Original Article

E-commerce and the role of the next governor in real estate were resounding themes at the New Jersey NAIOP CEO Perspective panel last week. With less than five weeks until the gubernatorial election, the chapter members gathered at Maritime Parc in Jersey City to voice their concerns which included remaining competitive in the region, millennial retention and attracting more jobs to the state.

Dave Gibbons, NAIOP NJ chapter president and CEO and president of Elberon Development Group, led the discussion alongside Mark Crawford, Duke Realty’s vice president of acquisition and disposition; Eugene Diaz, Prism Capital Partner’s principal; and Joe Taylor from Matrix Development Group.

According to Diaz, being a competitor in today’s market means understanding the role of urbanization in labor, millennials and empty-nesters in the state while thinking of the role of the state in a more global economy. He and Taylor stressed the importance of addressing new trends, such as urbanization, its inadvertent effect on infrastructure and the role of government.

“There is a new planning paradigm that we’re all faced with today,” Diaz said. “Part of it is millennial-driven, they’re aging and new millennials are coming online, but this is the reurbanization of our suburban marketplace. That planning paradigm, for 40 or 50 years, planning boards simply put high-density residential in one side, you put nice residential on a hill, you put a little Main Street commercial with some retail, office over there and that’s it. The reality is, we found out suburban markets have been dying off because that paradigm doesn’t work. And the new paradigm now is the urban paradigm, which is everything needs to be around each other.”

Diaz said Prism continues to see success and interest in its Hoffman LaRoche campus redevelopment project in Nutley. The firm recently signed Modern Meadow, a Brooklyn-based biotech firm that manufactures synthetic leather, to occupy 72,900 square feet at the campus.

Taylor said that even though there is an emphasis on last-mile delivery, which puts New Jersey in an advantageous location relative to New York City, the state needs to do more to remain attractive for developers. The state of development in New Jersey, namely, the lack of available land in highly marketable locations has pushed Matrix Development to venture into Eastern Pennsylvania and even Staten Island in hopes to balance how attractive its facilities can be while keeping the projects economically viable.

“With the exception of PILOTs, which we used pretty much everywhere we go in New Jersey, I don’t think we’ve done a deal without incentives in years. For our urban projects, certainly for Newark, Urban Transit Hub was important. For New Brunswick, Transit Hub was very important. Couldn’t have done without it, couldn’t have done Pannasonic without them… Without PILOTs, we don’t move.”

“The new governor has to do a far better job than the old governor did, in my opinion, to make infrastructure a much higher priority,” he said. “The Turnpike, as great a road as it is, is old. We’re technologically behind and still have people taking tickets, which is silly. The things that have to be done are more mobility and reinvestment.”

Crawford said Duke Realty, a relatively newcomer to the state, has noticed the trends in population in both the state and nationally. The REIT, which was once concentrated in the mid-west, he said, has changed its strategy completely, seeking to be in top tier industrial markets such as New Jersey, Florida and Southern California.

“Over the last few years we sold off all of our suburban office and medical offices, all retail, and reinvested into industrial real estate, so now 99 percent of our income comes from industrial real estate” Crawford said. “We are heavily concentrated in the Midwest, but we’re trying to change that by focusing our investments in tier 1, high-barrier markets like New Jersey, Southern Florida and Southern California. One of the things that interest us in Northern New Jersey is that it is, of course, one of the biggest industrial markets in the country. It’s in the middle of one of the biggest population centers in the country and it also has great distribution infrastructure and access to all that population. That, coupled with the land constraints here really give us what we see as our long-term growth strategy.”

The REIT owns approximately 5.7 million square feet in the state across 15 properties and 47 acres of land.

Looking into the future, both Diaz and Taylor said they hope the next governor sees a value in more public-private partnerships and emphasized the need for the state to address its infrastructure problems.

“If we don’t get New Jersey transit figured out, there is going to be a strangle-hold at some point on development,” Taylor said. “There is going to be a strangle-hold on development if we don’t modernize the way these highways are maintained, whether it’s privatizing, whether it’s technology, whether it’s doing flexible spending on the Turnpike.

“There are a lot of things that need to get done here to benefit our children and their children. And most of them are unpopular to at least someone. Get over it. Someone has got to have the (courage) and people have to be willing to let things happen. In my conversation with both campaigns, we’ve gone over the Turnpike, Parkway, Amtrak, Gateway, all these things to increase connectivity and productivity. They all say the right thing, but after they get sworn in and they go into the legislature or post-election meetings, things get a little dicey. I’m hoping it won’t be that way with the next governor.  We’ve had eight years of that. We can’t live another eight years that way.”