Projects Opposed

New Jersey Towns Where Warehouse Projects Have Sparked Opposition

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Source: CoStar, April 2023
Map: Nicole Shih

Although Americans will apparently never give up their love of shopping online, and having packages dropped at their doorsteps, the warehouse leasing and development pace that was set during the pandemic has somewhat normalized. E-commerce juggernaut Amazon, which led warehouse development nationally, has slowed the expansion of its supply-chain network.

But whether e-commerce growth is cooling, freight is increasingly coming into the country through the Port of New York and New Jersey, which is now the busiest U.S. seaport and is considered a more stable alternative to California. That trend will likely continue and drive demand for additional warehouse space in New Jersey, according to developers.

Amid the growing backlash against warehouse development, New Jersey is grappling with what kind of controls, if any, it should put on the state’s surge of industrial development. New Jersey already took a stab at controlling industrial development last fall, when the state Planning Commission’s Office of Planning Advocacy adopted suggested guidelines for municipalities to help them weigh and determine proper siting for proposed warehouse projects.

But some lawmakers and critics say those recommendations aren’t enough — because they are voluntary, not mandatory — to stop what some charge is rampant "warehouse sprawl." Several bills regarding industrial development were introduced in New Jersey's Legislature late last year, and more than a half-dozen are now pending.

The stakes in New Jersey are especially high because logistics is a lucrative and crucial industry, according to Garden State commercial real estate officials and business groups.

Mark Shearer, the newly named president of NAIOP New Jersey, a commercial real estate trade group, has made addressing warehouse opposition and correcting what he said are inaccurate perceptions of the industry one of his priorities. Shearer is senior managing director for Rockefeller Group in New Jersey and New York, which has industrial developments in the region.

"We think that there is a shortage of warehouse space that’s driven by data," Shearer told CoStar News. "You can take a look at the vacancy across the state in the sector and there is less than 3% vacancy. And of the newer product, the modern product, there’s virtually no vacancy. So I think what that’s telling you is the market demands it."

New Jersey’s industrial occupancy at one time was at record lows, and while it’s risen recently, it’s still only 2.7% in Northern New Jersey, according to CoStar data. The Garden State, situated as it is between New York City and Philadelphia and with its seaports and airports, is a logistics dream location. The logistics industry in the Garden State shouldn’t be hamstrung, according to Shearer and others.

"The biggest economic driver in New Jersey right now is the port and the goods that come from that port," Shearer said. "And that is kind of our golden goose right now. The rest of the business sectors aren’t really rapidly growing anymore. ... [Cargo] has shifted from the West Coast to the East Coast as far as arriving into this country and it needs to stop somewhere. And that’s what’s driving a lot of this."

In North Jersey, industrial real estate "serves as a gateway for the global trade and an engine of economic growth for the region" and the area is "chronically under-supplied," said Mateusz Wnek, associate director of market analytics for CoStar Group.

"Logistics assets are a key piece of supply chains that serve numerous critical industries such as retail and manufacturing," Wnek said. "Population growth, consistently strong retail spending, and rising port activity provide the impetus for more construction of warehouses and distribution centers."

The New Jersey Business & Industry Association voiced its own concerns over any legislation that would be too restrictive of warehouse development. That trade group supports "sound planning in order to locate warehouses in the right locations,” according to Ray Cantor, its deputy chief government affairs officer.

"People have concerns and I think they should be listened to. … But the knee-jerk reactions from everyone always is, ‘No we don’t want this in our neighborhood,’" he said. "But we can’t run a state like that. I’ve been doing this for too many decades at this point in time, and I think you could take out the term 'warehouse' — depending on your decade — and put in 'residential,' put in 'shopping center,' put in 'office parks' and you’ll see the same arguments, the same complaints, the same 'it-doesn’t-belong-here’ arguments.”

Warehouses benefit municipalities in a variety of ways, according to Cantor and others. They create jobs and they pay local property taxes, which reduces the amount of taxes that residents must pay, he said. In addition, warehouse projects in some cases redevelop and remediate contaminated land that often has been vacant for years, according to Shearer.

Nearly 12.2% of all jobs located in New Jersey are in the wholesale trade, transportation or warehousing sectors, those that are devoted primarily to the storage and distribution of goods, according to Census Bureau data cited by the state. That is the highest share among the 50 states, with those sectors together responsible for 15.7% of New Jersey’s total payroll.

But those pro-warehouse arguments don't sway some residents in municipalities where massive logistics developments are planned and organized opposition is mounting. Critics of those projects raise a variety of concerns and complaints about new warehouses including:

• Air pollution.
• Tainting runoff water.
• Locations at sites using outdated flood maps from 1999.
• Traffic congestion.
• Taking over the Garden State's remaining open green space.
• Trading new tax revenue at the cost of quality of life for residents.
• Shrinking demand for warehouses as the pace of online sales slows.

"It is morally bankrupt" to build based on outdated flood maps and "to continue designing buildings and stormwater management based on criteria of the past when the climate is changing fast," according to Fox.

And a regional approach is necessary for warehouse development, taking into account how far close together large warehouse developments are planned, according to some groups.

Several of the organizers who hosted the networking event recently did a presentation about their concerns to members of Gov. Phil Murphy's administration, according to Willa Inlender, co-director of the Mercer County Defense League.

Assemblywoman Beth Sawyer, R-Woolrich, at a hearing in Trenton in December, testified that she represented "thousands of people" who oppose the warehouse project in Harrison Township and need to have their voices heard.

"This is impacting neighborhoods where you’re talking about a daycare [center] that’s going to have a 37-acre warehouse under roof right behind [it]," said Sawyer, who is sponsoring one of the pending warehouse bills.

Some developers claim the anti-warehouse factions are a small but vocal minority in towns. And officials like Shearer and others said that there are already laws and regulations in place to address concerns about pollution.

New Jersey is a home-rule state, meaning its municipalities each craft their own zoning regulations and decide what can be built within their borders. In some cases, anti-warehouse residents have claimed that municipal officials have improperly rezoned areas to permit industrial development or engaged in "spot zoning," or singling out a plot of land for a use totally different from the surrounding area for the benefit of the owner and detriment of other owners.

In West Windsor, Fox and a fellow resident sued the township in a bid to stop the development of Bridge Point 8 planned on a former American Cyanamid site. That project includes seven warehouses totaling more than 5.5 million square feet on a 539-acre tract. In addition to the township, the lawsuit names a subsidiary of Bridge Industrial of Itasca, Illinois, and a unit of land owner Atlantic Realty Development of Woodbridge, New Jersey, as defendants.

Bridge and West Windsor Mayor Hemant Marathe didn't respond to an email seeking comment.

The suit charges that there was an unlawful quid pro quo regarding the project. In 2020, the township reached a settlement agreement with Atlantic Realty regarding litigation that had been filed by Howard Hughes Corp. of Woodland, Hills, Texas, the former owner of the Cyanamid site.

Howard Hughes had objected to the existing zoning of the location, where it wanted to build a mixed-use project that would have included nearly 2,000 residential units. Local officials and residents opposed the new housing, fearing the burden it would have imposed on schools and municipal services. So instead, industrial development was permitted on the site, a land use that's now become as controversial as residential.

“Be careful what you wish for,” said Tim Evans, director of research for New Jersey Future, referring to West Windsor's decision to permit industrial rather than multifamily development. His group is a nonprofit organization that promotes equitable growth and redevelopment.

In Gloucester County's Harrison Township, which is not far from Philadelphia, Russo Development of Carlstadt, New Jersey, is planning to construct a 2.1 million-square-foot warehouse project on a roughly 160-acre site. Two lawsuits — including one by a daycare center — have been filed to permanently stop that project. In December, facing intense pressure from residents, Harrison's Joint Land Use Board voted 9-0 against giving the project a final go-ahead.

Since then, Russo has filed its own lawsuit asking a judge to overturn the actions of the Joint Land Use Board "in wrongfully, arbitrarily and capriciously denying our as-of-right site plan application," the company said in a statement.

"Our development project is fully compliant with the provisions of the [municipality's] redevelopment plan, and proposes warehouse uses that are consistent with the industrial/warehouse zoning that has been permitted on the property for decades," Russo said in its statement. "The redevelopment plan remains consistent with the historic zoning the governing body created through deliberation as to what was most beneficial to Harrison."

The developer added that "Woolich, the neighboring community, on which a significant portion of our development sits, embraced and approved this plan, which will create jobs and utilize the roadway infrastructure on state and federal highways that anticipated and accommodate this development, as was fully demonstrated in our land use application."

Harrison Mayor Lou Manzo declined to comment on pending litigation to CoStar News.

In addition to the Mercer County Defense League and the Skyland Preservation Alliance, other New Jersey activist groups fighting against industrial development include the Alliance for Sustainable Communities, the South Jersey Responsible Development Coalition, Citizens Warehouse Action Group and People Against Warehouses in Mullica Hill.

"Our group and like-minded citizens are now forced to fend for ourselves," Clint Guest, who is with the South Jersey coalition, wrote in an op-ed piece for NJ.com. "We are fighting the warehouses that are slated for farmland and creeping closer to our residences and schools, often using our own money or crowdfunding."

Attempts in Trenton to impose strict regulations on warehouse development have failed. Two years ago, then-State Sen. President Steve Sweeney, D-Gloucester, introduced a bill that would have, in part, had the state promulgate guidelines, hear appeals and render decisions on proposed developments.

The bill, opposed by NAIOP and other business groups as detrimental and potentially crippling to the logistics industry, ultimately died. Instead, the state Planning Commission last year spent months getting feedback from stakeholders in order to draft and adopt recommended guidelines for towns to turn to in order to avoid warehouse sprawl and properly weigh industrial developments. The goal was to carefully balance the need for new industrial facilities with the potential impact they have on communities.

The main takeaway from the guidance was that towns need to update their zoning and master plans to adapt to a new era of mega warehouses, with the recommendations meant as a tool to do that. In some towns, old municipal regulations broadly permit any type of warehouse development in parts of town zoned for industrial use. Those local zoning rules were drafted when there were only relatively small warehouses being built, not today's giant logistics hubs.

Some town ordinances don't distinguish between different types of industrial properties — which can range from smaller last-mile fulfillment sites to massive distribution centers the size of multiple football fields — or which would be appropriate for different sites.

But the onus is on municipalities to update their zoning regarding industrial-project siting, and developers should be able to build warehouses in areas now zoned for such use, according to Shearer. In most cases developers are simply seeking, and are entitled to, approvals for projects that are permitted under local zoning, he said.

"The towns need to wake up and look at their master plans and redo them," Shearer said. "If something is a matter of right [to build in an area], we as developers think that we should be able to pursue that project and pursue that land."

Towns aren't mandated to read, let alone follow, the state's new warehouse guidelines and update their zoning, so some lawmakers, anti-development groups, and others say more is needed.

The state's guidance last year, which New Jersey Future's Evans said was based on some of his reports on warehouse development, is "definitely an improvement over the former situation. ... [but] I think we need to figure out if we can get laws and regulations changed to require to towns to look at this guidance and maybe change some things based on it.”

Assemblywoman Sawyer has introduced a bill that mandates not only municipalities but county planning boards to review certain large warehouse projects. The process would include the county preparing an impact assessment and conducting a public hearing on projects, and the ability to impose on developers. That type of regional approach is needed, according to Sawyer.

Most of the pending bills relating to warehouse developments still keep decisions on their development squarely in the hands of the municipalities where they are slated to be located.

State Assemblyman Alex Sauickie, R-Jackson, has several bills pending on warehouse development. One of them would require the state Planning Commission to adopt a model ordinance for the siting of warehouses that towns could turn to and update their local master plans and zoning ordinance. The NJBIA supports that legislation.

“That will make it easier for towns to implement the State Planning Commission’s recommendations because they’ll have a model ordinance in place that they can use or modify as they see fit," Cantor said. "That’s all in support of sound planning.”

As for proposed legislation such as Sawyer's bill, Cantor said he doesn't think another level of government review, by county in addition to local officials, should be involved in decisions on warehouse development.

"We have a robust planning process on the local level, we have requirements that multiple towns be notified and be considered," he said. "From a county perspective, they have a role to play in how roads are used and what impacts county roads. So there is a role for counties to play. But we don’t think we need to add new levels of governmental review.”

Warehouse critics dispute the claim that towns have to notify their neighboring jurisdiction about proposed warehouse development, saying there in fact isn't any regional planning.

New Jersey Future is working on a draft of a bill that would require the state to create a map indicating the best locations for future warehouses, taking into account factors such as highways and infrastructure, according to Evans.

"That would give the towns yet another tool to use," he said.