As demand for warehouse space near New York City pushes vacancies to lows not seen in decades, a West Coast developer is spending $200 million to carve out its piece of the market.
Creation Equity, an Arizona-based developer and investment firm founded in 2018, said this week that it’s expanding to the Northeast with two warehouse projects on Long Island and a third in Newark. The three facilities, one of which is pre-leased to beverage conglomerate Keurig Dr. Pepper, will combine for more than 400,000 square feet.
The first of the projects, a 103,000-square-foot distribution center on an 8-acre site a mile south of the Long Island Expressway in Melville, is set to break ground next month, Creation said, following the demolition of an office building on the site. The distribution center has been pre-leased to Keurig Dr. Pepper at what Creation called a “record-breaking rental rate” and is expected to be completed by late next summer.
About 15 miles west, in Islandia, Creation received approval to develop a 178,000-square-foot warehouse, also just off the Long Island Expressway. The 12-acre property on Old Nichols Road was acquired off-market and rezoned from residential to commercial, Creation said. The project is expected to break ground in December.
In Newark, Creation is seeking approval for a 120,000-square-foot logistics facility on a 10-acre site adjacent to Newark Liberty International Airport. The property was acquired off-market and was previously used for parking, Creation said. Pending approval of the site plan, construction is expected to begin next fall.
Offering access to New York City, the New Jersey Turnpike and the Port of New York and New Jersey, North Jersey has become one of the tightest industrial markets in the country. Vacancies in the region fell to a record low of 2.7 percent in the second quarter, according to Savills, while average asking rents shot up nearly 50 percent year over year to an all-time high of $14.33 per square foot.
Bob Agahi, who co-founded Creation four years ago with David Sellers, called the Newark project “a once-in-a-decade find and a crowning achievement in our real estate portfolio.” Agahi added that Creation, which will open a New York City office in the coming months, is pursuing two additional acquisitions in North Jersey.
The projects are part of a previously announced $1 billion joint venture between Creation and investors advised by J.P. Morgan Global Alternatives, which includes these and three other developments in Arizona and Texas.
Creation, which also has projects in California, Colorado and Tennessee, claims to have $4.65 billion of developments in its pipeline, including industrial and retail properties.