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Joe Cavaluzzi is a contributor to Real Estate New Jersey, from which this article was excerpted.

Twenty-one parcels of undeveloped New Jersey land from Hackensack to Perth Amboy will play a critical role in keeping the Port of New York and New Jersey competitive with other East Coast ports, some of which now are unloading ships that once berthed along the docks in Newark and Elizabeth. As the port plays a critical role in the state’s economic growth, those parcels of 17 to 300 acres also will play a vital role in the future of New Jersey’s 700 million sf of warehouse and distribution space, as well as in the lives of the more than half a million people who earn a living moving the more than 400 million tons of cargo that comes through it in a year.

But the port, too, is feeling the effects of the state’s reputation as congested, expensive, tax-laden and unfriendly to development. The growth rate of the port has slowed in the past few years of a 10-year run that saw the volume of cargo handled increase a total of 110%.

To keep the Port of NY/NJ competitive and growing, the New Jersey Economic Development Authority, the Commerce Department, along with the Port Authority of New York and New Jersey, several major private companies and professional associations, including NJ-Naiop, have banded together to promote port-related development under the New Jersey Portfields Initiative. The need for the port to continue to grow, and for the Portfields Initiative that is attempting to attract companies to develop the warehouses and distributions centers to facilitate growth, were topics of a recent NJ-Naiop seminar on growth opportunities in and around the ports.

The initiative has already begun a targeted marketing campaign to promote 21 available portfields sites, a number of them large enough for import and master warehouses that handle imported cargo off the ship and distribute it to the regional warehouses of major retailers. The port initiative is targeting real estate brokers as well as national and international retailers, manufacturers that need some value-added assembly, food and beverage importers and distributors, the electronics industry, auto and parts manufacturers, and logistics and distribution companies.

“We are trying to get the word out that we have big box opportunities close to the port that are ready to be developed,” said Timothy Comerford, manager of area development for PSE&G, one of the companies participating in the initiative. “The Portfields Initiative began last year with the EDA. There are a number of developers now developing these sites, but the problem is that people outside the region don’t know about that.”

The Portfields Initiative has begun a marketing campaign to 3,500 companies that would have a major interest in moving goods and has established a website. “We need to market the fact that we reach 35% of the US population overnight and we need to correct the misconceptions about the port and state,” says Frank McDonough, president of the New York Shipping Association and a visiting professor at Stevens Institute of Technology in Hoboken.

The Port of NY/NJ’s growth rate peaked in 2005 and has flattened ever since as companies have diverted ships to other East Coast ports. Last year, the Port of NY/NJ lost 10% of its rail cargo to other ports, McDonough says.

“Why? Because we are plagued by the perception of the region as expensive and as a place that’s not good to do business,” he says. “The importance of the Port of New York and New Jersey to the region and to the nation as a whole cannot be overstated. We need to unleash our potential as an economic engine that provides opportunities far beyond those that exist today.”

While McDonough says there are a number of critical elements for the port to continue to grow–including completion of the dredging projects to deepen channels to 55 feet, expanding rail capacity and terminals–the need to commit to full use of waterfront property for waterborne uses is one of the most important.

“To improve the efficiency of the port, it is necessary to remove all operations that do not contribute directly to the movement of cargo,” he says. “That could be accomplished through a five-mile port support zone that could use these portfields to house port-related operations such as container storage and repair that do not require access to the pier head.”

The Port Authority originally put together the Portfields Initiative a few years ago with a series of incentives to encourage developers to look at the redevelopment of 17 sites, with a concentration around the region from Newark to Carteret. A number of projects have since begun at those sites and four additional sites have been added. They range from Perth Amboy north along the Arthur Kill, along Newark Bay and up the Passaic River to Hackensack, with one site on the Hudson River side of Bayonne.

“The next step was to get the word out to brokers and companies with interests in the port. We’re looking at potential of 10 million sf of industrial space,” Comerford says. “When you get outside of New Jersey and talk to companies, they think that if they need 200,000 sf to one million sf, they have to go down the Turnpike or even to Pennsylvania to find it.”

To counter that impression, the Portfields Initiative has kicked off a high-impact direct mail campaign targeting 3,500 major distribution and retail companies, as mentioned. The group is also marketing the port at various trade shows that, including one last month in Denver attended by 3,000 real estate professionals.

Caren Franzini, CEO of the New Jersey Economic Development Authority and, like McDonough and Comerford a panelist at the recent NJ-Naiop seminar, says the Portfields Initiative effort will include promoting a number of business development and retention as well as well as training grants and redevelopment bond programs. “The state Environmental Infrastructure Trust has grants available when a property has a water-related issue,” she explains. “The EDA offers Redevelopment Area Bonds, known as RABs, that enable a developer to work with the municipality to get funds and use property taxes to pay debt service for the bonds.”

The EDA issues long-term, low-cost bonds on behalf of municipalities seeking to fund infrastructure improvements and other new development costs with a municipal pledge as security for the bonds. The low interest rates may be passed on to redevelopers, Franzini says. The program covers the broad scope of redevelopment costs that may be financed to exempt redevelopment projects from local property tax for up to 35 years.

The EDA also offers bonds for Revenue Allocation Districts, or RADs, within a redevelopment area. RADs give municipalities a financing alternative where the bonds may be secured by a number of revenue sources including the property tax increment, parking taxes, and sales and use taxes retained by the municipality.

Indeed, New Jersey’s portfields are already attracting some developers with deep pockets, including Panattoni Development Co., one the largest private warehouse developer in the US. Panattoni is in the process of developing iPort12 International Trade & Logistics Center in Carteret, clearly visible to the east of the New Jersey Turnpike, just north of Exit 12. iPort12 will be a 1.2-million-sf campus situated on 132 acres in two buildings of approximately one million sf and 200,000 sf with 36-foot ceilings, ESFR sprinklers, numerous dock doors, grade-level doors and oversized 80- by 72-foot bays.

“When we started developing the site at Exit 12 of the Turnpike in Carteret we were the first new construction there in 12 years,” says James Murray, a partner at Panattoni Development. “Since then we’ve been joined by ProLogis at nearby Port Reading.”But Murray, who is managing the development of iPort12, says Panattoni is facing a shortage of warehouse labor. “The labor issue is a huge one. We are bringing work and facilities to where labor lives,” he says, adding that it reminds him of circumstances 10 years ago when companies had to set up bus service from Northern New Jersey to supply labor to their warehouse facilities at Exit 7A.

And Rockefeller Group Development Corp., which specializes in foreign-trade zone development and management, along with MC Realty Inc. have acquired a 40-acre park located in the Meadowlands at Exit 15X of the Turnpike. Rockefeller plans to seek foreign-trade zone status in developing the site with a single or multiple warehouse-distribution buildings totaling more than 550,000 sf. The Jersey City site on County Road is one of the last remaining undeveloped sites in the Meadowlands.

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