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TETERBORO, NJ-Completing a process that began two years ago, Mohawk Industries Inc. has signed a long-term lease for 617,000 sf of industrial space, representing the entire building at 698 Route 46 here. The agreement runs for 10 years with options. The value of the deal was not disclosed.

Brokers for the deal included Bill Waxman, first vice president of CB Richard Ellis, Saddle Brook, NJ, representing owner AMB Property Corp. of San Francisco. The Calhoun, GA-based Mohawk was repped by Janet Henick of Pantheon Properties, New York City, and Roger West of Alliance Partners, Atlanta.

Mohawk will take up residence in the soon-to-be-former Ford distribution center here. Two years ago, Ford sold the building to AMB for $32 million in a transaction brokered for both sides by a CBRE team headed by Waxman. The move by Ford was part of an effort to reorganize its distribution system, and the automaker signed a two-year lease with AMB to give it time to facilitate that restructuring in the Northeast region.

Ford will vacate the building this October, and Mohawk will move in next July. In the meantime the asset, which sits on a 27-acre site, will get a substantial makeover.

“Ford was the original and only tenant,” according to Waxman. “A 340,000-sf section was built in 1958, and the building was expanded to its current 617,000 sf in 1974. The problem is that the older section has a ceiling height of only 16 feet, which is antiquated by today’s standards.”

As a result, AMB is going to take down the walls of the older section and rebuild the entire facility as “a brand-new, state-of-the-art distribution center for Mohawk,” Waxman says. He likens it to the type of building “you would see in the NJ Turnpike Exit 8A market.

“It’s rare to find a building this size in the Meadowlands market, and a lot of companies are forced to move to 8A or elsewhere,” he continues. “AMB has the foresight to understand that they could raise the roof and really attract a top-notch tenant.”

Rental costs for similar facilities are roughly 30% less in the 8A and points south compared to the Meadowlands market, but Mohawk opted for the Teterboro location “to protect their market share,” Waxman explains. “Here, eight miles from Manhattan, they can get their products to their customer quicker and cheaper than their competitors, and the cost savings are monumental.”

“I think you’re going to see more deals like this in these land-constrained markets,” he predicts.

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