New business migrants pour in from New YorkGateway Regional Report
In the wake of 9/11 many large New York City companies opened offices in northern New Jersey only to return to Manhattan again. Today a new round of New York-to-New Jersey migration is underway as companies flee the city?s sky-high real estate prices.
Just last week realtor Greg Sholom was helping a New York-based company complete the purchase of a 20,000- sq.-ft. Hackensack industrial facility. That was one of many such deals being put together by Sholom, who is president of Team Resources, a real estate services firm in Carlstadt.
?We are seeing very strong interest in buying industrial sites in northern New Jersey from both users and investors,? says Sholom, whose firm has a strong presence in the Gateway Region. He is currently working on about a dozen searches by New York companies for space in New Jersey. The clients range from small and mid-sized service and distribution companies to importers and light manufacturers.
Sholom says the searches are motivated by skyrocketing real estate values throughout New York City. The price of industrial buildings in Brooklyn and Queens averages about $150 a sq. ft., compared with about $120 a sq. ft. for comparable facilities in North Jersey. And rentals are anywhere from 30% to 40% cheaper on this side of the Hudson River. For example, a new industrial building with 36-foot-high ceilings that would lease for about $9 a sq. ft. in New Jersey could fetch up to $12 in Brooklyn or Westchester County.
Proximity to the seaports of Elizabeth and Newark is another big attraction for many distribution firms branching out of New York. One such firm is Kari-Out of White Plains, New York, a maker of condiments and bags for french fries and fried chicken for fast-food chains.
In 2002 Sholom helped Kari-Out buy an industrial building in Totowa with 140,000 sq. ft. of manufacturing and distribution space. Today the company is adding a 50,000-sq.-ft. building to the site.
?The rents, taxes and other costs in Westchester are much higher than they are in New Jersey,? says Howard Epstein, chairman of family-owned Kari-Out. ?Also, since we import so many things from Asia, being located near the piers was very important.?
Epstein was also attracted to a New Jersey workforce experienced in manufacturing, distribution and shipping. ?It?s very difficult to get that workforce in Westchester because rents and homes are more expensive,? he says. ?People with moderate incomes cannot afford to live there.?
The New Jersey Economic Development Authority supported the Kari-Out relocation with bonds issued at low interest rates. ?New Jersey bent over backwards as they tried to help us come over,? says Epstein.
?Once they come from New York to New Jersey, they like it better here,? says Sholom. ?There?s better truck access, the buildings tend to be more modern and efficient and the access to highways and ports is superior.?
Another Sholom client, kosher wines and foods maker Royal Line/Kedem, moved from Brooklyn to Bayonne three years ago. Sholom says the company paid about $8 million for a 185,000-sq.-ft. building and currently has about 150 employees.
Distribution companies are particularly drawn to New Jersey. ?One of the biggest drivers is the access to the interstate highway system,? says Philip Heilpern, senior vice president in the Woodbury, Long Island, office of real estate services firm CB Richard Ellis. ?Many companies have their major distribution centers in New Jersey and smaller facilities in places like Long Island.?