Mark Shearer, senior managing director for Rockefeller Group’s New Jersey and Pennsylvania region, is set to begin a two-year term as NAIOP New Jersey’s chapter president. He’ll assume the post amid increasingly fierce resistance to warehouse development in the state, but he expects the association to expand its outreach to policymakers and take a more proactive approach to highlight the value of such projects. — Photo by Aaron Houston for Real Estate NJ
By Joshua Burd
Local pushback is nothing new for the commercial real estate sector, but developers in New Jersey have faced increasingly fierce resistance to the types of warehouse projects that have helped sustain the industry in recent years.
Such is the challenge for Rockefeller Group’s Mark Shearer, who recently began as NAIOP New Jersey’s chapter president starting in late January.
“Right now, we have certain municipalities that are fantastic to work with, and some that clearly don’t want any development,” he said. “So we want to try to do a little more outreach and education that we are of value to the community, and we can help actually push the township agendas forward, as opposed to just taking.
“I think we need to do a better job of advocating for ourselves, so I think that’s going be a big push in the early part of (2023), just making sure that the information that’s out there is accurate,” he added. “There’s a lot of disinformation — that we pollute, that we do all of these other things — but we (as an industry) have cleaned up more environmentally contaminated sites than anyone would care to admit were even in New Jersey, and the way that happens is through economic development. Without that, these sites will just sit there and stay polluted.”
Those conversations are well underway with lawmakers in Trenton and other stakeholders as NAIOP, the commercial real estate association, seeks to promote the benefits of industrial projects and “make sure that the entitlement process is as uniform as we can get it across municipalities.” Broadly speaking, he said it’s crucial for the chapter to not simply oppose public policy, but “help on the front end” when laws and regulations are being crafted.
They’re among several areas of focus for Shearer and a chapter that has grown to some 850 members. That constituency is “really strong” and increasingly diverse, which the veteran developer hopes will continue under his two-year term.
“I think we learn a lot from our peers, and I think we come up with commonality,” said Shearer, who joined Rockefeller in 2018 as its senior managing director for the New Jersey and Pennsylvania region. “If we’re all having the same problem, that’s how we can address it. As individuals, we tend to move on to the next thing.”
Shearer will helm the chapter’s volunteer leadership while also leading his firm’s regional development team, which has built more than 5.5 million square feet of industrial space in the past five years. It’s now completing a 345,600-square-foot project in Eastampton, while its current pipeline of some 6 million square feet in New Jersey and Pennsylvania includes a nearly 655,000-square-foot project in Spotswood, along with opportunities in Carneys Point, Piscataway, Philadelphia and elsewhere.
To talk about it all, Real Estate NJ met with Shearer in mid-December at Rockefeller Group’s regional office in downtown Morristown. Below are excerpts from the interview, edited for space and clarity.
Real Estate NJ: You became a NAIOP New Jersey trustee in 2016. How does your job change as president?
Mark Shearer: I think the real change is you are now the face. The organization is so well run with the staff, with (CEO) Mike McGuinness and the rest of the team. It’s pretty much following their script and following the board’s script. The stuff that we pursue is decided on at the board level and, as the president, you just become the face of it.
RENJ: With respect to anti-warehouse sentiment, what recourse is there at the state level when much of the pushback is coming from individual municipalities?
MS: I think a lot of it has to come through the Legislature … At the township level, there’s so many municipalities, I don’t see us being able to do a really good, coordinated effort except through the League of Municipalities. One of the other things we want to look at is potentially partnering with some other groups to just give ourselves a little more volume as far as the constituency that actually isn’t against everything that’s proposed — trade associations and some other groups as well.
RENJ: The League of Municipalities is interesting because you don’t see a lot of partnership there historically between the league and the commercial real estate industry.
MS: No, but we’re hoping that we can get some education through that group, because they are the ones that disseminate guidance to the municipalities.
RENJ: Remediation is almost a given for industrial development these days, but it still seems like, outside of the residents of that town, it’s probably not widely known how much environmental cleanup you’re doing in the state.
MS: I would say, even inside of the town, most people have no idea how dirty some of these sites have been. And a lot of the ones that we’ve done anywhere north of, call it, Exit 9, has been some kind of environmental remediation. That’s the nature of ‘Welcome to New Jersey.’
RENJ: In the meantime, membership in the chapter seems like it’s growing at a good clip.
MS: The membership is really strong. I think we want to see continued diversity in that membership as we go forward. We have a really strong Developing Leaders program, which is going to be the next generation of leaders, so I like to focus on that. I think identifying talent and folks that can help serve for the long haul is important.
RENJ: Is anybody still talking about COVID impacting their business?
MS: We all talk about it, but I don’t know that it’s getting in the way. The bigger COVID issue is really the return to the office for (members) that are more office-centric. And they’re trying to figure out ways to get occupants back in their building on a more full-time basis.
RENJ: Let’s talk about your day job. What’s front and center for Rockefeller Group in New Jersey?
MS: We’re continually looking. It’s gotten harder to make the numbers work with the capital markets kind of being in flux, but we haven’t put our pencils down. We’re still working, still actively seeking deals, and the fundamentals of the market are still really strong. Vacancy is really low. Rent growth continues. Rental rates are strong. It’s really just the capital markets that are in flux right now because of the interest rate increases and just uncertainty in the market.
RENJ: The Spotswood site is fascinating because of its manufacturing history and its location in a small town in Middlesex County. Have you seen that Exit 9 submarket emerge as a viable option over the last couple years?
MS: I think it’s always been viable. There just hasn’t been any land there, there hasn’t been any real density of any kind of development there, so it’s been pretty stagnant for a really very long time. With the site we’re working on, the construction, I think, began in (the 1920s) on the factory that was there, so it’s been industrial for a long time. I think the market has moved a little bit. It’s relatively close to the port, and we just like it as a Turnpike access, port access location.
RENJ: What are you doing to find sites now that you weren’t necessarily doing five years ago?
MS: It’s the same process. We have never really been a buyer of fully entitled, ready-to-go sites. That hasn’t been our business model. Our business model has been to take more challenging stuff, figure it out and then put it into production.
RENJ: Because you’re getting better value that way?
MS: It helps the yields. It helps limit a little bit of the competition for those sites, and our model is not that we’re going to pay the most money for a site. We’re not the best buyer for that. If the site’s ready to put a shovel in the ground tomorrow, someone else is probably going to be doing that deal.
RENJ: Generally speaking, are there still old industrial sites in New Jersey that are potentially ripe to be repositioned and redeveloped?
MS: There’s a ton. We’re not built out or redeveloped out. … The thing is, when the capital markets seize up, we effectively become built out, because no one wants to take those risks. When it frees up a little bit more and the capital’s flowing a little bit more freely, people will take more risks and put sites into production that would not have been in production before.