Today's tenants changing the face of NJ industrial market.

In today's industrial market, many older buildings have become obsolete for tenants, who are turning to newly built facilities to get the most value for their rental dollars. As a result, builders are seeing an increased interest in spec and build-to-suit projects in New Jersey, which is bound to increase over the next year.

Industrial buildings become dated for several reasons, including design and appearance. Although existing buildings can be renovated by raising a roof, pouring a level floor or adding a new skin, it may be more economical to start with a new building.

Ceiling height and floor space are major concerns for many tenants that want to maximize their storage capabilities. Although older buildings with lower ceilings may rent for less, they may not be as functional, since newly designed automated racking systems can warehouse products as high as 40 feet or more. Simple economics dictate that the more product stored per square foot, the less expensive the space as it relates to the product. In addition, while an older building with a lower ceiling may work, it would require more ground square footage to compensate for the lower ceiling, which could ultimately add to the tenant's cost, specifically rent, taxes, etc.

An example of a new facility that incorporates the features required by today's tenants is a 330,000 square-foot build-to-suit distribution facility currently under construction in North Arlington, NJ, for North Arlington Associates. As the design build/general contractor, Century 21 Construction designed this facility with 26-foot-high ceilings to meet the anticipated storage requirements of today's users.

Meeting User Needs

Column spacing and the location of fire/demising walls are also a consideration for tenants. Local and state building codes require that large, open spaces be divided by fire-retardant concrete columns or steel columns with demising walls so fires can be easily contained. We designed the North Arlington facility to meet these stringent requirements. Concrete columns in lieu of steel columns were used to eliminate the need for a fire/demising wall. However, the tenant opted to also add a demising wall in order to reduce their insurance premiums due to fire insurance costs for their product.

Image and appearance are also major concerns for many industrial tenants. For smaller tenants, there is a growing need for flex space because many firms are combining their corporate office and distribution space. For these companies, new flex buildings often make the most sense because they include the benefits of a warehouse and the image of an office building. For example, Marino Plaza I and II, a newer 140,000 square-foot flex complex in Clifton, NJ, caters to a wide array of tenants who have a variety of needs. The complex houses small warehousing operations, manufacturing and light assembly firms, high-tech and computer facilities, and office space.

As the next year unfolds, more spec and build-to-suit projects will be sporadically starting up in New Jersey. Office and warehouse absorption are playing a key role, along with tenants who want the latest technological advances. As a result, landlords and builders are responding to their needs with an active build-to-suit and spec market evolving.

(Century 21 Construction is a full-service real estate development and construction company specializing in property development as well as construction management and general contracting assignments. Since 1992, the company has completed more than $120 million worth of new construction projects and renovations consisting of medical, office, retail, educational and municipal facilities. In addition, it has increased its bonding capacity to $130 million).