February 23, 2017
An unprecedented demand for industrial space, combined with increasing office vacancy rates, is leading some landlords to convert low-grade office buildings into warehouses, geared to meet the growing need for “last-mile delivery” processes. In New Jersey, for example, a developer tore down a 500,000-square-foot office building, to put up 800,000 square feet of industrial, according to JLL.
Ignatius Armenia with JLL said such conversions are undertaken by landlords of office buildings that have been experiencing falling tenancy rates for a while. Additionally, “New Jersey is a well-positioned hub that’s equidistant from Boston and D.C., and an hour outside New York City,” he said, adding that it’s an ideal place for next-day deliveries.
Nor is the trend specific to New Jersey. Chicago’s Millennium Mile is being converted from a parking garage to warehousing. If the project succeeds, it “could be a key example of how infrastructure can be repurposed to meet changing needs of urban populations,” said JLL’s Peter Kroner.
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