Northern New Jersey industrial marketplace called 'robust'

Real Estate Weekly, August 22, 2001 by Steven G. Leitner, Robert P. Rubin

The industrial real estate market in Northern New Jersey continues its robust pace with available space running about 5%. The strength of this market is due in no small part to geography. If there was ever a case to be made for the importance of location, this is it. The greater New York I New Jersey metro area ranks first in the nation in terms of population, population density, effective buying income and total retail sales. It is within a day's drive to 42% of the U.S. population.

Is it any wonder then that this area attracts so many corporations specializing in telecommunications, pharmaceuticals, R&D and financial services? The pharmaceutical and medical technology companies in the area are responsible for 141,000 jobs and have a total economic impact of $10.3 billion. That figure represents more than one-third of all the pharmaceuticals sold in the world. Private sector Research and Development dollars spent for all area firms amount to 25% of total U.S. R & D expenditures.

The strength of the region is evidenced by the development taking place in Jersey City and in Middlesex County at Exit 8A of the New Jersey Turnpike. The Jersey City waterfront has truly earned its "Gold Coast" title as more and more companies leave Manhattan to occupy the millions of square feet of Class "A" office space being developed in Jersey City...at rental rates running 40%-50% below Manhattan prices. The development of large high ceiling warehouse facilities at Exit 8A has gained impetus as an increasing number of major developers have become "players" in the area. Immediate access to the New Jersey Turnpike and close proximity to the Port of Newark and Newark Airport has created a magnet for companies with both national and international shipping requirements. The local government has created an atmosphere of cooperation that provides a relatively streamlined approval and permitting process resulting in the development of over 20 million square feet of industrial space.

The Northeast part of this region, Bergen and Hudson Counties, has an older industrial product mix that was created primarily for manufacturing, a sector significantly less important today, not only in this area but throughout the U.S. Some of these facilities will require structural changes in the future if their owners hope to satisfy the changing needs of this economy.

Despite the preponderance of outdated industrial facilities, many companies still want to be in this area. The proximity to Manhattan, the airports and Port of Newark, and the road infrastructure which supports the area are all important to their business. Investors, recognizing the same values, recently purchased a number of large industrial portfolios in Bergen County, each totaling over 600,000 square feet In both Bergen and Hudson Counties, a good portion of what little unimproved industrial land still exists. is now being developed into large, modern, high ceiling buildings with leases being finalized prior to the completion of construction.

While the U.S. economy has slowed somewhat, there is good reason to feel optimistic about this region's future. Lessons learned from past overbuilding

have kept development at an absorbable pace. While technology companies are currently taking a beating, let us not forget that the products they developed have completely revolutionized the way business is conducted.

With low vacancy rates, declining interest rates, and banks, although cautious, still eager to make loans, we should be positioned well to handle a downturn and to prosper from the inevitable recovery that always follows.