The real estate demand for warehouse and distribution facilities in northern New Jersey is so strong, even properties once heavily contaminated are now in play. That was among the insights from a panel discussion on the New Jersey Industrial Real Estate Market at the December 9 NJTPA Freight Initiatives Committee meeting.
Morris County Freeholder Kathryn DeFillippo, NJTPA Third Vice Chair and a member of the committee, introduced the panelists, noting that this is NJTPA’s third annual meeting focusing on the topic. She said the “market has been red hot with major new developments continuing to occur.”
William Waxman, Executive Vice President of the real estate firm CBRE, said 2019 was “a great year.” While the demand for space has pushed up leasing rates, users have generally accepted them, he said. The growing number of e-commerce facilities, he said, were involved not only in sales to consumers but handling returns, which can involve 30 percent of items ordered. He said New Jersey remains attractive to companies seeking close access to population centers and for “mid-mile” distribution facilities serving a multi-state region.
While many companies are seeking to “go green,” he said, the trend towards ultra-fast delivery to consumers creates harmful impacts including congestion, pollution and waste “There are other costs we need to think about,” he said adding that the current practices may not be sustainable. His presentation is here
Matt Schlindwein, President of Development and Construction at Greek Development, described his company’s development of 4.1 million square feet of distribution facilities at Tremly Point in Linden. Crucial to the success of the development, he said, was working with the municipality to create a structured payment in lieu of taxes agreement that allowed predictable financing. Some buildings on the site have divisible space to attract diverse tenants. The company has constructed an overpass over a rail line to facilitate access.
One of the attractions of the development — similar to others throughout North Jersey — he said, is that “you can reach one-third of the U.S. population in a day’s drive… and about 10 percent of that population in about an hour.” His presentation is here
Jeff Milanaik, Northeast Region Partner with Bridge Development Partners, said his company was redeveloping the Ingersoll Rand site in Phillipsburg with 4 million square feet of warehousing and distribution space. Reclaiming an industrial site such as this, he said, presents many challenges, not just contamination but technical challenges involving the soil and elevations. Gaining cooperation and confidence of local governments was also crucial.
He said a big attraction of sites in northern New Jersey is access to an available labor force. In economically depressed Phillipsburg, the project offered much needed jobs.
“It’s exciting to be part of something like that” he added. He said his company recognizes that there are great opportunities in redeveloping other “urban infill legacy sites” in New Jersey. His presentation is here
Despite the current strong market, all the panelists agreed that unforeseen developments on Wall Street or elsewhere could derail the progress. The business cycle, they recognized, remains in effect.