Page 22 - RE-NJ

20 OCTOBER 2023
OWNERS COUNCIL Q&A
BRAD VANDER VLIET
VICE PRESIDENT, INDUSTRIAL CROW HOLDINGS DEVELOPMENT
How do you feel about the market?
New Jersey’s geographic, infrastructure and labor advantages contribute to its consistent ranking as one
of the country’s top three performing industrial markets. We are confident this leading position will continue.
Where do you see opportunity in New Jersey?
Looking ahead, with the fourth round of COAH obligations set to launch in 2025, New Jersey municipalities are going to have to look differently and creatively at ways to solve
their affordable housing deficiencies. We believe
this will spark a change in perspective on industrial development. From a value- add perspective, commercial projects are significant revenue generators for affordable housing trust funds.
Public-private partnership can make a major difference here, as towns work to leverage Smart Growth principles regarding the
strategic placement of industrial product within
a town’s borders. It can be done, and it has been done. Cranbury Township is the perfect example: It has a critical mass of industrial product — a major driver
of the local economy — geographically segregated from a quintessential suburban downtown environment.
Where do you see opportunity outside New Jersey?
Monies from the widely publicized Inflation Reduction Act (IRA) have been flowing into major manufacturing projects — from a microchip factory to electric vehicle plants — throughout the country. Unfortunately, New Jersey has not been in the mix. There is meanwhile a lot of real estate activity happening in Atlanta and Charlotte.
More locally, Philadelphia has seen phenomenal year-over- year industrial rent growth, underscoring the strength of the market there.
What’s been the biggest surprise of 2023?
In our ever-evolving, ever- changing industry, just when you think you’ve figured out the market, new instability occurs. A few years ago, you knew what you were getting into — the rents, the cap rates, the proper building size and the tenants out in the market. In the current cycle, outside factors are really having an impact. We are seeing as- of-right applications being unjustly denied, debt/equity woes and limits on utilities (what is available today might not be tomorrow). There are so many variables that are challenging to predict on
the path to entitlements, and this is creating uncertainty on what needs to be certain. What used to be just bumps in the road unless something wild happened have become commonplace.
What is the biggest challenge facing the industry?
The biggest challenge is
the public’s perception of industrial development. Folks hear industrial and think “thousands of people, thousands of trucks,” which is usually not the case. They forget or ignore that these facilities create family- supporting wages, and
they also forget industrial development supports the local and state economies. New Jersey has been losing businesses and people; that needs to reverse, and our sector can be a catalyst. This
type of education is an uphill battle — but it’s important.
Give us a prediction for the fourth quarter.
The market will be surprised by the positive overall activity that occurs, including major leases, cap rates exceeding expectations and land sales.
In the past few months, we’ve seen more activity than we have in the past 18 months. The shock of the market and how things will settle out remains, but there are now more real estate site tours and RFPs. Companies increasingly understand what the future holds and are more apt to make decisions.
Getting To
Know You
FOOD OR BEVERAGE OF CHOICE
It’s a tie between pizza and milkshakes.
FAVORITE JERSEY RESTAURANT
Gladstone Tavern in Peapack
BEST WAY TO BLOW OFF STEAM
Sporting-clay shooting
FAVORITE VACATION SPOT
The Bronx Zoo is a great day trip with the family.
TV SHOW, MOVIE OR BOOK YOU’D RECOMMEND
Three things I miss! Parenting three children under the age of six has been keeping me busy in my spare time.