By Lori Zuck, Managing Director, Transwestern
As redevelopment continues to spread throughout the outer boroughs of New York City, some industrial end-users are being priced out of New York, and increasingly turning to New Jersey, where incentives are in place, prices are attractive and occupancy costs are lower.
At the same time, location and infrastructure remain the primary reasons that New Jersey has continued to be a well sought after industrial region for corporate users and investors.
The state benefits from its tremendous consumer base in the greater New York region, its highway network from New York to Philadelphia, and even further, Boston to Washington D.C., as well as its proximity to air and sea ports, offering unparalleled access to international markets and cargo.
In addition, compared to more congested urban locations, New Jersey’s warehouses offer more land to accommodate better truck maneuverability and trailer/container storage.
Recognizing these advantages, a wide range of companies are being lured to the Garden State and bringing countless jobs with them.
Manufacturer AP&G Co., a mid-sized manufacturer of adhesives, recently brought more than 100 jobs to New Jersey, moving its headquarters from Brooklyn to Bayonne. Aron Streit Inc., manufacturer of matzo, is under contract to sell its longtime Manhattan factory and shift operations to Moonachie.
Companies continue to capitalize on the prime industrial space that’s available along the Turnpike in central New Jersey (where nearly 2.3 million square was absorbed in 2014 at Exit 7A) and into northern New Jersey, near the Meadowlands.
I would be remiss if I didn’t mention the most widely recognized example, Amazon’s 1.2-million-square-foot “mega-warehouse” in Robbinsville, which provides the e-commerce giant with a central location to sort, pack and ship products.
The fact is, we expect to see a continued increase in demand for New Jersey warehouse and distribution spaces, and as competition increases, the New Jersey industrial market will only continue to soar.
Vacancy is at its lowest since 2008 (7.8 percent), and competition is fierce among investors and users alike.
Retail, including e-commerce, remains a catalyst, as tenants are expanding warehouse space or utilizing third party logistics firms (3PLs) to store increased inventory.
During my more than 25 years in the industry, I’ve observed that the industrial market tends to be more stable when compared to other property types.
With that said, one trend that I have noticed is that space is filling up quite differently today.
For example, during previous recoveries, we’ve seen smaller space leased up first and larger leases follow. But that has not been the case this time around.
As the state encompasses all of the infrastructure and attributes necessary, we will likely see corporate users and investors continue to take advantage of New Jersey’s strategically located industrial market.