pay higher rents if it means they can reduce transpor- tation costs and be closer to major consumer markets." US industrial real estate rates dipped 0.1 percentage point to 5 per- cent in the first quarter compared to 2017, while average rents rose 5.4 percent in the same period, according to a national report by Cushman & Wakefield. Vacancy rates also dipped nation- ally from 5.1 percent in the fourth quarter of 2017 to 5 percent in the first quarter of 2018. The West, at 3.5 percent, and the Northeast, at 4.9 percent, had the lowest vacancy rates in the first quarter. The Midwest vacancy rate was 5.3 percent, and in the South, it was 6 percent, according to the Cushman & Wakefield report. The list of the 14 projects under development, compiled by CBRE, totals more than 12 million square feet. One of the projects is based at a 90-acre waterfront site that is a for- mer US Navy and US Army base, near the GCT Bayonne marine terminal. "Rental costs account for just 5 percent of our customers' overall supply chain costs, while transportation accounts for over 50 percent." $5.00 $5.50 $6.00 $6.50 $7.00 $7.50 $8.00 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Port-area markets Central New Jersey Rents rise for warehousing near NY-NJ port Source: CBRE © 2018 IHS Markit Average rent per square foot 5.4% 5.6% 5.8% 6.0% 6.2% 6.4% 6.6% 6.8% Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Port-area markets Central New Jersey NY-NJ port-area vacancy rates diverge Source: IHS Markit © 2018 IHS Markit Distribution center vacancy

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