Jones Lang LaSalle
Busy port triggers rush to build NJ warehouses
60 million sq. ft. of space required over the next decade
By Jeremy Quittner
Published on May 15, 2006
A tidal wave of imports hitting the ports of New York and New Jersey is triggering an unprecedented scramble to build warehouse and distribution capacity. In the past three years, developers have unveiled plans to develop at least 6 million square feet of facilities, at a total cost of nearly $500 million.
That space may amount to little more than a drop in the bucket. Experts estimate that 10 times as much space, mostly along the New Jersey waterfront, will be needed over the next decade to handle forecast increases in cargo volume.
Location, location, location
"There is a lack of warehouse and distribution facilities close to the port," says Michael McGuinness, executive director of the New Jersey chapter of the National Association of Industrial and Office Properties, in New Brunswick.
The need for more space is clear. Last year, the Port Authority of New York & New Jersey handled 80 million tons of cargo, or $114 billion worth, which represents a 25% rise over the past five years. The vacancy rate for warehouse space within 30 miles of the docks was just 7% last year, according to CB Richard Ellis. The scarcity has helped push rents for prime space near the waterfront to as much as $8.50 a square foot.
Faced with the threat that capacity constraints could force shippers to take their business elsewhere, the Port Authority is scrambling for new sites.
Because no virgin land is available, the agency teamed up with the New Jersey Economic Development Authority last year to spur redevelopment of brownfields--sites that have been unused because of contamination or other problems. The New York-New Jersey Portsfield Initiative has already identified 17 such sites in northern New Jersey that it will help developers clean up.
"The biggest thing we're faced with is finding the appropriate funding to improve infrastructure and fast-tracking development to bring these sites online," says Michael Francois, the Port Authority's chief of real estate and development.
Panattoni Development Corp. has announced plans for one such effort: a 3 million-square-foot complex of six warehouse and distribution facilities on a brownfield near Carteret, N.J. In the first phase, expected to begin late this year, the Edison, N.J.-based company will build a 1.1 million-square-foot warehouse.
With an eye toward alleviating bottlenecks on Staten Island docks, in particular, Manhattan-based P/A Associates has big plans for a brownfield site near Perth Amboy, N.J. The company intends to begin building about 2 million square feet of warehouse and manufacturing space next year.
Vanishing capacity
"The supply of this kind of space is very tight," says Aaron Malinsky, a principal in P/A Associates.
Matrix Development Group is fully aware of that. It finished a 430,000-square-foot warehouse near South Brunswick, N.J., late last year that a single tenant snapped up for $5.25 a square foot.
"Most of the warehouses [we build] are fully occupied by the time we're done," says Richard Johnson, a senior vice president of Matrix, based in Cranbury, N.J.
One of the region's largest warehouse developments, the 3.6 million-square-foot Port Reading Business Park, near Carteret, is also off to a good start.
The developer, Denver-based Prologis, has finished the first, 360,000-square-foot facility. A quarter of it is already leased; the asking rent is $6.25 a square foot.
The entire project is expected to cost $200 million and take three to five years to complete, and at this point it looks like there will be no shortage of tenants, according to Stan Danzig, executive director at Cushman & Wakefield Inc., the property's broker.
Comments? cnyb@crain.com
Busy port triggers rush to build NJ warehouses
60 million sq. ft. of space required over the next decade
By Jeremy Quittner
Published on May 15, 2006
A tidal wave of imports hitting the ports of New York and New Jersey is triggering an unprecedented scramble to build warehouse and distribution capacity. In the past three years, developers have unveiled plans to develop at least 6 million square feet of facilities, at a total cost of nearly $500 million.
That space may amount to little more than a drop in the bucket. Experts estimate that 10 times as much space, mostly along the New Jersey waterfront, will be needed over the next decade to handle forecast increases in cargo volume.
Location, location, location
"There is a lack of warehouse and distribution facilities close to the port," says Michael McGuinness, executive director of the New Jersey chapter of the National Association of Industrial and Office Properties, in New Brunswick.
The need for more space is clear. Last year, the Port Authority of New York & New Jersey handled 80 million tons of cargo, or $114 billion worth, which represents a 25% rise over the past five years. The vacancy rate for warehouse space within 30 miles of the docks was just 7% last year, according to CB Richard Ellis. The scarcity has helped push rents for prime space near the waterfront to as much as $8.50 a square foot.
Faced with the threat that capacity constraints could force shippers to take their business elsewhere, the Port Authority is scrambling for new sites.
Because no virgin land is available, the agency teamed up with the New Jersey Economic Development Authority last year to spur redevelopment of brownfields--sites that have been unused because of contamination or other problems. The New York-New Jersey Portsfield Initiative has already identified 17 such sites in northern New Jersey that it will help developers clean up.
"The biggest thing we're faced with is finding the appropriate funding to improve infrastructure and fast-tracking development to bring these sites online," says Michael Francois, the Port Authority's chief of real estate and development.
Panattoni Development Corp. has announced plans for one such effort: a 3 million-square-foot complex of six warehouse and distribution facilities on a brownfield near Carteret, N.J. In the first phase, expected to begin late this year, the Edison, N.J.-based company will build a 1.1 million-square-foot warehouse.
With an eye toward alleviating bottlenecks on Staten Island docks, in particular, Manhattan-based P/A Associates has big plans for a brownfield site near Perth Amboy, N.J. The company intends to begin building about 2 million square feet of warehouse and manufacturing space next year.
Vanishing capacity
"The supply of this kind of space is very tight," says Aaron Malinsky, a principal in P/A Associates.
Matrix Development Group is fully aware of that. It finished a 430,000-square-foot warehouse near South Brunswick, N.J., late last year that a single tenant snapped up for $5.25 a square foot.
"Most of the warehouses [we build] are fully occupied by the time we're done," says Richard Johnson, a senior vice president of Matrix, based in Cranbury, N.J.
One of the region's largest warehouse developments, the 3.6 million-square-foot Port Reading Business Park, near Carteret, is also off to a good start.
The developer, Denver-based Prologis, has finished the first, 360,000-square-foot facility. A quarter of it is already leased; the asking rent is $6.25 a square foot.
The entire project is expected to cost $200 million and take three to five years to complete, and at this point it looks like there will be no shortage of tenants, according to Stan Danzig, executive director at Cushman & Wakefield Inc., the property's broker.
Comments? cnyb@crain.com
posted by Jones Lang LaSalle NJ News Blog at 10:28 AM
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