Northeast Real Estate Business

NOV-DEC 2015

Northeast Real Estate Business magazine covers the multifamily, retail, office, healthcare, industrial and hospitality sectors in the Northeast United States.

Issue link:

Contents of this Issue


Page 53 of 64 Northeast Real Estate Business • November/December 2015 • 53 DEVELOP ACQUIRE MANAGE LEASE Put your trust in us. At First Industrial Realty Trust, it's not only about the buildings, it's about the trust. 9 out of 10 customers would recommend First Industrial as a landlord, just one reason why we're a preferred industrial real estate provider in the U. S. From leasing to developing to managing our properties, we have the knowledge, resources and relationships to make it happen. For more information: Jojo Yap Chief Investment Ofcer (312) 344-4328 price for land has increased dramati- cally, and the demand for land has in- creased dramatically along with it. The implication is that there is more new product coming to market, but the price goes up." The New Inland Empire Moving inland, key markets in east- ern Pennsylvania also are beneftting from the supply chain evolution. "After northern New Jersey, eastern Pennsylvania is seeing the most in- dustrial activity in the region," Danzig says. "Many older seaports like New York and New Jersey are constrained by the cities that built up around them, and not all available facilities are viable options for today's users," Levy adds. "A lack of functioning space options often pushes industrial tenants further inland." Located within an 11-hour drive — a truck driver's shift — from a sig- nifcant percentage of the U.S. popu- lation, Lehigh Valley in particular is quickly becoming the big bulk distri- bution center for the Mid-Atlantic and Northeast, according to Egan. First Industrial Realty Trust is scheduled to deliver two buildings — one 341,000 square feet and the other 243,360 square feet — off Route 33 in Northampton County in the fourth quarter. DCT Industrial recently de- livered its 425,714-square-foot DCT Chrin Commerce Centre in Palmer Township. "In Lehigh Valley, they're building big — going up to 1 million square feet or more — and they're getting tenants," Egan says. "With the excep- tion of the Inland Empire, I don't think we've ever seen this many big, big buildings go up at the same time and also get occupied." Speaking of big buildings, accord- ing to Colliers International's Q2 2015 Industrial Research & Forecast Report, Liberty Property Trust is starting con- struction on two 1 million-square-foot buildings for Uline, and The Rockefell- er Group has a 1.1 million-square-foot hub scheduled to commence soon. "Lehigh Valley is a really key, quick- ly growing area," Egan says. "If we had this conversation 10 years ago, I don't think anyone would've consid- ered it to be one of the key logistics centers in the U.S." Panama Canal Impact Looking ahead, speculation contin- ues about the impact — or lack there- of — that will be felt in supply chain networks in the Northeast once the expanded Panama Canal opens next year. CBRE conducted a study prior to the West Coast congestion last year to try to gauge how much the widened canal could potentially shift where users en- ter the country. Egan explains: "We posed a question to users: If you're bringing goods into the country from the West Coast and then shipping across the country, what is the point geographically where that route stops making fnancial sense and, instead, it becomes more eco- nomical to bring goods in through the East Coast and then ship to the west?" The result? "The line of indifference, as we called it, was much further to the east than we thought it would be," he says. "Even when we put in some inputs with the wider canal, the line didn't move inland very much." CBRE's conclusion was that the ca- nal will have an impact, but not as much as originally anticipated. "Some conventional thought was that it would be a complete game changer," he says. Danzig agrees that the Port of New York and New Jersey will see limited volume increase from the expansion. "The widened canal is going to have a much bigger impact for the ports in the South, and maybe up the East Coast, but not as much for New York and New Jersey," he says. "This is an imports port as opposed to an exports port. The experts say we can't afford to bring in the Post-Panamax ships, unload them, and then send them out empty. It's not cost effective." Even with speculation leaning to- ward minimal impact, the Port Au- thority of New York and New Jersey is making sure it's ready for increased volume and bigger vessels, if and when they come. According to CBRE Research's 2015 North America Ports & Logistics An- nual Report, the Port Authority is in the midst of a $4.3 billion capital plan to invest and upgrade existing port in- frastructure. Most signifcant is the 64 feet of air being added to the Bayonne Bridge, which will improve acces- sibility to the primary terminal, Port Newark-Elizabeth, for Post-Panamax ships. The Bigger Picture From Levy's perspective, the Pana- ma Canal is just a part in the greater whole when it comes to port activity and logistics-related real estate growth in the Northeast. What it really comes down to is accessibility. "Access to major population centers is the key driver of warehouse space," he says. "Markets with this proxim- ity beneft in a healthy economy. With direct access to the Northeast's highly dense population, volumes will only increase." n

Articles in this issue

Links on this page

Archives of this issue

view archives of Northeast Real Estate Business - NOV-DEC 2015