NORTHEAST SNAPSHOT, AUGUST 2005
Northern New Jersey Industrial Market
The state of New Jersey as long been established as one of the premier industrial hubs in the nation. Its port system encourages international trade, and a flexible transportation infrastructure allows for distribution throughout the Northeast and the nation. Central New Jersey along the New Jersey Turnpike has been the most popular market for new industrial development, but Northern New Jersey has emerged as a major point of activity of late. The market already comprises more than 800 million square feet of product and various industrial developments are in the pipeline up and down the turnpike near the port region.
“There is a definite land grab currently underway in the port region of New Jersey,” says Robert Kossar, principal and executive vice president of Teterboro, N.J.-based Lee & Klatskin Associates. “This is a result of developers anticipating demand based on the projected growth of the port as it begins to accept larger vessels and more freight.” This trend indicates a movement towards large-scale infill development, he notes.
New product is being built in close proximity to the ports, an area that until now has been occupied by older buildings with low ceiling heights and limited trailer parking. “Over the next 2 years, major submarkets in close proximity to the ports such as the 12, 13A, 14, 14A, 15E and 15W exits of the turnpike will experience an inundation of new development,” Kossar says. This development will consist of millions of square feet of modern distribution and warehousing centers.
Prologis has completed a 340,000-square-foot building at Exit 14A in Jersey City for which Lee & Klatskin is handling the leasing. The property features 36-foot clear ceiling heights, cross-dock configuration and rail service. Catellus — which Prologis has entered into an agreement to acquire for $4.9 billion — is underway on Port Reading Business Park at Exit 12 as well as a 1 million-square-foot three-building complex in Elizabeth at Exit 13A. Port Reading Business Park is a 3 million-square-foot development spanning 290 acres. The first building, totaling 360,000 square feet, opened earlier this year.
Other developers with projects either under construction or in the planning stage include Panattoni Development, Morris Development, Adler Development, Trammell Crow Company and Russo Development.
“These developments will create a sharp increase in Class A industrial product serving more of Northern New Jersey than ever before, thus enticing certain companies to remain close to the ports instead of moving to Central New Jersey in search of quality facilities,” Kossar says. Ultimately, this creates more choices for users, which has become more important as the price of transportation increasingly dictates the most feasible distance companies can be from the port area.
Leasing activity is steady in the Port market and the Meadowlands. Rental rates range from $5 to $8.50 per square foot in the port market and from $5.25 to $10 per square foot in the Meadowlands market. The vacancy rate in the Port is 5.81% down from 6.53% last quarter. In the Meadowlands, vacancy is up slightly to 8.72% from 8.48% in the previous quarter.
Because of strong development activity, Northern New Jersey now has options for port-related regional distribution. Users will now have more options than ever before.
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