A rendering of 395 Pedricktown Road, a nearly 482,000-square-foot industrial building that is among the final pieces of Dermody Properties’ LogistiCenter Logan in Logan Township. — Courtesy: Dermody/Ware Malcomb
By Joshua Burd
For what may seem like a remote section of southern New Jersey, Logan Township has all the makings of a top industrial submarket, thanks to major highways like interstates 95 and 295, the nearby Port of Philadelphia and its access to a huge swath of the Northeast.
Dermody Properties sought to capture all of those benefits more than a decade ago, when it set out to build millions of square feet of logistics space in the Gloucester County town.
“Tenants usually figure this out first and developers chase after the tenants to find sites to solve their needs,” said Gene Preston, partner in Dermody’s east region office. “We did this a little bit in reverse: We bet on a big park when it wasn’t so fashionable to do so and we’ve been rewarded.”
There is no disputing that. Known as LogistiCenter Logan, the 1,100-acre park has attracted users such as Kimberly Clark Corp., Freightliner and a long list of other well-known tenants. And the developer is now marking that success as it prepares to enter its last phase of development. Dermody and its partner, Great Point Investors, have broken ground on their last two buildings in the park, which will add another 563,000 square feet to the portfolio and push the complex above 5 million square feet.
The smaller of the two buildings, which is about 194,000 square feet, was already under construction in mid-July and is rising across Oldmans Creek Road from a project that drew significant attention to the park last year, when Amazon signed a 1 million-square-foot lease for the space. The deal was another source of validation for the park, building on the success that Dermody found with South Jersey’s large base of food companies and other businesses.
“When you buy a big park like this, you typically have a 10-year horizon on getting it developed,” Preston said, “and we had a major recession in the middle of that, but came out of the recession very strong and are able to get to the finish line for the park, so that’s exciting.”
The sprawling complex sits just off I-295 and about 10 minutes from Exit 2 of the New Jersey Turnpike. But it was home to only about a half-dozen buildings in 2005 when the Reno, Nevada-based developer acquired the site and crafted the master-planned campus.
James Mascaro, the firm’s senior vice president for development, recalled that the existing buildings ranged from about 60,000 to 150,000 square feet, but Dermody envisioned larger and more modern properties in line with other top submarkets.
That plan initially drew well-known companies such as Freightliner, Serta, Sears and others, as the firm began with two buildings that were each around 360,000 square feet. In 2007, Dermody developed a 599,500-square-foot Northeast distribution center for Kimberly Clark under a lease with the personal care products company.
“It had to have been an eye-opener,” Preston said. That’s not to diminish any of the buildings that came before it, he added, “but Kimberly Clark is a really well-known company, they made a big commitment and the fact that they’re still in the park says a lot about the park, how it’s evolved and what kind of logistics location it is.”
To be sure, Dermody has pioneered the submarket alongside a handful of other landlords, including Matrix Development Group and Liberty Property Trust. But the region has gained increasing attention in recent years as other developers look for opportunities beyond northern and central New Jersey.
Dermody has maintained its edge partly by updating its master plan for Logan in 2014, in a bid to capture the changing preferences of tenants. For instance, the site plan for what became the Kimberly Clark facility originally called for three smaller buildings that were deemed to be too long and narrow to appeal to modern users.
Meantime, Dermody opted to break up a larger building in the northern half of the site that ultimately became 395 and 405 Pedricktown Road, which will result in properties of about 482,000 square feet and 152,000 square feet, respectively. The buildings have attracted recent tenants including Kenco Logistics and Greenyard, a Belgian food company.
“Flexibility was important and has been important in the park for the whole time we’ve been there,” Mascaro said, noting that the new master plan also called for buildings with higher clear heights, additional trailer parking and other modern features.
The fine-tuning has ensured that the park remains attractive to forward-thinking tenants. Look no further than Amazon, which announced in April 2017 that it would open one of its massive fulfillment centers at the Logan campus. The e-commerce giant is slated to occupy the space at 2651 Oldmans Creek Road by year-end.
“It’s obviously a pretty big endorsement of the region and the submarket that Amazon has a facility,” Preston said. But the fundamentals go hand in hand, he added, noting that tenants have become more sophisticated in their decisions and allowed developers to explore new markets.
“Ultimately, what’s driving the success here in southern New Jersey as well as all of the well-performing markets around the country is the explosion of e-commerce,” Preston said. “And as companies look to optimize their supply chain and find the right places to position their goods to efficiently get them to the customers, different locations have emerged as the whole supply chain discipline has grown and evolved.”