(Editor’s note: This column appeared in the December issue of Real Estate NJ.)
By Michael G. McGuinness
Giving Tuesday, often stylized as #GivingTuesday for the purposes of hashtag activism, is the Tuesday after Thanksgiving in the United States. It is touted as a “global generosity movement unleashing the power of people and organizations to transform their communities and the world,” according to Wikipedia.
Never has there been a more appropriate time to be charitable and share what you have with those in need. It’s been nearly 10 months since the COVID-19 pandemic began taking its toll on New Jersey, where the unemployment rate currently hovers a little over 8 percent. Many of those who lost their jobs, or who are underemployed, do not have health insurance and must rely on Medicaid. According to the Community FoodBank of New Jersey, the number of food insecure New Jerseyans could increase to 56 percent higher than the national average. All of our already stressed food banks are stockpiling food and funds as COVID infections are on the rise once again. Please consider a donation (every dollar helps!) to one of these major hunger action groups:
As our businesses continue to suffer the effects of the pandemic, more and more workers will be impacted. The NAIOP CRE Sentiment Index (based on a survey of nearly 300 national firms) for September 2020 was 45, indicating that respondents expect unfavorable conditions for commercial real estate over the next 12 months. Closer to home, the New Jersey Business & Industry Association’s 2021 62nd Annual Business Outlook Survey (released on Nov. 29) found severe COVID-19 impacts and great dissatisfaction with New Jersey’s business climate. Many survey respondents expressed continued loathing for high taxes and a common sentiment that New Jersey’s policies are “anti-business.” Coronavirus or no coronavirus, New Jersey’s challenged performance compared to other states is well established by the business community. This year, there was little change in those standards — although just about all of them are going in a negative direction.
There were some positives: 43 percent rate the quality of New Jersey public schools better than other states — although that’s a 6 percent decrease from last year. As for workforce quality, 29 percent said it was better than other states for the second straight year. But when it comes to taxes and fees, 90 percent reported the Garden State was worse than other states. New Jersey was also listed as worse than other states in controlling government spending (80 percent), attracting new business (72 percent), controlling health care costs (71 percent), controlling labor costs (67 percent), attitude toward business (66 percent) and the costs of regulatory compliance (63 percent).
NJBIA CEO and President Michele Siekerka concluded, “As we are now confronted by a second wave of coronavirus that will continue to impact the livelihoods of many business owners, it is even more incumbent for our leadership to provide support, comprehensive planning and outside-the-box thinking to help them, and to avoid any mandates or policies that would further strike at their bottom line.”
I couldn’t agree more. It seems prudent to me that local, county and state government agencies need to bite the bullet and do some “giving” as well. How about giving businesses a reason to locate and expand here? How about giving them tax relief and better service? How about tightening their belts and working more cost effectively, and entering shared service agreements with other government entities? How about merging and/or consolidating with other agencies doing the same thing?
It’s 11:59 PM, and unless the Legislature and Gov. Murphy agree to finalize a robust business incentive program by New Year’s Eve, one that puts New Jersey on par with other states to compete for the jobs that will follow on the heels of a successful roll-out of COVID vaccines in 2021, it may be too late. If we can tackle the high cost of doing business here, we may have a shot at attracting more companies, especially those in life science, and the many related jobs that are poised for acceleration in 2021 and beyond. The potential is great.
According to JLL’s 2020 Life Sciences Real Estate Outlook, the race for development and distribution of COVID-19-related tests, therapeutics and vaccines is already beginning to energize demand in pharma-heavy New Jersey, a trend that should spread to more markets as 2020 progresses. Indeed, because many primary life sciences markets are also tech hubs, available space is subject to demand from both industries, pushing overflow life sciences demand to rising secondary markets.
Many life sciences companies — which include pharmaceutical, biotechnology and medical devices businesses — are currently located in New Jersey for good reason. New Jersey offers a highly educated workforce and proximity to six research universities in the state, along with Columbia University and the University of Pennsylvania within a 50-mile radius. There are available suburban office campuses that can be adapted to life science uses and space to build GMP (Good Manufacturing Practices) facilities for R&D and manufacturing with excellent speed to market due to the port and transportation networks. New Jersey meets all these requirements and should work to capitalize on the expanding life sciences sector. With forecasted growth in this market, we should do what it takes to attract these businesses to locate in New Jersey bringing new jobs and investment. NAIOP New Jersey’s Life Sciences webinar in February 2021 will present a deeper dive into these issues.
But are we ready to meet this challenge and seize this opportunity? That depends on how much we are willing to give up our antiquated approach to business attraction and retention, to get there. ‘Tis the season for giving.
Michael McGuinness is CEO of NAIOP New Jersey and has led the commercial real estate development association since 1997. NAIOP represents developers, owners, asset managers and investors of commercial, industrial and mixed-use properties, with 830 members in New Jersey and over 19,000 members throughout North America.