By Joshua Burd
NAIOP New Jersey has announced a new date for its iconic commercial real estate awards gala, as residents and businesses continue to weather the impact of the COVID-19 pandemic.
The commercial real estate association said it has moved the annual gathering, which takes place at The Palace at Somerset Park in Somerset, to Wednesday, Sept. 9. Originally scheduled for May 14, the gala typically draws a who’s who of industry leaders in New Jersey for an evening that includes the coveted Deal of the Year awards and a high-profile slate of honorees.
This year’s honorees include the family of Frank Visceglia, Eugene Diaz of Prism Capital Partners, RC Andersen LLC, Anne Strauss-Wieder of the North Jersey Transportation Authority and Weehawken Mayor Richard Turner. Michael McGuinness, NAIOP New Jersey’s CEO, reflected on this year’s Deal of the Year finalists in the March issue of Real Estate NJ. You can find his column (with the new date) below.
Making a difference one deal at a time
By Michael G. McGuinness
On the eve of leap day last month, I had the pleasure of listening to presentations by nine teams of finalists in NAIOP NJ’s annual Deal of the Year (DOY) competition, part of the Annual Commercial Real Estate Awards Gala, taking place on Sept. 9. Nothing inspires me more than the passion, creativity, determination, social consciousness and thoughtfulness of these developers and commercial real estate professionals. They all recognized an opportunity, did their research, took the time to understand the community’s needs and developed a solution for problems confronting area residents. Their vision opened the door to countless other community benefits, including good jobs, remediation of contaminated sites, infrastructure improvements and tax ratables.
One of the notable themes this year: the cleanup and redevelopment of former heavy manufacturing sites that once employed thousands of people. In Piscataway, the new 2.1 million-square-foot Logistics Center will house 1,500 new jobs, some in LEED and WELL-certified buildings, replacing the former contaminated Union Carbide manufacturing facility that previously employed 5,000. In Phillipsburg and Lopatcong, the former Ingersoll-Rand facility — which manufactured rock drills, pumps and steam condensers, employing over 5,000 — is being transformed into a regional logistics hub with 3.85 million square feet of Class A industrial warehouse space that will house nearly 3000 new jobs upon completion. In Perth Amboy, a blighted and contaminated site that housed manufacturing operations for over 150 years, most recently Gerdau/Ameristeel, will house Home Depot’s 1.2 million-square-foot, state-of-the-art distribution facility and with 600 jobs for local residents, many of whom now commute to the 8A industrial hub.
Most of the industrial deals fit this category, and it is a testament to New Jersey’s desirability and the shrinking inventory of sites suitable for warehouse, distribution, e-commerce and logistics centers. These factors are leading to new markets for the logistics industry, historically clustered near Port Newark and the 8A submarket, and now spreading south and west across Middlesex and Warren Counties. It was amazing to hear how public officials in these municipalities worked with developers to do what was needed to attract new investments and jobs.
Gov. Phil Murphy has made sustainability and resilience to climate change imperatives. I am happy to report that the commercial real estate industry is adapting quite readily for many reasons: tenant demand, energy savings, lower insurance premiums and enhanced social responsibility. Without any mandates, many of the deals included sustainable features, such as bamboo floors, locally sourced concrete, green roofs that mitigate stormwater runoff by reducing pervious coverage, argon-insulated glass, high efficiency HVAC systems, stormwater recharge and filtration systems and backup generators. One of the industrial facilities is being built to LEED Platinum and WELL-certified building standards. It was also noted that concrete was chosen for its acoustic (sound deafening), thermal and durability features.
Labor, not surprisingly, was another major theme that trumps everything. Having ready access to a skilled and talented workforce is a critical driver of real estate location decisions today. Today, more resources are invested in human resource departments than in the past. Labor force assessment studies are routinely done to identify and analyze the laborsheds (geographic area from which a company could reasonably hire workers). Cost of living, commute time and unionization rate are some of the factors evaluated. Several development teams invested considerable time and resources, along with the respective mayors, to market sites to tenants.
Transportation and accessibility were also integral to project success. Major highways and rail infrastructure are key to site location in all cases — industrial, office and mixed-use. Transport issues for the industrial facilities was a bit more complex, since both trucks and employees need easy access, and many more parking spaces are required with different access points for trucks, cars and even bikes. It was interesting to see an uptick in the number of new logistics centers strategically located near densely populated submarkets to recruit workers. The “last mile” conundrum came up repeatedly, and shuttle buses and commuter vans were often the solution for transporting workers from train stations and bus stops. Young professionals setting up households require easy access to mass transit, fueling growing demand for attractive and affordable residential rentals in areas that have only recently been able to attract investors. This demand seems to be bottomless (given high occupancy rates), but requires more reliable and timely train service from the folks at NJ Transit.
This year’s DOY teams were younger and more diverse. Some had grown up or are currently living in the project municipalities. For me, it gives added authenticity to a project when personal reputations and quality of life are on the line. I was inspired by their passion, sense of community, social responsibility, and desire to take the time to hear and truly understand the community concerns and needs. We heard about efforts to eliminate food deserts, voluntarily raise minimum wages and provide “hospitality” and concierge-type services such as day care, urgent care and shuttles. They sought opportunities to sponsor local sports teams and events, including festivals and educational programs. They “put their money where their mouth is.”
Gov. Murphy’s administration and the Legislature can take some credit for nearly 8,000 new full-time jobs and 3,500 construction jobs these projects will generate in 10 municipalities. Thanks to our nationally recognized Site Remediation and Reform Act (SRRA) program that authorizes the use of licensed site remediation professionals, or LSRPs, massive and timely environmental cleanups are allowing the revitalization of communities with clean, safe ratables and jobs. Several developers were able to take advantage of sales tax savings connected with the Economic Development Authority’s Urban Enterprise Zone program, offsetting some of the considerable construction costs. These programs should continue uninterrupted. Nearly all these successful redevelopment stories relied on the economic benefits of local PILOT (payment in lieu of taxes) agreements, which provide developers with a predictable cost stream, and give towns revenue for infrastructure improvements, cleanups, affordable housing and other public needs. Local land use, planning and zoning ordinances should be modernized to minimize the need for zoning variances to facilitate mixed-use development. Finally, without further delay, Trenton must reauthorize state incentive programs to eliminate the suburban disadvantage and meet today’s market and workforce needs.
None of these projects would have occurred without a carefully selected team of quality professionals who share the developer’s vision, do their homework, take time to understand community needs and know how to connect the dots and get things done. Developers wear many hats — mentor, cheerleader, artist and director. Developers with successful track records, commitment to the community and trusted capital partners are worth their weight in gold. As the late Katharine Graham (former publisher of the Washington Post) said, “To love what you do and feel that it matters — how could anything be more fun?”
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.