New Jersey’s warehouse boom has come under fire from state officials, lawmakers and community groups in 2022, but strong industrial growth and cash-hungry cities will likely ensure the boom continues into 2023.
For the first time, state officials and lawmakers took action to stem the industry’s boom, while grassroots groups stepped up. One South Jersey planning board rejected a giant warehouse project last week.
Still, industry fundamentals remain strong, with one industry report projecting 26.5 million square feet of warehouse construction in New Jersey over the next three years.
“It is clear that the market needs more available space,” the State Planning Commission said in a landmark report on the warehouse industry this year.
At least four bills have been introduced in the Legislature before the end of 2022 by lawmakers under pressure from voters to protect their cities from “warehouse sprawl.”
The commission’s actions and several new bills in the Legislature reflect growing public concern over the industry’s recent boom in response to the pandemic-induced shift to online shopping and the scramble for land to build warehouses from which to distribute goods to consumers.
After urging state and county governments to curb growth — which is largely determined by municipalities that control land use — the commission adopted guiding principles in September, aimed at helping cities decide whether to approve a growing number of warehouse applications.
There is no authority to impose guidelines
But the commission stressed it had no power to impose its recommendations on local authorities, which staunchly defend a long tradition of self-government, and so it said the recommendations on warehouse siting, design, traffic impacts and community relations were purely advisory. Some critics called the document toothless, while planners hailed it as a detailed road map for local officials caught between developers and residents who worry their cities will be overrun by huge industrial buildings and increasing truck traffic.
In the Legislature, at least four bills were introduced in late 2022 by lawmakers who are under pressure from voters to protect their cities from “sprouting” warehouses and want county and local officials to carefully study the project’s implications before approving applications.
One bill by Sen. Shirley Turner (D-Mercer) would not just encourage, but to demand cities follow the recommendations of the State Plan when evaluating applications for warehouses.
Another, co-sponsored by Assemblyman Alex Sawki (R-Burlington), would allow the state issue $150 million in bonds for matching grants to municipalities to buy the right of development of lands designated for warehouse development.
Scoops too co-authored the bill it would require the State Planning Commission to adopt model ordinances containing regulatory options that municipalities can use to determine warehouse locations. The ordinances will also show cities how their master plans and zoning regulations can conform to the model.
I Assemblywoman Beth Sawyer (R-Gloucester) introduced a bill in September that would require county planners analysis of plans for warehouses larger than 500,000 square feet prior to any municipal approval to ensure that residents and surrounding municipalities do not suffer “significant adverse effects” such as traffic or stormwater impacts.
What are the residents afraid of
Taken together, the bills reflect public concern that the warehousing industry is gobbling up previously undeveloped land, industrializing rural or residential areas of the state, and exposing residents to a significant increase in truck traffic, resulting in increased noise and air pollution.
But here, the state clashes with New Jersey’s vaunted home rule about 600 municipalities. By and large, municipalities have resisted any attempt to weaken their authority over land use, including whether to allow warehouses. And some approve projects against residents’ wishes, arguing that the giant buildings increase tax revenue while creating jobs.
In West Windsor, Mercer County, a plan to build 5.5 million square feet of warehouse space, billed as the largest warehouse project in the state, is awaiting approvals from county planners and two state agencies.
Mike Serra, executive director of the New Jersey League of Municipalities, told state lawmakers at a recent hearing that many cities are concerned about the impact of warehouses on traffic and stormwater runoff, but recognize their economic benefits and are therefore trying to balance competing interests.
Transportation and warehousing generates 12.2% of New Jersey jobs and 15.7% of total payroll, the highest for both state in the country, according to federal data. The logistics industry is driven by New Jersey’s location at the heart of the Northeast, as well as the importance of the Port of New York and New Jersey, which in August became the nation’s busiest, surpassing the ports of Los Angeles and Long Beach.
Data from the warehouse industry has shown that rents have been rising to record highs for at least two years and vacancy rates are falling as demand outstrips supply.
Latest trends
But in the third quarter this yearvacancy rate did show decline. Demand, dampened by the economic slowdown, has lagged behind supply, which has grown as new warehouses hit the market, according to a quarterly report from Cushman & Wakefield, the global commercial real estate services company.
The company reported that the average asking rent for warehouses in New Jersey nevertheless rose 7% year-over-year, and prices are expected to rise again in the coming quarters based on strong fundamentals.
The report predicts job vacancies will rise in the fourth quarter and through 2023, but will remain below pre-pandemic levels. Rents will also continue to rise, but not as much as in the last 18 months.
While warehousing was previously limited to existing industrial facilities, particularly near ports or rail terminals, a sharp increase in demand over the past two to three years has led to the spread centers farther from the points of entry for goods into the region, leading to new pressures on land in remote areas such as South Jersey.
Residents’ wins and losses
A plan to build 2.1 million square feet of warehouse space was rejected Thursday in Gloucester County’s Malika Hill community. Garrison Township planners, according to Donna Schwager, secretary of the city’s land use board. She did not answer the question why the board rejected the application. Malika Hill is part of the town of Garrison.
The plan faced strong opposition from residents who feared it would disrupt traffic and industrialize the quiet suburb.
The developer, Russo Development, attacked the planning board’s decision and said the plan complies with local zoning laws for the property.
“We are disappointed that Harrison JLUB acted arbitrarily in failing to properly zon the property and approve our application, which is fully consistent with the zoning and redevelopment plan governing the property,” the company said in a statement. “As property owners in the township, we fully intend to exercise our rights to redevelop the property for an appropriate and expressly permitted use.”
Harrison Township, like several others that have denied warehouse applications, may now face a lawsuit from the developer on the grounds that it “rightfully” blocked the project, which complied with the zoning.
In West Windsor, Mercer County, a plan to build 5.5 million square feet of warehouse space, billed as the largest warehouse project in the state, is awaiting approval from county planners and two state agencies, nearly six months after it was approved by city planning officials amid strong opposition from the residents.
Stacey Fox, an opponent of the West Windsor project, said runoff from the Bridge Point 8 development would violate a new inland flood rule proposed by the Department of Environmental Protection and would run counter to State Planning Commission recommendations. She urged the city to withdraw its consent.
“Townships have changed course in the past,” she wrote in the West Windsor Voice. “Now that the inland flood regulations and warehouse siting guidelines have been approved, West Windsor can reconsider its colossal misjudgmentdand to do what is best for the entire region.”
