By Dan Kennedy
New Jersey stands at a pivotal moment in its economic evolution. We’re presented with a unique opportunity based on consumer needs and federal priorities, including meaningful financial incentives. If New Jersey is to position itself as a hub for advanced industries such as data centers, energy storage and cold storage manufacturing, it needs to act.
Compare Loudin County’s work with Dominion Energy to make Northern Virginia the place where “the internet lives” with recent rate cases in New Jersey’s Cumberland County, where significant limitations in Atlantic City Electric’s service area has discouraged interest in new cold storage commercial development.
If this is a race, New Jersey is woefully behind, failing to land a new data center in nearly 20 years.
This is a hot segment of the national commercial real estate market with low vacancy rates (around 3 percent), demand jumps and rising rents. This would be good news for New Jersey, but so far, these benefits have yet to reach us. While business and public adoption of artificial intelligence is partially responsible for this growth, Ron Derven writes in NAIOP’s Development magazine that a “tsunami of data is also flooding into data centers from numerous sources, including 5G, the internet of things (IoT), e-commerce, streaming services, cloud computing and virtual reality (VR).” In addition, data center needs will be pushed further in the future by autonomous vehicles, which will likely generate terabytes of data daily through their high-resolution cameras, radar, lidar (light detection and ranging), GPS and automotive networks.
New Jersey has an indisputable strategic location, skilled workforce and robust infrastructure. These factors create a strong foundation upon which to build. However, realizing this potential requires a comprehensive strategy that addresses key challenges and leverages emerging opportunities across interconnected sectors.
- Infrastructure modernization: At the core of New Jersey’s strategy lies the modernization of its infrastructure. Data centers, energy storage facilities and cold storage manufacturing plants all require reliable power sources, robust cooling systems and efficient transportation networks. Therefore, the state must prioritize investments in upgrading its energy grid, enhancing cooling technologies and improving transportation infrastructure to ensure seamless connectivity. By modernizing its infrastructure, New Jersey can create an environment conducive to the establishment and expansion of advanced industry. This will require energy source choice, including natural gas and other fossil fuels, to complement increased renewable energy production.
- Regulatory reform and incentives: Streamlining regulatory processes and offering incentives are essential to attracting investment to this sector. Complex state and local permitting procedures and bureaucratic hurdles discourage companies from investing in new facilities. New Jersey should enact policies beyond providing investment incentives (tax breaks, grants and rebates) to make siting new facilities more practical through flexible zoning and tools to defuse NIMBYism. While other states that are winning this race offer both lower costs and a business-friendly environment, New Jersey has strengths the others don’t. If New Jersey wants to compete, it must do more than merely signal a commitment from behind a podium or in a news release. State and local leaders must remove the barriers that prevent New Jersey from being the preferred location for America’s advanced industries sector.
- Workforce development: The success of data centers, energy storage facilities and cold storage manufacturing plants hinges on the availability of skilled labor, which New Jersey has. Continued investment in workforce development to cultivate a talent pool capable of meeting the demands of these advanced industries should transcend politics. New Jersey governors — now and in the future — must collaborate with educational institutions and industry partners. Gov. Phil Murphy deserves credit for helping develop specialized training programs in IT infrastructure management, renewable energy technologies and advanced manufacturing. To ensure New Jersey delivers a steady supply of qualified professionals to support these industries — which other states can’t — prioritizing workforce development must continue beyond the current gubernatorial term.
- Strategic partnerships and collaborations: Collaboration between government, industry and academic institutions is essential for driving innovation and fostering growth in the advanced industry sector. New Jersey should establish strategic partnerships and collaborations to leverage the expertise and resources of all stakeholders. By fostering a collaborative ecosystem, New Jersey can create a supportive environment for the development and deployment of new technologies and solutions.
New Jersey must take prompt and meaningful action on these four steps to create an environment conducive for the growth of advanced industry. Anything less will cause New Jersey to fall further behind in this race for the future.
Dan Kennedy is CEO of the New Jersey chapter of NAIOP, the Commercial Real Estate Development Association, which is the state’s leading organization for owners, developers and related professionals in office, commercial, industrial and mixed-use real estate. NAIOP NJ advocates for responsible development that creates jobs and benefits for communities where New Jersey residents work, live and play. He is a licensed professional planner with a MCRP from Rutgers University’s Edward J. Bloustein School of Planning & Public Policy and a B.S. in environmental science from the University of Delaware.
