Booming warehouse market running into quality-of-life concerns

Amid an onslaught of applications for warehouse development due to intensified consumer demand during the COVID-19 pandemic along with New Jersey’s prime location and access to rail, interstate highways and ports, communities throughout the Garden State have struggled in recent years to balance the expansion of warehouse development with concerns of their residents. In the case of some municipalities, this has led to confrontation.

With the growth of warehouse development on the rise, New Jersey took action this past September to assist municipalities by adopting the Distribution Warehousing and Goods Movement Guidelines. The New Jersey State Planning Commission intended for the Guidelines to “facilitate greater cooperation and coordination among local governments, their counties, and their regions.”

For example, instead of defining all forms of warehouses under one generic, umbrella term, the Guidelines distinguished between different types of warehouses and provided specific attributes for each type of center/facility. The purpose for creating such distinctions was to help municipalities determine whether a project would be both compatible with a site and beneficial to a community. With that said, the Guidelines did not attempt to provide a one-size-fits-all solution for how to address the potential impacts of warehouse development; rather, the Guidelines were meant to be used to better understand and accommodate each community’s warehousing needs.

The Township of Franklin in Somerset County is a prime example of a municipality that is attempting to navigate the competing interests associated with warehouse development. In late 2020, the Franklin adopted a Master Plan Update and associated Land Development Ordinance amendments expressly designating warehouses as “permitted uses” within a newly created Business and Industry (B-I) zone.

In response, Franklin experienced exponential growth in warehouse development, receiving more than two dozen applications for the development of new or expanded warehouses. Despite the clear economic benefits associated with such growth, Franklin’s residents became increasingly vocal about their concerns about warehouse development encroaching on their neighborhoods. To address these concerns, this past summer Franklin adopted a controversial ordinance, under which warehouses became “conditionally-permitted uses” subject to specific restrictions—such as a 500-foot separation requirement from residentially zoned areas.

Unfortunately for developers, the ordinance severely affected land that was previously available or already purchased for warehouse development. As a result, multiple developers commenced lawsuits against Franklin to protect their right to use their properties for warehousing. The developers alleged, among other claims, that the ordinance is inconsistent with Franklin’s Master Plan and improperly precludes the developers’ intentions to use the properties for warehouse development. From their perspective, Franklin did not have the authority to adopt the ordinance to accommodate the township’s residents’ preferences without considering the detriment to the developers. On the other hand, Franklin asserted that the ordinance was adopted to reduce the potential negative effects of warehousing while continuing to encourage commercial and industrial development in the areas best suited for such purpose.

Franklin Township is only one example of a community where warehouse development conflicts have reached a boiling point. This past October, Bridgewater adopted an ordinance in response to growing concerns over future development, amending the definition of warehouse uses and removing warehouse uses as a permitted principal use in multiple manufacturing zones. Only time will tell how the demand for warehouses will be squared with residential considerations, as the negative effects associated with such developments are juxtaposed with the continual growth of e-commerce and consumers’ expectations for same-day delivery services.

As the e-commerce industry continues to evolve and grow, the demand for warehouses will nonetheless increase and likely set up further conflicts between developers, municipalities and residents. While the Guidelines are a starting point, they make it clear that it is unrealistic to assume that a solution squaring the interests of residents with the needs of businesses will materialize. Instead, a nuanced, town-by-town approach is needed to right-size the response to development in each community because when it comes to land use and planning there is no “one size fits all” solution.

Jennifer Porter, a member in CSG Law’s Real Estate, Development & Land Use group, represents clients ranging from Fortune 500 companies to developers, owners and lessees of commercial, retail, industrial and residential properties in all aspects of land use, zoning and development law. Evelyn Baert is a law clerk with CSG’s Real Estate, Development & Land Use group.