Real Estate Journal — Industrial / Distribution Centers — May 30 - June 12, 2014 — 3C


M id A tlantic

I ndustrial R eal E state & D istribution C enters

By William Forcello, CBRE New Jersey Industrial leads the way in New Jersey


or as long as most native New Jerseyans can re- member, when it comes

real estate: Location. Location. Location. New Jersey has an intricate highway system, which pro- vides easy access to The Port of New York and New Jersey, the largest port on the East Coast and the third largest in the US. There are more than 100 million consumers within a day’s reach by truck from the ports. This alone helps explain why tenant demand remains so strong in New Jersey, es- pecially when it comes to the popular industrial stretch of the New Jersey Turnpike.

The Turnpike corridor sub- markets consistently attract the majority of demand for the entire Northern and Central New Jersey markets. In 2013, the Meadowlands, Route 287/ Exit 10, and Exit 8A submar- kets, together, accounted for more than 50% of the leasing velocity seen in all 24 New Jersey submarkets. And because of the con- sistently strong demand, in- dustrial properties are an attractive asset class, leading to increased interest from the investment community. In fact, sales activity has hit

an all-time high since CBRE began tracking New Jersey industrial sales, with invest- ment purchases amounting to 17.55 million s/f in 2013. This figure has increased, on average, 67.3% each year since 2009 But who is occupying all this space? Food and beverage store sales continue to be a stand- out performer throughout the US. In New Jersey, food- related occupiers continue to be active, as cold-storage space is increasingly hard to come by. Three of the six cur-

rent build-to-suit construction projects throughout the state are being built for food users. Other industries that are tak- ing up industrial space in the Garden State include logistics providers and clothing/apparel companies. Warehouse and distribution operations are becoming in- creasingly more sophisticated and efficient. We are seeing an uptick in demand for new class A product. In 2013, existing class A leasing accounted for 16.6% of the state’s total leas- ing velocity, which is especially continued on page 24C

to where we l i v e , n o n - r e s i d e n t s ( t o u r i s t s , friends from out of town, people who have never really spent quality time

William Forcello

here, etc.) have a tendency to wrongly stereotype the Gar- den State. “You’re from Jersey? Oh man, your highways are hor- rendous and that Meadow- lands smell? Just awful.” We have all, at one time or another, been on the re- ceiving end of one of these negative attacks and have passionately defended our stomping grounds, firing back with a litany of all that is so great about us: our communi- ties, our schools, our diverse cultural, recreational and entertainment facilities and our ability to stand together in times of crisis and disaster, most recently during Super- storm Sandy. What’s ironic is that the very characteristics that have earned our state the nick- name, “Dirty Jersey,” are what place us a step above the rest. The New Jersey Turnpike, the Meadowlands, Newark Lib- erty International Airport, the ports…all these have helped shape New Jersey as one of the country’s most productive economies and important in- dustrial real estate markets. We are the center of commerce and industry that is flourish- ing so much, supply cannot keep up with demand, and, as a result, construction and redevelopment are the name of the game right now. Dollars are flowing into the construction of new indus- trial facilities; more industrial space is being traded on the investment sales market than ever before; tenant demand continues to be historically robust; and owners are asking for—and tenants are paying— lease rates that are at or above their 2007 peak rates. So what do industrial prop- erty owners have to thank for this recent buzz of activity in the industrial market, which is always an accurate early indicator of how the overall economy is performing? It comes back to the three “L’s” of

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