Writer: Joey Garrand
2 min read February 2021 — The boom is on in South Jersey. External industrial investors are taking an interest in the region’s ideal location, and consequently a great deal of capital is flowing into the region.
In a piece by the Philadelphia Business Journal, Itay Ron of the Israeli company Faropoint states, “I can still make sense of deals in South Jersey…. The pricing is high but with some of the buildings, the replacement costs would be double and land is unavailable. We have conviction in what we buy.”
The attractiveness of the South Jersey/Philadelphia region has Faropoint eager to invest $100 million into last-mile distribution centers. However, according to Ron, “It’s hard to source these properties in Greater Philadelphia and it’s more competitive than most of the markets we are in.”
One specific market in focus is Burlington County of South Jersey where a variety of land acquisitions and planning is taking place. Faropoint acquired two buildings in the second half of 2020 in the area.
In 2019, “Burlington County saw 6.6 million square feet of warehouse approved or under construction — and a large portion of that was in primarily residential and agricultural communities ranging from Florence to Pemberton Township,” according to the Burlington County Times. In 2020, industrial products continued to rise. According to representatives of Lee & Associates in an article with citybizlist, net absorption for Class A industrial product in Burlington County increased 29% year-over-year, increasing from 2.1 million square feet in 2019 to 2.7 million square feet in 2020. As of year-end 2020, Burlington County has over 32.7 million square feet of industrial inventory and is positioned as the strongest industrial submarket within Southern New Jersey
Recently, a 117-acre industrial site at 1900 River Road in Burlington Township sold for $110.5 million to a joint venture between Clarion Partners and Baltimore-based MRP Industrial. In 2015, the same property sold for $61.5 million. As reported in the Philadelphia Business Journal, “‘Burlington County is one of the most desirable locations for industrial development throughout the Northeast Corridor due to its proximity to both the New York City and Philadelphia metropolitan areas,’ said Joe Hill of Lee & Associates. ‘The need for Class A distribution space that can conveniently service large consumer bases has been significantly magnified as shopping habits have shifted and online spending has considerably increased.’”
Black Creek Group, a Denver-based industrial commercial real estate firm, is expanding its portfolio with South Jersey property as well. Black Creek is also focusing its efforts on Burlington County where it recently acquired 45 acres. “Burlington County is experiencing unparalleled demand from the institutional development community as the need for modern distribution space that can efficiently service large consumer bases continues to rapidly accelerate,” said Bob Yoshimura of Lee & Associates,
Other counties, such as Camden, have also been experiencing industrial real estate demand. For instance, Faropoint acquired the Runnemede Corporate Center in Camden County for $29.4 million. A 382,000-square-foot building at 151 Benigno Blvd. was also acquired by Conshohocken-based Maguire Hayden for $23.1 million.
South Jersey’s industrial real estate market is booming, specifically in Burlington and Camden counties. The close proximity of these counties to both Philadelphia and New York City and the more reasonable pricing that is found within South Jersey are some of the main reasons for the boom. Significant appreciation of land values in the South Jersey area has already taken place over the past few years, and the flurry of industrial activity means investors expect this trend to continue.