Jersey City a Gem for Industrial Clients
A state plan to encourage urban redevelopment has sparked an interest in northern N.J., and companies are taking a second look at Jersey City. Developer and builder Thomas Barrett takes a look at that area's industrial market, in anticipation of our February issue's industrial-market focus.
Editor’s note: One of the topics of focus in our February issue is the industrial market. Thomas Barrett of Barrett Builders, LLC, Ft. Lee, N.J., is an experienced developer and builder in the metropolitan N.Y.-N.J. region. Below are excerpts from his article “For Prime Industrial Property, Jersey City is Undiscovered Gem,” which give us a look at the industrial market in northern N.J.
The state plan to encourage urban redevelopment has sparked an interest in northern N.J., and companies are taking a second look at Jersey City. As a full-service developer and builder active in the metropolitan N.Y.-N.J. region, I have experienced a significant increase in the number of industrial users looking to build here, representing the potential for millions of square feet of new product. Right now, the biggest challenge is finding locations for new industrial projects that bring value to my clients. Typically, reasonably priced land is scarce after a boom economy, and that’s what we are finding in northern New Jersey.
With its proximity to the ports, northern N.J. is gaining in popularity as companies become more concerned about the rising costs of fuel, as well as wear and tear on trucks making long runs to remote warehouses. Larger corporations-especially those with a profit-conscious, progressive mindset-are recognizing that the higher cost of land in northern N.J. can be easily offset with the long-term reduction of transportation costs and more efficient warehouses. Users who want to build here understand that they are looking for higher per square foot SKU (Stock Keeping Unit) positions and lowered facility maintenance costs.
By going high-cube with a warehouse (made possible by the evolution of forklift technology), companies gain more SKU positions under a smaller footprint, which translates to lower labor costs, reduced energy costs, and less drive time for forklifts. For example, a 100,000- sq.-ft. warehouse built with today’s typical 38-ft. clear ceiling offers approximately the same capacity as a 200,000-sq.-ft. warehouse with the 22-ft. ceiling common in the 1970s.
At Barrett Builders, we are actively involved in building on property in Jersey City, and it all started with a brownfield. In the past, the designation of a site as‘contaminated’ meant builders would not touch the property. But today’s new urban environmental laws, combined with opportunities for new construction in markets like N.J., have changed that philosophy. The scarcity of open land suitable for development, particularly in northern N.J. and throughout the N.Y. metropolitan area, has made the revitalization of brownfield properties an acceptable and growing component of the development process.
The challenge today is how to accomplish site reclamation in a way that meets the complex federal and state requirements, boosts the local economy, improves the environment, and still provides a profitable opportunity for a developer. Brownfield development is not for the faint of heart. But if done carefully and knowledgeably, it can be rewarding and profitable.
Faith in Jersey City
In November 2002, Keystone Property Trust broke ground on a half-million-sq.-ft. industrial development in Greenville Yards, which Barrett Builders is constructing on speculative basis. This marks the culmination of a milestone agreement between public agencies and private developers, which will turn the former railroad switching yard into two state-of-the-art distribution centers employing hundreds of area residents.
By making this significant investment, Keystone is demonstrating its faith in the future of Jersey City. Mayor Glenn D. Cunningham said it best during the groundbreaking ceremony: “Today we are celebrating the transformation of abandoned brownfields into fields of opportunity. This bold undertaking by Keystone represents a vote of confidence in the strength of this region’s marketplace.”
Theirs is not the only vote of confidence in the northern N.J. area. During 2002, the Hudson Waterfront, of which Jersey City is the major component, was the region’s most active area. Five office buildings totaling 3.2 million sq. ft. were completed in 2002. Also last year, the acquisition of the 697,000-sq.-ft. asset at 10 Exchange Place in Jersey City by Hypo Vereinsbank, a German investment bank, represented a major investment in the city. And currently in northern N.J., there is 3.5 million sq. ft. of office space and nearly 1.6 million sq. ft. of industrial space under construction, further illustrating the well-rounded growth taking place in the Jersey City area.
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