Port Newark-Elizabeth Marine Terminal is a major component of the Port of New York and New Jersey. (Ken Lund photo/Flickr.com via Creative Commons License.)

NEW YORK CITY AND NEWARK, NJ—Increasing demands for rapid delivery and rising transportation costs are pressuring retailers and e-commerce companies to locate distribution facilities as close as possible to customers, factors that continue to drive industrial space planning decisions in the country's number one distribution market, metropolitan New York and New Jersey, according to a new report from Jones Lang LaSalle.

In a golf course-themed research study, The Leaderboard: The Top 18 Distribution Markets in the United States, JLL says the market's ability to service cities up and down the eastern seaboard, combined with its connections to the #3-ranked Central and Eastern Pennsylvania markets, offsets higher labor and real estate costs in the region.

“While real estate costs are higher nearer to the Northern New Jersey and New York population nexus, the region also provides diversity in site selection options as well as labor availability and costs that are not extreme, although a few related metrics like unionization rates tend to slightly offset an overall strong labor score in our model,” JLL says in the report, adding that Central and Eastern Pennsylvania markets “provide more 'large-block' development opportunities and a lower average land basis, as well as a beneficial business operating environment—at the likely sacrifice of increased transportation or service costs.”

Because it is so densely populated, the New York and New Jersey Metro Area, already boasting the largest seaport on the East Coast, has the potential to grow even more because of the newly expanded Panama Canal, JLL says. The metro area “is an immensely important driver of industrial space which cascades down from the Port and Meadowlands submarkets through a corridor of industrial markets that include the big-box hub Exits 8A and 7A submarkets,” JLL says.

While Chicago is a “not too distant fourth” in the JLL rankings, the firm says “it does not have the broader population density of a New Jersey or Central Pennsylvania market—or the population growth potential that other larger markets do,” but is the undisputed champion “when it comes to intermodal (in Joliet, for example), Class I rail and other infrastructure benefits (like O'Hare International Airport), and it remains the central node for much freight and cargo in the country.”

“Increases in freight costs, trucking capacity concerns, labor availability, the impact of e-commerce, more competitive customer service requirements, talent management, global complexities, risk mitigation— these are just some of the operational concerns that keep corporate supply chain professionals up at night,” the JLL study concludes. “When it comes to supply chain optimization, specifically distribution network strategy, companies must ultimately make site selection decisions that pin their strategy down to the ground.”

New York

Instant Insights /

New York-New Jersey Port Ranked Top Distribution Market in JLL Study

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