Increased shipping from Asia, rising gas prices and a government push to rehabilitate abandoned industrial sites are fueling revived development in New Jersey’s unloved but commercially vital ports.
The Port of Newark and Port of Elizabeth have been the prime beneficiaries of the increased volume of exports from China and other Asian nations. Shipping that has clogged up California ports has led importers to send goods to the East Coast instead — specifically to New Jersey — via all-water routes through the Panama and Suez canals.
At the same time, a trend in which developers built warehouses and distribution centers on farmland in rural New Jersey and Pennsylvania and trucked containers to and from the ports has been reversing itself, thanks to rising gas prices.
Also, there has also been renewed emphasis by the government on rehabilitating abandoned or underused industrial and commercial properties where redevelopment is complicated by actual or perceived environmental contamination — all of which is leading to more planned development.
“Because of heightened awareness that the state is putting in the area, there is a commitment to getting port properties up and running,” said Michael McGuiness, executive director of the New Jersey Chapter of the National Association of Industrial and Office Properties. “We’re basically seeing developers trying to get property cleaned up with state help and to build warehouses and storage facilities.”
The New York metropolitan area is the third largest industrial marketplace in North America, behind Los Angeles and Chicago. Traffic into the region’s port is projected to double over the next 15 to 20 years, and New Jersey sites will play a significant role.
As gas prices rise nationally, some experts have been citing this as the reason that distribution firms want to be closer to the ports, in order to cut down on the gas costs of truck trips to warehouses farther from the ports.
The Port Authority of New York and New Jersey and the New Jersey Economic Development Authority launched the Portfields Initiative to stimulate development in the port district. The project, first launched in 2004, calls for both agencies to dedicate $300,000 apiece for three years to identify and redevelop what are known as “brownfield” sites, which are contaminated or at least viewed as contaminated.
Since the program’s launch, 17 sites have been identified and are in the process of being developed. The most advanced projects are the Elizabeth Business Park, the Port Reading Business Park in Carteret and the Linden Municipal Airport, according to Tim Lizura, director of real estate for the New Jersey Economic Development Authority.
The agency recently signed an agreement with the state Department of Environmental Protection to help facilitate the environmental remediation of the brownfields sites in the project. Lizura said that each site has a different set of environmental issues to be addressed before construction can begin.
The Port Reading Business Park, being built by Prologis, is a 3.6 million-square-foot facility of eight warehouses. Located off Exit 12A on the New Jersey Turnpike, the facility has recently completed the first building, which is three quarters leased out.
“It is the first new warehouse built in close proximity to the port at this time,” said Stan Danzig, executive director at Cushman and Wakefield, who is overseeing leasing for Port Reading. “There is a built-up demand for people who want to be close to the port.”
Danzig said the demand for the Port Reading project has allowed for rent to be in the low to mid six-figure range and the site is being used for both imported and exported goods.
Danzig noted that there is a lot of development around Exit 8A and Exit 7 on the Turnpike, which are located in rural Middlesex County, and said the Rockefeller Group is doing a new industrial project in Jersey City.
In addition to the Port Authority and the state’s environmental agency, transit officials are pushing for development closer to the ports, on the brownfields.
John Hummer, project manager at the New Jersey Transportation Planning Authority, said by being closer to the ports, shippers can cut down on the wear and tear on infrastructure while being closer to important rail links, which will allow them to ship across the country without using gasoline.
“Real estate, like warehousing, is being built on the last remaining farms of New Jersey around Exit 8A,” Hummer said. “Taking up open space and creating sprawl is a bad idea, when we have many acres of brownfields around. There are more goods moving into the port and the region. As global patterns change, the warehousing needs to take place near the port.”
The economic development agency said that bonds issued by the New Jersey Environmental Infrastructure Trust Fund offset environmental remediation costs for private developers. As a part of the Portfields initiative, the development group facilitates the bond process for developers.
According to Tim Tucci, senior managing director at CB Richard Ellis, land prices around the ports have been rising over recent years to around $1 million an acre.
Tucci noted the Trembly Point area of Linden as a waterfront location that could see a spike in redevelopment with infrastructure improvements. He said that a bridge connecting the hard-to-access location to the Turnpike and other roads would spur development there.
“If the bridge goes up, that area will open up,” Tucci said of Trembly Point. “The land owners are looking at the redevelopment there and the community is pushing for it.”