Brownfields no longer a dirty word for developers

Real Estate Weekly, March 12, 2003 by Thomas Barrett

The state plan to encourage urban redevelopment has sparked an interest in northern New Jersey, and companies are taking a second look at Jersey City. As a full-service developer and builder active in the metropolitan New York-New Jersey region, I have experienced a significant increase in the number of industrial users looking to build here, representing the potential for millions of SF 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, North Jersey 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 New Jersey 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-SF warehouse built with today's typical 38-foot clear ceiling offers approximately the same capacity as a 200,000-SF warehouse with the 22-foot ceiling common in the 1970's.

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 New Jersey, have changed that philosophy. The scarcity of open land suitable for development, particularly in northern New Jersey and throughout the New York 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.

In 1993, Barrett Builders became a party to Administrative Consent Order Agreements for Greenville Yards, one of the first large-track brownfield sites in Jersey City. Situated in the heart of the city's industrial area, the redevelopment comprised 50 acres of vacant land that, until the early 1980s, had served as a switching yard for Conrail. Barrett Builders' remediation work as designated redeveloper has helped transform Greenville Yards into a prime industrial site generating significant tax revenues and creating hundreds of permanent jobs. Greenville Yards' convenient location near Exit 14A of the New Jersey Turnpike, and within a Foreign Trade Zone and an Urban Enterprise Zone, have helped to attract several major companies to the area.

Greenville Yards in Jersey City has generated significant interest from food companies in particular, both processors and distributors. Easy accessibility to I-95, the Holland Tunnel, the Port of New Jersey/New York and all major metropolitan rail yards have made the former brownfield a prime location for this industry. In September 2000, Barrett Builders completed the first building in Greenville Yards, a 132,180-SF refrigeration/freezer facility for Summit Food Corp., an Asian food distributor/importer. That was followed in December 2001 by a 137,000-SF frozen food warehouse! corporate office for Preferred Freezer Services of Jersey City, Inc., which features leading-edge cold storage technology. Rising transportation costs encouraged Preferred Freezer Services -- formerly based in Perth Amboy -- to move its storage and distribution facilities to Jersey City, closer to shipping ports and food destinations. And the company has further contracted us to start construction of a 65,000-SF refrigerated terminal f or a Preferred affiliate.

Food companies are usually well-received by municipalities because they are a clean business with high employment in the local area. With user interest running high, Barrett Builders is working to find additional land or property to be renovated for those companies that have already recognized the cost-efficiency of the metropolitan market.

This proactive approach is key to the success of a brownfield development project. The developer's job involves working with investors, landowners, and environmental specialists, and focusing on the positive effects the project will have on the community.