M id A tlantic Real Estate Journal — September 2023 — 3D M id A tlantic Real Estate Journal — Fall Preview — September 2023 — 3D
www.marej.com
N ew J ersey B roker
sers of industrial space in Northern and Central New Jersey By Adam Tannenbaum, The Blau & Berg Company Overcoming challenges in Northern and Central New Jersey’s industrial space market U
across New Jersey once wel- comed industrial property development as a harbinger of job growth and tax revenue, the scenic blight, pressure on the power grid, and increased truck traffic have created such a backlash among residents of over eighty townships that the Department of State has issued guidelines to help towns regulate or prohibit new ware- houses. In Jersey City, the Council is moving to void a 20-year tax exemption with the landlord of an Amazon-tenant- ed last-mile delivery station at 79 Thomas McGovern Drive,
citing a failure to commit to agreed-upon goals of hiring local and minority workers. Two years ago, the explosion of e-commerce demand at the height of the pandemic reached critical mass as market mam- moths like Amazon and FedEx drove demand for large-scale, state-of-the-art industrial fa- cilities throughout the New Jersey Turnpike corridor. In- stitutional capital bought these properties at record high prices and low cap rates, making it even more prohibitive for mid-sized local and regional companies to compete for the
space that they needed. The 2023 market landscape has comparatively let air out of the tires, but the sector has not seen sharp declines in demand observed in other areas like of- fice real estate. Industrial out - door storage properties have experienced greater pricing fluctuations, as the market rents for these parcels even in prime markets like the Port of New Jersey and the Meadow- lands have dropped as much as 30% from this time last year. Many of the same landlords who sought deals with the larg- est e-commerce and logistics
companies on the planet just a couple of years ago are look- ing more aggressively for more local and regional tenants with countercyclical business cycles to fill spaces that have sat vacant for longer periods of time. While it is unclear if the recent dip in this market is short-term or structural, midsized tenants in the mar- ket should make longer-term bids for space lest the decline in inventory push rents back toward their peak. Adam Tannenbaum is an associate at The Blau & Berg Company. MAREJ
continue to face tremen- dous proper- ty pressures despite rising vacancy rates and cooling demand. Warehouse rent growth persisted through the
Adam Tannenbaum
second quarter of 2023 to $14.25 psf, up from $12.17 psf this time last year, according to market research from The Blau & Berg Company. While some tenants in the market have been able to look to older industrial buildings whose owners are offering more con- cessions like additional months of free rent, the market cooling has not yet manifested in any downward pressure on asking rents or sale price expectations. Climbing rents and stubborn property values are among many economic and real es- tate-related challenges that industrial businesses face. These companies have de- clined to commit to long-term leases as they contend with a volatile interest rate climate and continued supply chain disruptions. Worse yet, fewer industrial facilities are be- ing built, as townships begin placing moratoriums on new warehouse development and city governments stress the need for housing supply and labor concerns as reasons to pivot away from industrial real estate development. While local authorities Kennedy assumes role as NAIOP NJ CEO NEW BRUNSWICK, N J — Dan Kennedy assumed the role of chief executive officer at NAIOP NJ . The launch of Kennedy’s formal tenure as head of this key commercial real estate development trade association followed a six- week transition period work- ing in tandem with outgoing CEO Michael McGuinness. Prior to joining NAIOP NJ, he was senior director/ director of Environmental and Utility Operations for the Utility and Transporta- tion Contractors Association of New Jersey. He previously served as a senior official in NJ State government. MAREJ
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