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Portfields Initiative: Full Steam Ahead

The Portfields Initiative has distributors and developers excited about the Metro NY/NJ Port District.

Jun/Jul 06
Some of the hottest warehousing/distribution properties in the country are in the heart of the Metro New York/New Jersey area - in fact, a few even have nice views of the Statue of Liberty.

What makes these properties so special for Warehousing and Distribution?
• They are in proximity to the Port of New York and New Jersey, largest port on the East Coast.
• John F. Kennedy International Airport, Newark Liberty International Airport, and LaGuardia Airport are only minutes away and handle nearly 25 percent of all U.S. international cargo.
• Metro New York/New Jersey has state-of-the-art highway, rail, air, and port infrastructure.
• Metro New York/New Jersey is within a day's transport of most of the East Coast and Midwest markets.
• Metro New York/New Jersey has an available labor force that's well-suited for the warehousing/distribution industry.

To communicate these strengths to U.S. businesses, the New Jersey Economic Development Authority (NJEDA) and the Port Authority of New York and New Jersey (PANYNJ) have launched an aggressive development and marketing plan called the Portfields Initiative. The goal is to create high-quality, "shovel-ready" building sites close to the port to stop the trend of new industrial construction pushing south and west.

"We know that with the deeper dredging of the port to 50 feet, there will be a significant increase in port activity, and we want to capture as much of the resulting economic development as possible," says Timothy Lizura, director of real estate development for NJEDA. "Port activity was already growing at about 10 percent a year. Redeveloping nearby industrial land into modern logistics facilities will also reduce truck congestion on the highways."

With this in mind, the two agencies agreed to launch the Portfields Initiative, a long-term joint venture designed to help government agencies, developers, and cities transform brownfield sites, or underutilized properties, into productive warehousing/distribution centers within the Port District - the area within a 25-mile radius of the Statue of Liberty.

Business Is Booming
The Port District's maritime and air transportation facilities are among the largest and most productive in the nation.

"In New Jersey alone, about 250,000 jobs are directly related to the port's shipping industry, which has an aggregate impact on the state's economy of about $20 billion to 25 billion," says Richard Johnson, senior vice president with Matrix Development Group and chair of the Northern New Jersey District Council of the Urban Land Institute. "The port has as big an economic impact on New Jersey as does the pharmaceutical industry, but it doesn't get nearly the same amount of press."

The port has never been busier. "Containerized cargo volumes in the port rose 7.6 percent in 2005 to a new record high and exceeded our own projected growth levels," says Patrick Flinn, general manager of planning and project development for PANYNJ. "The dollar value of all cargo moving through the port exceeded $132 billion for the first time, up 15.6 percent from 2004. Asia is the port's largest market, with a 17 percent increase in cargo volume trade with the Far East and a 15 percent increase in trade with Southeast Asia."

Across the country developers are seeing a rapidly increasing demand for warehouse space to support the growth of imports. Larger warehouses are being constructed nationally to accommodate this increase in trade. And with the shift toward just-in-time manufacturing and inventory control for wholesalers and retailers, speed to market is absolutely critical.

"Unless additional industrial sites are developed, firms seeking warehousing and distribution facilities will be forced to locate outside the Port District and will not reap the economic and fiscal benefits of these developments," warned CB Richard Ellis, a global commercial real estate firm, in an August 2005 report to the PANYNJ.

Shortage of Space
"Large, modern distribution centers in the Port District are at a premium," says Stephen Martin, senior consultant and supply chain expert with Lee and Klatskin Associates in Teterboro. "Larger retailers are especially strapped for finding Northeast regional locations large enough to accommodate a building greater than 500,000 square feet, and many want the sites to be expandable, often up to two- or threefold. Fuel costs continue to shrink the viable options [further afield]."

In fact, usable space is so rare that some older buildings are being knocked down just to make room to stack cargo or containers. "There is just not enough existing capacity to handle it all," says Lizura. "Many of the legacy buildings in and around the port don't have much service left."

"The second- and third-generation and multistory facilities that once served, and continue to serve, the region do not fulfill many of today's sophisticated requirements," says Jules Nissim, senior director for Cushman & Wakefield in East Rutherford. "In order to offer value-added services, logistics tenants are seeking state-of-the-art facilities that contribute toward a more efficient supply chain."

Existing facilities are older and not as technologically advanced. They have low ceilings, fewer doors, and not enough space to meet the demands for more truck parking and container storage.

"There hasn't been much new warehousing development in the area for decades," says Jim Murray, a partner with Panattoni Development Company, which is developing two Portfield Initiative sites. "Most of existing metal-panel buildings only have a vertical clearance of 24 feet with 40-foot x 40-foot bays."

Today's warehousing/distribution buildings have a 36-foot vertical clearance, 80-foot x 80-foot bays, 130-foot-long truck spaces, at least one dock per 5,000 square feet of space, modern IT infrastructure, and state-of-the-art ESFR sprinkler systems, which keep down insurance rates.

"The larger bays are ideal for companies that do a lot of pick-and-packing or sorting, which gives them a tremendous amount of flexibility in how they lay out their space," says Murray.

Labor is another big plus for the Port District: New York and northern New Jersey have a ready and willing labor force with the right skills for the warehousing/distribution industry. "In fact," says Murray, "a lot of local labor is bussed from northern New Jersey to central New Jersey every day to work in warehouses, pick and pack, or run forklifts. It makes a lot of sense for companies to locate their logistics facilities where the labor is."

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