Jeff Milanaik, regional partner for Bridge Development Partners — Courtesy: Premier Group/Scott Roth
By Joshua Burd
It was a year to remember, but Bridge Development Partners is already focused on the future.
After the sale of more than 3 million square feet of industrial space in New Jersey — part of a three-state, $700 million deal announced earlier this fall — the firm is well on its way toward refilling its pipeline in the Garden State. Jeff Milanaik, regional partner for Bridge, said the firm is under contract for a series of sites in northern and central New Jersey that could pave the way for another 6 million square feet of development activity.
In other words, the firm still sees plenty of opportunity in the Garden State.
“If I had a crystal ball, I probably wouldn’t be sitting here,” Milanaik joked. “But you use instinct and you surround yourself with really bright people — and you listen and learn.
“And it’s convinced us to double down right now.”
The privately held, Chicago-based firm entered New Jersey only three years ago. But it quickly amassed a pipeline of well-located development sites that could tap into the demand for last-mile distribution space, largely by taking on parcels that had complex environmental and engineering challenges.
That strategy paid off in a big way earlier this year. In late September, Bridge closed on the first of three phases of a blockbuster deal with Duke Realty Corp., an Indianapolis-based REIT, which agreed to acquire roughly 4.28 million square feet that the firm had completed or had under construction in New Jersey, Southern California and South Florida.
That included 2.26 million square feet of existing space in Perth Amboy, South Brunswick, Cranbury and Carteret, along with 852,000 square feet in buildings that are under construction in Newark and the Meadowlands. At full build-out, the value of the deal across all three states will approach $700 million.
Bridge and its joint venture partner, Banner Oak Capital Partners, had already started to think about the next phase of its pipeline well before the sale to Duke became a possibility, Milanaik said. While the deal was a sign that the industrial market was becoming “super-heated,” he said the firm still saw plenty of room to run in New Jersey.
For one thing, the supply of new industrial space in the state continues to be constrained, thanks in large part to a lack of shovel-ready sites. Milanaik also noted that banks have become more disciplined after being burned by an overbuilt warehouse market in previous cycles.
At the same time, demand is consistently strong from a host of users such as e-commerce and retail players, logistics firms and others, especially those seeking to be just a few miles outside of Manhattan. Milanaik also cited the continued rise of online sales and a trajectory for e-commerce that still shows room for additional growth.
“I think it’s a new paradigm with everything that’s happening today,” he said. It’s why Bridge started the process of looking for new development sites in New Jersey some 18 to 24 months ago, even as it was still developing the properties that were ultimately sold to Duke. The firm is following a similar strategy of sticking to sites along the New Jersey Turnpike, starting at Exit 10 and heading north, with a willingness to clean up the properties as needed.
Milanaik expects to close on many of those sites by the first quarter of 2018.
“Two years later, I’m at a point where I can get to a contract,” he said. “I just think the opportunities are here, especially with the model that we’re running.”
He added that, in its next round of acquisitions, Bridge will look to be a long-term owner of some of the assets that it develops.
“We’re looking at (2018 and 2019) to be extremely active,” Milanaik said.
Bridge’s pipeline will look to stay active across its portfolio. Tony Pricco, the firm’s president, touted a pipeline of more than $1.3 billion in value, which encompasses 10.3 million square feet in New Jersey and other supply-constrained major U.S. industrial markets such as Chicago, Miami, Los Angeles, San Francisco and Seattle.
Garden State industrial strength
Bridge Development Partners’ blockbuster portfolio sale to Duke Realty Corp. is anchored by properties in the Garden State, including seven buildings at four locations in central New Jersey and two buildings now under construction in northern New Jersey.
Here is the full list in New Jersey:
- Bridgeport Logistics Center, a three-building 1.3 million-square-foot industrial park in Perth Amboy
- Bridge Point South Brunswick, a 488,884-square-foot building at 773 Davidson Mill Road in Monroe. The building is fully leased to two regional third-party logistics firms.
- Bridge Point Cranbury, a 264,085-square-foot building that was recently leased and is located at Route 130 and Broadway Road in Cranbury.
- Bridge Point Carteret, a 206,500-square-foot building at 900 Federal Blvd. in Carteret. Located just off New Jersey Turnpike Exit 12, the facility is fully leased for 15 years to Virginia Dare Extracts, which relocated from Brooklyn.
- Bridge Point Port Newark, a planned 661,000-square-foot facility at Delancy Street and Route 1&9 in Newark.
- Bridge Point Meadowlands, a planned 193,805-square-foot building under construction at 5 Ethel Blvd. in Wood-Ridge and Carlstadt.