How did the ‘Amazonification’ of New Jersey happen?
Shifts in global trade have had a bigger influence in the growth of warehouses than the pandemic, experts said.
| May 2, 2023
The pandemic has not had the outsized influence on the explosive growth of warehouses in New Jersey as conventional wisdom might suggest, according to experts who have tracked the trend.
Tim Evans, director of research at the think tank New Jersey Future, called Covid a “black swan event” – an unusual occurrence with severe consequences — that may have accelerated online shopping but added that consumers are still buying the same amount of goods as before the outbreak.
What has really fueled the demand for warehouse space in New Jersey are shifts in global trade and economics, an increasingly more expensive real estate market in the Lehigh Valley across the river in Pennsylvania, and a dearth of staging areas near the ports run by the Port Authority of New York and New Jersey, which are among the busiest in the country, he said.
As Delaware Currents has reported, nearly 150 warehouse projects totaling 88 million square feet are in the planning stages or been recently approved in the 14 counties of New Jersey that make up the Delaware River watershed.
For some counties, the projected growth is astronomical compared to what warehouse space is already in place.
Patterns in international trade have shifted so that the United States is engaging in more commerce with South Asian countries like India, Bangladesh and Pakistan, Evans said. That, in turn, makes the East Coast ports more attractive for importing goods. Also, congestion at West Coast ports during the pandemic gave shippers pause and prompted them to give East Coast ports a closer look.
Additionally, the Panama Canal was widened, allowing bigger ships to make their way to the East Coast. Once upon a time, ships unloaded their cargo at West Coast ports and material would be taken cross-country by train. That is less the case now, Evans said.
Land in the Lehigh Valley, which was once cheaper and available, has become less so as more warehouses have sprung up there, causing developers to look to New Jersey where farmland is cheaper and more attractive because it has acreage that has not been previously developed.
Land around the ports to redevelop once-abandoned factories has become scarce, meaning the squeeze is on to find other properties farther south along major arteries in New Jersey, Evans said. The need to staff warehouses and distribution centers means developers need to site their buildings close to population centers.
There’s also been a decline in the popularity of suburban office parks as the next generation of workers are more interested in living and working in walkable communities and not ones that are so dependent on cars to get them there. These former office parks, ideally placed near highways, are attractive locations for reuse as warehouses.
Sorting space needed
New Jersey’s geographic location, within a day’s drive of a quarter of the country’s population, makes it a perfect warehouse hub. With its network of highways, including the New Jersey Turnpike, it serves as a ready springboard to five major U.S. cities — Baltimore, New York City, Philadelphia, Washington D.C., and Wilmington.
“We’re kind of in the cross-hairs on a national basis if you want to be in this distribution game,” said Timothy A. Brill, Central Jersey project manager with the New Jersey Conservation Foundation.
The logistics industry plays an “extremely important” role in New Jersey, with 12 percent of the jobs in the state related to logistics and warehouses, Donna Rendeiro, the executive director of the New Jersey State Planning Commission, said at a webinar about warehouses in January.
“Because of our location, we are a logistics state,” she said. “There’s no getting around that.”
Warehouses serve as gigantic staging areas, Evans said. He likened it to moving into a new house: You need an empty room to unpack and sort where things will go. It’s much the same with ships unloading their cargo, except the volume of material is exponentially more.
Speed and automation driving warehouse trend
While Amazon may have overbuilt some of its warehouse capacity, other retailers and delivery companies are demanding as much space as ever.
Experts said old warehouses, with lower ceilings and smaller storage areas and footprints, were not built to accommodate the highly mechanized, super-stacking systems that modern centers demand. Automation is a huge driver of how these places now run, which means building new updated square footage.
Consumers want their products even faster, so that means goods have to be even closer to population centers. Five years ago, consumers were content to wait five to seven days for a delivery, said Kristen Scudder, freight program manager at the Delaware Valley Regional Planning Commission.
“Now, it’s commonplace that if it’s not there in two days, it’s not fast enough,” she said.
Ben Spinelli, executive director of the New Jersey Highlands Council, a regional planning agency, said planners and municipal officials were slow to grasp the immense consequences of the growth in these mammoth buildings, particularly as they exploded in numbers starting about five years ago.
The pandemic “was the gasoline on the fire,” he said.
Localities caught flat-footed
In some cases, localities have engaged in what Spinelli called “planning malpractice,” and ignored the science about siting and mitigating the development of these buildings, which can usher increased runoff, air, light and water pollution and truck traffic.
Decision-makers don’t quantify the loss of farmland, the change in a community’s characteristics or the loss of natural resources as measured against the possible economic gains of tax revenue and jobs, he said.
“We – and I’m using the queen’s ‘we’ — failed in the beginning to predict what the trend was, to get ahead of it,” Spinelli said. “It’s become a development pattern of opportunity, not planning.”
“Because of our location, we are a logistics state. There’s no getting around that.”
Donna Rendeiro, the executive director of the New Jersey State Planning Commission
Any signs of slowing down?
It’s unclear whether the trend of what planners refer to as the “Amazonification” of New Jersey continues as robustly as it has, experts said.
Brill said things could plateau or they could slow and then take off again.
Evans said New Jersey remains immensely popular for warehouse developers. Future demand is a matter of global economics — and an 88-million-square-foot question.
“How much stuff,” he asked, “are we going to keep importing from other countries?”
Read this Delaware Currents special report: 88 million square feet of warehouse space is proposed in the Delaware River watershed in New Jersey.
Upcoming stories in our warehouse coverage include:
- Activists are organizing in opposition to proposed warehouses. Who are they and what have they learned?
- Solutions: Experts say it is not too late to take action to mitigate the potential environmental impacts of warehouses. What can be done?
- Do warehouses live up to their promised economic benefits in terms of taxes and jobs?
Have suggestions, comments, feedback? Drop us a line at email@example.com