The Industrial and Office Real Estate Brokers Association of the New York Metropolitan Area (IOREBA) recently hosted its Fall Kick-Off event for a crowd of over 100 commercial real estate specialists looking for insight on industrial development in New Jersey. Alec Taylor, Partner at Matrix Development Group, moderated the panel of industrial experts that included Jeff Milanaik, Principal, Bridge Development Partners, LLC; Greg Rogerson, Principal, J.G. Petrucci Co., Inc.; Alex Klatskin, General Partner, Forsgate Industrial Partners; and David Iacobucci, Managing Director, Woodmont Industrial Partners. The discussion was entitled, “The Wave of Industrial Speculative Development and Investment in Central / Northern New Jersey.”
With the option to construct a building on a build-to-suit basis, Taylor asked the panel, why spec?
“Once you construct a building, customers can see it, touch it and it’s real to them. With spec buildings, prospective customers’ shortened timeline objectives can be met, which makes us confident with spec development,” said Milanaik.
Rogerson concurred noting that “in New Jersey you have to show a building is real and the second it’s up, people will begin contemplating it.”
Panelists noted that it’s time to build on spec again compared to 18 months ago. “There is greater interest in the Port Newark and Elizabeth markets with the widening of the Panama Canal, the raising of the Bayonne Bridge and the dredging of the harbor. These are all factors of rapidly increasing demand for product in the Port markets,” stated Iacobucci. “However there are still a lot of vacant buildings; but interestingly the value of buildings are rapidly increasing, due to the increasing demand to buy product,” Rogerson added.
Milanik noted that his company is looking at properties that are environmentally challenged, but they remain patient. “With vacancy rates decreasing in submarkets coupled with inherent demand, we are really excited about the opportunities in the state,” he said. Klatskin added, “there are a lot of locations that tenants really prefer to be in, and we want them to fall in love with the buildings, rather than the price. Furthermore, once the housing market in the suburbs and New York City really start to kick-in, the industrial market in New Jersey will be outstanding.”
The industrial experts also discussed the increased interest in the eastern Pennsylvania marketplace, given the significant rent growth occurring there, but noted it is a challenging marketplace to find properties. Its strategic location is logistically convenient to distribute products from West to East. As those rents continue to climb, it will make the port markets more desirable. To keep tenants in New Jersey, “we have to build smarter buildings and have better product to market,” Milanaik added.
“So, what’s in store with industrial spec in New Jersey,” Taylor asked the panelists. And, the common answer was that we will see approximately 50 percent of existing spec buildings tenanted and about three to five million square feet of new spec buildings under development in 2015.Related Articles: