New Jersey’s industrial real estate market has hit a golden age. Rents are now rising at an unprecedented rate, which makes investors eager for properties. Read on to learn more about this new demand for industrial space.
Top Industrial Market
Like many other top industrial markets, New Jersey’s vacancy rates have reached record lows. This trend is because demand outweighs supply due to the massive popularity of e-commerce. As a result, the market appears to be entering an age of prosperity for landlords and industrial space developers. It’s also a fantastic time to sell! Capitalization rates, better known as cap rates, have fallen below 3%. This development is an indication of rising values for sellers. Cap rates are the calculation of an owner’s first year of rental income divided by the total purchase price. These rates will most likely continue to compress, since there’s so little available industrial space yet still so many investors.
Investors are willing to pay more for industrial buildings of all types – even older, less functional warehouses. In fact, the average sale price for industrial deals in northern New Jersey rose to $202 per square foot. That’s a 35% increase from 2020. The research also shows that the average cap rate is 5.3%. Buyers can certainly still find value in a seller’s market. Because where you have the strongest upwards rent trends, investors can buy in at a low cap rate. Location is also more important than any other aspect of industrial space. Since investors see the potential, buyers are coming in from all over the country.
If you’re looking to make some industrial real estate deals in the near future, you’ll need a title company that knows this type of transaction very well. Keep Innovation Title in mind for all your real estate transaction needs.