14B — February 12 - 25, 2016 — New Jersey — M id A tlantic
Real Estate Journal
www.marejournal.com
C entral N ew J ersey By Steve Pastor, NAI James E. Hanson
The impact of e-commerce on industrial space in New Jersey
I
t goes without saying that technology is dra- matically changing the
are changing the traditional “warehouse” in more ways than one. For instance, e- commerce is currently trans- forming the food sector, adding pressure to supermarkets and food vendors to make changes to their locations and opera- tions. From a design standpoint, the e-commerce distribution center breaks new ground in the technology it utilizes. It also reaches skyward—multi- level facilities are becoming common. From a location standpoint, traditional distribution cen-
ters were located far from population centers in areas more adaptable to sprawling facilities. But those locations can hamper next-day deliv- ery demands of consumers, resulting in the construction and conversion of facilities in more densely populated areas. Indeed, for smaller, special- ized e-commerce distributors, urban in-fill locations come into play. Port proximity is another factor for receiving incoming product, and New Jersey’s port access has been key in development of facilities near the ports.
Quest ions remain. For densely populated states like New Jersey, availability of land is a serious issue. There is minimal prime land avail- able and local resistance to development can be a factor. Urban in-fill locations are one response, as mentioned, with many locations garnering urban redevelopment sup- port through state and local incentives. Land availability is also less of an issue the fur- ther south one ventures down the New Jersey Turnpike, as Amazon and others have dem- onstrated. The amount of new industrial construction from Exit 8A south is testament to that. The modern e-commerce distribution center, by volume alone, also requires more truck or car parking and office space than the traditional facility, another issue coming into play in the development of new facilities and availability of land, particularly in the more heavily populated areas. Because of the sheer volume of product shipped in and out of the modern e-commerce distribution centers, mez- zanines have become an im- portant packing or staging area. These structures are useful for buildings with a less-than-ideal layout and al- lows for additional, separated space. The volume of product also impacts hiring. Because of volume, such facilities are more labor-intensive. They create a substantial number of jobs, boosting the economy, but questions remain about whether enough qualified em- ployees are available. As demographics change, and people, particularly the younger generation, order online and want product de- livered quickly or on the same day, e-commerce’s evolution will continue to have a sub- stantial impact on industrial real estate in New Jersey. Given some of the industry’s growing pains in terms of land and employee availability, there will be some “casualties” among smaller e-commerce companies ill-prepared to re- spond. But dominant compa- nies such as Amazon, as well as FedEx and UPS, among others, are well-equipped to respond and keep growing. Steve Pastor is the vice president of Global Logistics and Ports Practice Group at NAI James E. Hanson. n
somewhere. Still there is more room for growth in this sector as Alibaba, the world’s larg- est online retailer based in China, has taken e-commerce platforms global and certain vendors have seen incredible growth rates after switching from Amazon. For New Jersey, that means one million-square-foot, state- of-the-art distribution centers in Robbinsville and Carteret, and a food distribution ware- house in Woodbridge. But e-commerce is more than just Amazon and the requirements of companies in that business
world, and the impact of e-commerce on industrial real estate in New Jersey is a prime ex- ample. How much of an impact? Ac-
Steve Pastor
cording to the Russell 3000 Index, Amazon generates more than 33% of all Internet revenue, and the products it sells have to be shipped from
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