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2022 North America Industrial Big Box Review & Outlook: Southern New Jersey/Eastern Pennsylvania

March 11, 2022 5 Minute Read

The pandemic supercharged demand in the region, which ended 2021 with a supply shortage of large-format buildings driven by historic preleasing activity. The I-78/81 Corridor, Southern New Jersey and Philadelphia all saw increased demand. Year-over-year rent growth of at least 15% to 20% is forecast for 2022.
Jake TerkanianSenior Vice President, CBRE Philadelphia


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More than 8 million people live within 50 miles of the market and 59 million within 250 miles. Population growth of 1.6% is expected over the next five years.

Figure 1: Southern New Jersey/Eastern Pennsylvania Population Analysis

Image of data table and chart

Source: CBRE Location Intelligence.

According to CBRE Labor Analytics, the region’s warehouse labor force of 190,457 is expected to grow by 13.4% by 2030. The average wage for a non-supervisory warehouse worker is $14.97 per hour, which is on par with the national average.

Figure 2: Southern New Jersey/Eastern Pennsylvania Warehouse & Storage Labor Fundamentals

Featured statistics with text and icons

Source: CBRE Labor Analytics.
*Median wage (1 year experience); non-supervisory warehouse material handlers.

Location Incentives

The market encompasses two states, New Jersey and Pennsylvania. New Jersey state incentives can be found on the Northern/Central New Jersey page. Over the past five years, there have been 382 economic incentives deals totaling more than $720 million at an average of $14,678 per new job in the Philadelphia metropolitan area, according to Wavteq.

According to CBRE’s Location Incentives Group, among the top incentive programs offered in Pennsylvania is the Job Creation Tax Credit (JCTC), which provides corporate income tax credits to companies that create at least 25 new jobs or expand existing employment by 25%. The tax credit ranges from $1,000 to $3,000 per employee for each new job created.

Figure 3: Southern New Jersey/Eastern Pennsylvania Top Incentive Programs

Source: CBRE Location Incentives Group.
Note: The extent, if any, of state and local incentive offerings depends on location and scope of the operation.

Logistics Driver

The region is centrally located along the East Coast, with access to three major ports: the Port of New York and New Jersey, the Port of Baltimore and the Port of Philadelphia. Two Class 1 railroads serve the region: Norfolk Southern and CSX. Approximately 100 major interstate interchanges are located within the region. The area has direct access to a number of international airports, making it one of the top air cargo markets in the country. Lehigh Valley International was ranked one of the fastest-growing cargo airports in the U.S. by Airports Council International in 2021.

Approximately 100 major interstate interchanges are located within the region.

Image of interstate freeway loop

Capital Markets

The Southern New Jersey-Eastern Pennsylvania region, in terms of big-box activity, is more intrinsically linked than we have ever witnessed historically from both an occupier and capital perspective. Little new supply in the Northern and Central New Jersey markets has directly influenced tenant migration west and south, making Tier I markets in Pennsylvania, New Jersey and Delaware particularly attractive to investors. Recent rent growth and a positive economic outlook have led to low-3% and sub-3% entry yields on certain core or core+ transactions.
Brad RuppelCBRE Executive Vice President

Figure 4: Cap Rate Comparison

Chart of year over year percentage changes

Source: CBRE Research.

Supply & Demand

With 493 million sq. ft. of total inventory, Southern New Jersey/Eastern Pennsylvania is the second-largest big-box region in North America. Nearly 48 million sq. ft. leased in 2021, leading to a sharp vacancy rate decline to 4.0% from 6.6% in 2020. Rents shot up, with occupiers signing deals at $7.07 per sq. ft. per year, 21% higher than 2020. General retailers and wholesalers dominated activity, with a market share of 41% as a diverse set of companies entered the market to take advantage of the large population.

Low vacancy rates and high rent growth kept developers bullish, with 24.6 million sq. ft. of construction completions and 48.4 million sq. ft. under construction, the second most in North America. Forty-five percent of the product under construction is preleased, diminishing fears of oversupply. All signs point to continued demand in the only remaining market in the Northeast with ample land available to develop big-box facilities.

Figure 5: 2021 Occupier Transaction Marketshare

Multicolored circle chart

Note: Includes new leases and renewals 200,000 sq. ft. and above.
Source: CBRE Research.

Figure 6: Transaction Volume

Bar chart with text and numbers

Note: Includes new leases and renewals 200,000 sq. ft. and above.
Source: CBRE Research.

Figure 7: 2021 Construction Completions vs. Overall Net Absorption

image of bar graph

Source: CBRE Research.

Figure 8: Direct Vacancy Rate by Size Range

Image of bar graph

Source: CBRE Research.

Figure 9: Under Construction & Percentage Preleased

Image of data table

Source: CBRE Research.

Figure 10: Historical First Year Taking Rents (psf/yr)

Note: Includes first year taking rents for leases 200,000 sq. ft. and above.
Source: CBRE Research.

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