6A — May 24 - June 13, 2019 — Industrial / Distribution Centers — M id A tlantic
Real Estate Journal
I ndustrial R eal E state & D istribution C enters By Jordan Metz, Bussel Realty Corp. Why is the NJ industrial real estate market still so hot? The Internet.
I nternet retail sales. That’s the difference keeping our current hot industrial mar-
all about warehousing and logistics. Here is what is important to note for the New Jersey indus- trial market: Every time in- ternet retail sales grow by ap- proximately 5%, our vacancy rate dips by approximately 2%. For every $1 billion spent on online shopping, users require one million s/f of ware- house space. Ecommerce rep- resented a growing share of the retail market in 2018, taking a 14.3% share of total retail sales last year, up from 12.9% in 2017. More signifi- cant is that ecommerce sales represented more than half,
or 51.9%, of all retail sales growth. This is the largest share of growth for purchases made online since 2008. Corre- spondingly, New Jersey indus- trial market sales prices have risen approximately 40 to 60%, depending on the submarket, in the last 3 years. There is a direct correlation between online sales growth and the need for industrial real estate. As ecommerce grows, so grows our industrial real estate market. That is why New Jersey submarkets near the ports are the hottest. There’s a common thread to most of my deals, that being location, location, location. These port-proximate facilities allow companies to receive containers from the second largest port in the country, Port Newark/ Elizabeth, truck them to their nearby warehouse, and then send their outbound deliver- ies to the consumer popula- tion centers of New York and Northern NJ, thus meeting our ever-growing consumer- economy appetite and demand for same and next day deliver- ies of whatever purchase we just made on our smartphones. This is a trend happening in every major core market in the nation. These last-mile locations’ ability to service the end consumer and simultane- ously limit their trucking costs puts them in a position to compete for a slice of the retail pie and to out-deliver their competition. Amazon, the architect of the current ecommerce logistics paradigm shift, recently announced a major investment into mak- ing “next day delivery” the new forum. Companies will pay a premium for a choice location. Many of these users are relocating from the NYC boroughs, which makes core port-proximate markets in New Jersey very attractive to employees and executives who don’t want to travel an hour to work on their morning and evening commutes. The port-proximate region of New Jersey has been and remains to be very strong in its fundamentals. With below 2% vacancy rates and properties being leased and purchased at a rapid pace, all signs bode well for industrial real estate in these markets. Unless we plan to no longer hack away continued on page7A
ket hitting l e a s e a n d s a l e p r i c e highs unseen in 40+ years. Technology is making the d i f f e r e n c e as it always does. Shop-
ping is easier than ever online and on your phone. Industrial real estate is the choice of every major retailer, and for the mul- titude of ancillary businesses in the ecommerce sector. It’s
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