By: Yolanda Rivas
2 min read March 2020 — The Southern New Jersey region’s low real estate costs and strategic location near major highways is bolstering demand in the industrial market. Ian Richman, senior managing director in the Southern New Jersey at Colliers International, specializes in the leasing and sale/acquisition of commercial and industrial properties in Southern New Jersey. In a recent interview with Invest:, Richman shared the trends in the market and the possible disruptions that could take place in the face of COVID-19.
How are you preparing to face a possible economic downturn?
We haven’t seen signs of a slowdown yet. Construction is still going on and demand has been outpacing supply to an extent. But with the development of COVID-19, we are expecting to see disruptions in the supply chain and people are starting to get nervous about the impact on the economy. Companies that import raw materials or have their products manufactured in China or elsewhere overseas expect to see a lag in production, delay in delivery or in the extreme case, a stoppage of manufacturing in certain factories altogether. This is uncharted waters and a global pandemic will have ripple effects throughout all industries, not just real estate.
How strong is the industrial market in South Jersey?
The demand in the industrial market has continued to increase over the last 12 months. One of the biggest drivers has been our rental rates and sale prices on a price per square foot basis relative to neighboring areas such as Northern New Jersey and the New York metropolitan area. A significant part of our activity has been coming down the New Jersey Turnpike from these northern-based tenants, owner-user purchasers and investors.
What market trends are emerging?
The Philadelphia Port is one of the largest, if not the largest, food port in the country. We see a lot of demand from food-related companies looking for warehouse/distribution facilities or manufacturing facilities. This is not a new trend but rather one sector that has been increasingly growing from a demand perspective in Southern New Jersey. Additionally, the overall demand for warehouse space has continued to remain strong, especially with the uptick in e-commerce and the expectation by the consumer to have goods in their hands as quickly as possible. When Amazon Prime was introduced, two days for delivery seemed fast and quickly became the norm. We are now finding that next-day delivery, if not same-day delivery, is an integral part of the supply chain That is driving a lot of companies to look for warehouse space in South Jersey.
The new speculative and build-to-suit development in our market has been mostly in the northern parts of Burlington County and the southern parts of Gloucester County,
How do you expect the market to evolve in the near future?
We expect more companies to continue to consider South Jersey as a home. The prices are what is really driving most of the activity and that is a trend that we will continue to see. We are now seeing a lot of multi-generational family-owned real estate companies starting to sell some of their properties to more institutional owners. We are also seeing the presence of more institutional owners and large regional owners with real estate holdings in our market. Some of that is attributed to the development of large distribution centers and some of this is attributed to the merger and consolidation of ownership groups.
To learn more about our interviewee, visit:
Colliers International: www.colliers.com