How many more warehouses will try to make South Jersey home?

Jessie Hernandez knows she and her Auburn Road neighbors aren't alone.

"It's everywhere," she said, walking along the Pilesgrove property that's been in her family since 1986, bought by her parents, who still live in an apartment off the home where Hernandez and her husband are raising their five children. "I know there are thousands of people all over who feel this way."

The massive warehouse complex proposed for a large parcel of farmland across the rural road where she lives, has her and others waiting and worrying about how at least three warehouses with a total of 2 million square feet will transform the two-lane county road with horse farms and crop-lined fields, McMansions and small ranchers.

The plan calls for more than 280 spaces for tractor trailers, some on a parcel currently zoned for single-family, affordable residential units.

"We feel surrounded by warehouses," Hernandez said, with warehouse complexes already built, planned or under construction in Carneys Point, Pedricktown and Harrison Township.

Are more warehouses coming to South Jersey?

The warehouse boom arrived in South Jersey years ago, as land-flush owners met with cash-flush developers to strike high-dollar deals on sites near some of the busiest highways in the region.

But that flood of new construction may be ebbing, industry observers say.

The reasons:

• A building spree has finally outpaced demand, pushing up vacancy rates even as new warehouses are under construction.

• Economic concerns, including rising interest rates, are making developers and potential tenants reconsider their business outlook.

• A shortage of prime space, particularly in hot spots along interstate highways and near Delaware River bridges in Burlington County.

• And, where space can be found, increasing resistance from municipalities and residents.

The warehouse-dominated industrial market, “though still strong, may be coming down from years of strong growth,” said a report in July from WCRE, an Evesham-based real estate brokerage.

It said "vacancies are anticipated to expand significantly and annual rent growth to slow."

South Jersey, and in particular Burlington County, led the region's industrial performance during the recent boom, according to the report.

It noted Burlington County had “the highest levels of annual net absorption, at 5 million square feet, despite delivering 6.8 million square feet of new construction in the past 12 months.”

But, it added, this year's first two quarters saw the county's lowest leasing volumes in the past three years.

South Jersey had an overall vacancy rate for industrial space of 5.5 percent at the end of this year's first quarter, up from 4.9 percent a year earlier, according to Newmark Real Estate.

Burlington County had the highest vacancy rate at 8 percent, compared to 4.9 percent one year earlier.

Over the same period, the vacancy rate doubled from 2.5 percent to 5 percent in Gloucester County.

More than 14 million square feet of warehouse space is in a development pipeline in Burlington, Gloucester and Salem counties, said Kurt Montagano, a broker for Newmark Real Estate.

The largest amount, 8.8 million square feet, is in Burlington County, which has attracted developers with its access to Pennsylvania via Delaware River bridges and land prices that are lower than in Central and Northern New Jersey.

What's next for the warehouse market in South Jersey?

The pipeline holds about 3 million square feet in Gloucester County and 2.4 million square feet in Salem County.

“That’s a mix of under-construction, plus existing space that’s been delivered in the past year,” said Montagano. “All of that space is vacant.”

WCRE predicts vacancies will hit hardest at warehouses of more than 500,000 square feet "as new construction projects underway are heavily concentrated in this segment.”

As another sign of the changing market, consider remarks two years apart by Rob Borny, an executive with warehouse developer Dermody Properties.

When his Nevada-based firm broke ground for a three-warehouse project in Woolwich in September 2021, Borny noted South Jersey was attracting “top-tier companies looking for Class A warehouse space that has become too rare to find or too expensive in Central and Northern New Jersey.”

But Borny offered a different take in May when Dermody announced plans to build two warehouses at separate sites on Route 38 in Lumberton and Mount Laurel.

At that time he described the economic environment as “challenging” and said Dermody was “very fortunate to be in a position to acquire properties such as these.”

With large properties harder to find, some developers are choosing sites farther from interchanges on the New Jersey Turnpike or Interstate 295.

"It’s interesting to see that development push out,” Montagano said of projects in towns like Hainesport, Lumberton and Pemberton Township.

A large project at the old mall site off Burlington-Mount Holly Road near Interstate 295 is currently in the works, called The Crossings in Burlington Township, a mix of residential, commercial and recreational spaces. The project includes three industrial warehouse buildings totaling 2 million square feet.

Burlington Township Mayor E.L “Pete” Green said that the size of any land development is limited by factors such as zoning, accessibility environmental constraints and, in many cases, storm water regulations.

It also includes a 500,000 square-foot retail center, which will include shops, restaurants and medical offices across seven buildings. A residential complex will be part of the mix.

Developers also are picking sites that already have buildings on them.

In Camden, for instance, a warehouse is approved for the location of a rundown complex that once held Haddon Meat Market on Mount Ephraim Avenue near the Collingswood border.

Similarly, a developer is seeking approval to put a refrigerated warehouse on the site of the former Freedom Mortgage Corp. headquarters on Pleasant Valley Avenue.

“Due to land constraints, particularly in the Southern New Jersey industrial market, tenants are less focused on cost and more on securing the right land option to suit their requirements,” said the Newmark report.

“The demolition process is something they’re completely willing to take on,” Montagano said of warehouse developers.

Are residents happy with warehouses in their communities?

Hernandez, a former nurse-turned-stay at home mom, homeschools four children. Another child has special needs and catches the bus on Auburn Road — where vehicles already speed past. She worries about the dangers of potentially hundreds of semi trucks and employees in personal vehicles racing to get to warehouses on schedule.

In the background of the quiet that's occasionally broken by the laughter of children playing, chickens clucking and crowing and horses neighing, the low hum of New Jersey Turnpike traffic can be heard.

Hernandez worries that while there is no exit near her house right now, one might be built to accommodate the warehouse traffic. That, she said, would disrupt not just nearby roads, wells and septic systems — it will rattle homes' foundations and even, she fears, "destroy that little town" of Auburn, where small houses are situated very close to the road.

"And any money used for that will come from our taxes," she asserted.

Increasingly, communities are raising alarms about warehouses potentially crippling local infrastructure and jeopardizing municipal finances.

Indeed, residents of Salem County's rural Oldmans Township crowded into public meetings this year to oppose a plan for nine warehouses on a 547-acre site.

The township’s planning/zoning board in June unanimously rejected the 5.3 million-square-feet proposal at Straughns Mill and Pedricktown-Woodstown roads.

Board members cited concerns that included sewer and water issues, loss of farmland and traffic impact.

Meanwhile, the board faces a lawsuit from affiliates of the would-be warehouse developer, Knight Owl Holdings of East Greenwich. They contend the board has taken “a series of arbitrary and capricious actions” to prevent the “permissible use of their land under the applicable zoning.”

Knight Owl continues to seek approval for a plan to build two warehouses with a combined 645,000 square feet on 92 acres elsewhere in Oldsman Township.

But New Jersey's State Planning Commission, while urging better guidelines for the warehouse-approval process, acknowledges the industry is a job machine.

Employment in the warehousing and wholesale trade or transportation sectors make up about 12 percent of all jobs in New Jersey, according to the commission.

“This is the highest share among the 50 states,” it said in a September 2012 announcement of warehouse-siting guidance for local communities.

The commission said large-scale warehousing, “can, if not properly sited and scale, result in negative regional impacts affecting adjacent communities, and transportation infrastructure that lacks adequate capacity.”

Hernandez rejected the notion that warehouses bring needed revenue and jobs.

"There are doctors and lawyers here," she said, motioning to a development filled with $600,000 homes. "No one needs a warehouse job here. Anyone who'd work in one would need transportation to get to work and there's no big towns around here."

Who's fighting off warehouse development?

Nick Mesiano is so opposed to warehouses proliferating in his hometown of Pittsgrove, the 29-year-old web developer started a Facebook group to rally neighbors and even put up a substantial sum from his own pocket to hire lawyers to represent their interests (and started a GoFundMe to raise more money).

The proposal he's fighting would put a warehouse complex on a former farm field at Landis and Gershal avenues — right near Parvin State Park, and a stone's throw from Vineland's small business corridor.

The latter is full of "human-centric activities," Mesiano noted, not conducive to heavy truck traffic.

"It's shocking to see a developer from far away try to put something so large and so out of place for the people who live here.

"Typically in this area when someone wants to build something new, you’re happy to see them expanding," he continued. "But we’re talking a massive facility out of the blue from someone we don’t know. ... We're talking about adding 600 truck trips a day to our town, to Route 55. Semi trucks are disruptive and the impact of them is a thing of its own. They’re loud, they shake the ground, they make the town almost inhospitable."

"The economic arguments come nowhere close to the justifying the environmental and community impacts of this kind of development," he added. "What I care about is making sure the place where I was born and people around me will have fair shot at keeping their community the way they like it."

But South Jersey's access to ports, bridges, highways and workers "has solidified the area as a desirable setting for distribution operations," according to the Newmark report.

It notes about 40 million households are within a four-hour drive of this region, "the highest of any major metro area in the United States.”

Westampton ended up rejecting, in the face of organized neighborhood resistance, a two-warehouse proposal for 44 acres off Woodland and Irick roads. The township is a small place, about 11 square miles, with about 9,000 residents.

The proposal from Woodlane Logistics LLC of Baltimore, Maryland, spent a long time in proceedings before the Land Development Board seeking a use variance. The request finally was rejected in December 2022.

Opponents confronted the plan with their own land-use law attorney and planner. Critically, it was they rather than the township who made the crucial discovery that the project needed the use variance. That finding vastly complicated the developer’s application.

Woodlane Logistics filed a lawsuit on Feb. 27 asking Burlington County Superior Court to reverse the board decision. The Pew family, owners of the land, filed a nearly identical lawsuit on Feb. 28.

The developer and family lawsuits have moved slowly, with an in-person hearing set for Aug. 24 on both actions.

Opponents don't win every fight.

In Chesterfield, for instance, a grassroots group sued the township and its planning board in an effort to block a warehouse project at the former Old York Country Club.

A state judge in May dismissed the suit, agreeing with the developer's view that officials had acted properly in approving a redevelopment plan.

“The biggest challenge is zoning – resistance from the township and the community itself,” observed Montagano.

“If the community doesn’t play ball with you, it’s a tough go.”

This article originally appeared on Cherry Hill Courier-Post: Amazon, Walmart, others see growth in South Jersey warehouses