Port Trends to Watch
The Port of New York and New Jersey (PNYNJ) has consistently been the busiest port on the East Coast, serving as a key gateway. With six container terminals and multiple cargo rail lines, the PNYNJ services one of the world’s wealthiest and most dense consumer base. The Port has the largest 250-mile radius population of any port in North America, with over 60 million people making up one-third of the country's GDP.
From January to June 2024, the Port handled 4.2 million TEUs, reflecting a 12.6% increase compared to the same period in 2023. This growth is attributed to resilient consumer demand, increased imports, and ongoing infrastructure improvements that have enhanced the Port's capacity to handle larger cargo ships. Looking ahead, the Port is expected to display a modest uptick in TEU volumes in the second half of 2024, as retailers prepare for the holiday season. However, the overall growth may be tempered by challenges in labor negotiations, which may trigger a strike by the East Coast International Longshoremen’s Association, posing a risk to the continuity of supply chain operations.
The Port Region Warehouse/Distribution Market
The PNYNJ, serves one of the most concentrated and affluent consumer markets in the world. The Port Region is one of New Jersey's most established submarkets, where demand for space has surged due to the growth in cargo volumes and larger ship sizes, driven by increased consumer demand. The submarket offers tenants a superior location within proximity to the New Jersey ports and the busiest thoroughfares in the State.
The vacancy rate in the Port Region rose by 320 basis points year-over-year (YOY) to 7.8%, largely due to the delivery of new, unoccupied developments. A notable new vacancy was the 490,428-square-foot (-sf) project at 1075 Secaucus Road in Jersey City. Additional vacant space added in the second quarter included 7 Slater Drive in Elizabeth, and a sublease at 414-434 Avenue P in Newark, each totaling 130,000 square feet (sf). Persistent occupancy losses continued for the sixth consecutive quarter, with year-to-date 2024 net absorption totaling negative 794,456 sf. This shift marks a stark contrast to 2022, when the Port Region recorded 2.0 million square feet of positive net absorption.
Despite these challenges, leasing activity in the second quarter exceeded the two-year quarterly average of 476,220 sf by 34.7%, totaling 641,680 sf. Key transactions included Veritiv's 226,169-sf lease at 675 Main Street in Belleville and K-1 Logistics’ 117,087-sf lease at 1 Slater Drive in Elizabeth. The average asking rent remained above $20.00 per square foot (psf) but decreased by 4.8% YOY to $20.40 psf. Similarly, taking rents fell by 14.0% from the previous year to $20.02 psf, due to the shortage of Class A lease transactions.
