getting approvals—a relationship with the local community. I don’t
know of any community in New Jersey that is helpful.”
As far as big box demand, attempts to better utilize the ports
are helping generate demand for large-scale warehouse and
distribution space.
“Right now, the largest demand we’re seeing is from 3PLs [pub-lic warehouses performing third-party logistics] and houseware
product companies,” says Mindy Lissner, senior vice president at
CB Richard Ellis. “We’re also seeing a lot of interest from beverage distributors. You know what they say: When times are good,
people drink. When times are bad, people drink.”
Those third-party logistics companies are looking for inexpensive space, but they also want warehouses with modern amenities,
including state-of-the-art, 32-foot-clear ceiling height, advanced
sprinkler systems and cross-loading facilities with ample trailer
parking. Then, there are the larger corporate clients that are looking for higher-end facilities and are willing to pay for them.
“What’s different from a year ago is that decisions are coming
a little slower and with more concentration in the last few months
as far as new users are concerned,” Lissner says. “That may be because of the uncertainty in the economy. Tenants may be looking
to outsource temporarily because their space needs could change
if the economy weakens.”
While Lissner reports that the summer was slow, since the beginning of Q3 activity and leasing seemed to have picked up.
mands have increased with the sophistication of distribution centers,
but land availability in many New Jersey markets is restrictive.
“From ground-up construction, we’re finding more opportunity in Pennsylvania because of the availability of the land,”
Knowles says. “Obviously, we still have availability in New Jersey.
But for bigger-scale centers, we recently had requirements for
three large production and distribution facilities and they all
landed in Pennsylvania.”
Jeff Milanaik, president of Heller Industrial Parks in Edison, recently noted that the increasing demand for additional parking is
creating problems for landlords and developers and often turns
out to be overestimated.
“The difficulty is in getting a site plan through approvals that
you don’t want to have to go back and change,” Milanaik said
during the same panel discussion with Somple. “But you really
have to, because parking is so much in demand, although most
companies don’t use all of the parking.”
Cross-dock loading facilities, too, have proven not to be a necessity to many users with warehouses below the size of regional
distribution centers and the so-called mega DCs. Security, on the
other hand, is something tenants like to see.
“They like to see fenced-in yards. There is more discussion of
security of the unit or individual buildings, but not more demand
for personnel,” says Knowles. “A gatehouse is great if they can
get it, but in multi-tenant buildings, efficiency becomes an issue
Activity faltered a bit at midyear, but things have
picked up and users have plenty of options.
“There seems to be a lot of activity in larger requirements,
those of more than 200,000 sf,” she says. CBRE is marketing
Panattoni’s iPort 12 at Exit 12 of the NJ Turnpike in Carteret. Lissner says that Panattoni has contracts for about 700,000 sf of space,
although it had not signed any leases as of mid-October at the
1.2-million sf state-of-the-art facility. “There is always good activity in buildings of less than 50,000 sf. It’s the 50,000- to 200,000-
sf range that has been a little slow.”
Brian Knowles, principal of industrial advisory services for The
Staubach Co., Murray Hill, says tenant demands include access
to labor: “For some of our larger tenants, especially the consumer
products people and retail folks, labor is a key factor to being in
the Northeast and in Northern New Jersey and Pennsylvania. Not
only can they acquire that first wave to warehouse staff, but they
also need to know the labor is there for them moving forward.
“I’m referring to larger distribution centers where you need a
mix of skilled and unskilled labor,” he continues. “These have
become very automated and very technical. As operations become more sophisticated, the labor they are looking for becomes
more important.”
In terms of buildings, Knowles says the demands remain the same:
High clearance, multiple doors and storage outside. Parking de-
because people have different schedules and they all have access
to the loading docks.”
So far this year, he reports increased availability on the leasing
side as more of the new space hits the market, resulting in flat to
negative absorption across all of the state. That already has lead
to an increase in tenant inquiries about acquiring properties.
“They are leasing properties now, but they may see some
opportunities to buy in 2008,” Knowles says. “Although it’s still
fairly tight, if availability continues to grow they probably will see
some opportunities.”
And property aesthetics become important where the uses mix.
For Mike Pembroke, SVP for leasing and marketing at Hacken-sack-based Russo Development, demand for combination office
and warehouse space in the same building brings its own set of
tenant demands. Russo owns and manages about 2. 5 million sf.
“Our tenant mix is not typical. We have a large number of tenants with large amounts of office or back office requirements as
well,” Pembroke says.
Sun Guard, a recent tenant that provides disaster recovery is a
good example. “All of their space is back office,” Pembroke says.
“Power is a key requirement for our back office and data centers. In
Carlstadt, our main building has access to two power stations. So
