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Development proposal for former ammunition factory in Roxbury, NJ: Video
A developer proposes to build storage areas as well as 110 housing units, ball courts and hiking trails on the site of the former munitions factory.
William Westhoven and Miguel Fernandez, NorthJersey.com
A former Sam’s Club warehouse in Mount Olive, currently leased to Amazon, has changed hands for $29 million. In a part of the state once known for its sprawling suburban office complexes, Asset Realty & Construction Group has sold the building to an unnamed buyer.
The trade magazine “Real Estate New Jersey” was the first to report on the deal.
Amazon, the giant online retailer, first revealed its plans to convert its Mount Olive site into a new fulfillment center in 2019.
Other construction projects planned in the region include a warehouse measuring over 230,000 square meters on the vacant site of the Hercules munitions factory. However, the proposal is facing local resistance.
The story continues below the photo gallery
Lanidex Urban Renewal has proposed building a warehouse in a former three-story office building near a school in Parsippany, and another proposal for an 11,000-square-foot warehouse in Denville is in the works.
The Garden State – with one of the largest ports in the country – has seen a surge in warehouse construction across the state and along major highways like the New Jersey Turnpike, especially during the COVID-19 pandemic as the popularity of online shopping exploded.
A 2020 study by commercial real estate firm JLL predicted that demand for industrial real estate in the United States would exceed 1 billion square feet by 2025. In November 2021, a CNBC report citing JLL data said that 96% of existing industrial space is in use, meaning developers need to start looking for untouched land for future uses.
Demand for new storage space is declining
However, NJ Spotlight reported that, according to state data, demand for warehouses declined between 2023 and this year.
“Two years ago, there were a lot of big requests on the market for 500,000 square feet or more,” David Greek, a North Jersey builder, told NorthJersey.com earlier this month. “The deals that are being done (now) are significantly smaller.”
According to California-based real estate software company CommercialEdge, new warehouse construction nationwide is down more than 40% between 2022 and 2023, after 341.9 million square feet of construction began last year.
Global geopolitics have led to higher transport costs and higher insurance premiums for maritime trade, which, according to Greek, means less construction activity and fewer square meters of warehouse space available for rent.
Why warehouses along the Route 80 corridor?
New Jersey experienced an oversupply of office space in the 1980s as talented people moved away from the region’s metropolitan areas, says James Hughes, dean emeritus of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University.
He estimated that by 1990, 80 percent of all office space ever built in New Jersey had been completed.
Joel Garreau described these new office parks on the outskirts of their metropolitan regions in his 1991 book “Edge City: Life on the New Frontier.”
Office parks have sprung up throughout Bergen County along Route 80 – where this Amazon warehouse is located – and at the intersection of Routes 80 and 287 in Morris County.
Even before the pandemic hit in 2020, younger talent had begun returning to city centers like Hoboken, Jersey City and Manhattan, said Jeffrey Otteau, managing partner and chief economist at the Otteau Group, a real estate consulting firm in Old Bridge.
Working from home has “further reduced the demand for the use of physical office space,” he said.
“When an office building in a suburb is sold, it is typically at land value. That is, the buildings themselves, the glass and steel, do not contribute anything to what someone pays,” Otteau said.
Not in my backyard
There is resistance to the warehouse expansion from local residents, conservationists and environmentalists.
“If it’s a higher-density development, is the existing infrastructure sufficient?” asks Michael Cerra, executive director of the New Jersey League of Municipalities, an industry association representing the state’s 564 cities and towns.
In other words, existing police and fire stations, roads, and water and sewerage infrastructure may not be able to accommodate the construction of the additional buildings.
New Jersey Future, a progressive advocacy group, warned of a “myriad of environmental hazards” such as noise and air pollution from trucks, but also traffic congestion and “issues of impact on open spaces” such as the preservation of farmland and forests.
“I would say the controversy is not necessarily about NIMBYism (Not in my backyard), but more about, ‘Hey, is this what’s best for our community?'” said Peter Bronsnick, an executive at East Rutherford-based real estate services firm Cushman & Wakefield.
“We welcome growth, but we want to keep an eye on the usage and the impact on our community,” he said. “We need to reposition the assets. We know we can’t leave them there forever.”
Daniel Munoz covers business, consumer affairs, labor and the economy for NorthJersey.com and The Record.
E-mail: [email protected]; Twitter:@danielmunoz100 and Facebook
