What Inning is the Industrial Sector in?
JERSEY CITY, NJ – CapRE’s 2018 Northeast Commercial Real Estate summit featured a rousing discussion on the state of the Garden State, New Jersey Development, Investment, Financing & Leasing: The Amazon State and Analysis of Traditional Deals. Moderated by Stan Danzig, Vice Chair at Cushman & Wakefield, the panel kicked off with the question on everyone’s mind — Where is New Jersey in the cycle? Below is a transcription of part of the discussion that followed when Danzig asked the half a dozen discussants that question.
Omer Mir Ahmed, Partner, Seagis Property Group LP: I’m never really good at answering in terms of innings. But I hear on the last panel, and one thing that is sort of going through my mind is that our industry has really been impacted by e-commerce. It’s really been the buzzword for the last couple of years. I was looking at state – there was $1.25 Trillion USD in retail sales in 2017, and of that $100 Billion of that was online. That’s about 8.5%. so from our perspective, we see a tremendous amount of activity from e-commerce players. And how much they’ve taken down over the last three to four years.
Danzig: I can help you with that. If you took Amazon, Wayfare and Jett.com, and you look back to 2012, they weren’t in New Jersey. And now they represent close to 20 million square feet.
Ahmed: Yeah, it’s unbelievable. If you take Amazon alone and go back three or four years, they have about 9.1 million square feet in the New Jersey marketplace and another 855,000 square feet if you add in Staten Island. That’s about 10 million square feet for a tenant that wasn’t even in the marketplace.
Just drive up the turnpike, starting at Exit 2, where they have 1.5 million square feet, then Exit 7, where thy took down another 577k, and go up to Exit 7 or 8A, and they took down another 991! Go along with another million square feet that they have at 7A in Robinsville. Exit 10 in Edison, [they have] 923,000 square feet. Then make your way north to the Meadowlands, Cartaret, where they have 2.9 million square feet, and up north in the Meadowland, a 616,000 square footer, then a 75,000 square footer in Moonachie and 16,000 in Hoboken, that’s 9.1 million square feet! In a very short period of time.
So there is obviously a domino effect. It’s been pretty amazing to see what’s happened. To answer your question…e-commerce is just scratching the surface. Amazon has a model that they’re going after, people are trying to figure that out, and where are we in the inning? It really depends on what happens here.
Kurt Kalafsky, Principal/CTO, The AZTEC Corporation: It’s hard to say where we are in the cycle but it’s certainly not like anything we’ve seen in the last few years. the vacancy rate is so low that we are actually seeing clients put up spec-buildings. And as soon as they get up they are filling. The product is moving quickly. You also see a lot of creativity in older product, where people are renovating to either a change of use alternative uses that didn’t typical use industrial space but now are. Whether it be pharmaceutical manufacturing or research facilities going into some of those facilities as well.
Stay tuned to CapRE Insider Reports for future articles covering later parts of this panel discussion. Continue the Industrial Conversation. Check out our Upcoming Events ->