4C — May 25 - June 7, 2018 — Industrial / Distribution Centers — M id A tlantic
Real Estate Journal
www.marejournal.com
I ndustrial R eal E state & D istribution C enters By Stan Danzig, Cushman & Wakefield E-Commerce, other developments spur continued growth inNorthernNewJersey’s industrial market T he continuing growth o f e - c omme r c e — which accounted for and increased trailer and automobile parking spaces to help meet the need for faster turnarounds.
Warehousing and distribu- tion activity in general has already benefitted from strong brick-and-mortar sales for consumer products, apparel, food and other categories. The increased e-commerce activity has further propelled demand for distribution and “last-mile delivery” facilities that offer easy access to major popula- tion centers. The desirability of Northern New Jersey submarkets — including the Meadowlands and other locations along the New Jersey Turnpike, and the I-80 and I-287 corridors — is
enhanced by their proximity to markets like New York City, Long Island, Connecticut and Westchester. The submarkets’ nearby road, water and air facilities also make it easy for warehouse-distributors to ship goods to virtually any national or global destination. Even with new projects coming on line, increasing demand has spurred absorp- tion, forcing would-be ten- ants to act quickly. Those who hesitate risk missing out on their first-choice proper- ties as single-digit vacancy rates, averaging 4% to 5% in
Northern and Central New Jersey, spur rents to double- digit levels ($12 to $13 psf in some cases) for desirable facilities. The e-commerce component of today’s demand for space is also driving design changes as tenants seek larger facili- ties. Today’s buildings aver- age 200,000 s/f, with higher clearances — 40-foot clear is the new normal — and they offer more power capability to drive sophisticated material- handling equipment. Tenants also want more features like a higher volume of dock doors
$119 billion of sales in the fourth quar ter o f 2017 alone, according to the U.S. De- partment of Comme r c e — is helping
Builders have responded by incorporating these dimen- sions and features in new proj- ects. Construction crews, in the meantime, are also keep- ing busy responding to new market needs as older build- ings are knocked down or ret- rofitted and land is acquired or consolidated to create facili- ties —which are rapidly being leased out — that meet today’s requirements. New warehousing and oth- er projects include Lincoln Equities’ development of 1.2 million s/f in Bayonne, directly opposite from the Global Container Terminal — as close to the port as one can get — that’s expected to be completed in early 2020. Another project is the Rock- efeller Group’s development of a 2.3 million s/f facility in Piscataway along the I-287 corridor that’s on its way to being fully leased after only one year. In Wayne, on the I-80 corridor, a 418,000 s/f warehouse distribution facil- ity that’s being built on spec already has a signed LOI. These trends are not likely to reverse any time soon, given such developments as recent multi-billion-dollar port dredging and other in- frastructure improvements, including the raise of the Bayonne Bridge, that are paving the way for post- Panamax and other shipping. Along with all this, the boundaries of warehous- ing and distribution centers continue to expand as new clusters go up as far South as Exit 4 on the New Jersey Turnpike, and west along I-78 to the Lehigh Valley in Pennsylvania. But at those distances the economics get foggier, and increased transportation costs come closer to outweighing lower space rates. Because of this, Northern New Jersey will likely continue to maintain a pre-eminent position for the warehousing and distri- bution segment in general, and its attraction will only be enhanced as e-commerce solutions continue to gain traction. Stan Danzig is vice chairman of Cushman & Wakefield’s East Ruther- ford, NJ office.
Stan Danzig
to drive demand for indus- trial/warehousing facilities in Northern New Jersey while shaping design requirements for new construction.
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