With every region of the country and world vying for good-paying jobs, New Jersey cannot afford to be complacent.
NAIOP New Jersey works on your behalf to get results that mean business. We achieved major policy objectives over the past 24 months:
NAIOP New Jersey works on your behalf to get results that mean business. We have achieved major policy objectives over the past two years:
- Bringing the Bayonne Bridge air draft issue to the attention of policy makers and the media: a fast-track review of environmental issues to help speed modification or replacement of the bridge was announced in August, and the Port Authority of NY and NJ has agreed to provide $1 billion toward either rehabilitating or replacing the bridge.
- The signing of the COAH Nonresidential Development Fee Moratorium...a law that will allow good, job-generating projects to move forward all around New Jersey.
- Proposal of the DCA’s “Minor Work” amendments to establish a two-tiered system for the submission of documentation for minor work and for notice for inspections: renovation work that typically would be done at change of tenancy in a retail, office, warehouse or industrial space, would be classified as minor work and could proceed without waiting for the issuance of a permit and without waiting for progress of work inspections.
- Signing of the “Grow New Jersey” incentive that shifts unused tax credits from the UTHTC (Urban Transit Tax Hub Credit program) to encourage job creation and retention and capital investment throughout the state.
- The extension of the Permit Extension Act to the end of 2012.
- The inclusion of virtually every one of NAIOP New Jersey’s recommendations in Governor Christie’s Transition Team Reports, many of which were enacted via the Governor’s first Executive Orders, and many more of which are reflected in the new “State Strategic Growth Plan”.
- The Appellate Division invalidated substantial portions of COAH's regulations, including the growth share approach that had a chilling effect on non-residential development.
- The signing of the Time of Application Law, which provides that the development regulations in effect on the date of submission for an application for development shall govern the review of that application and any decision made with regard to that application.
- Revising the Municipal Land Use Law to allow for Vertical General Development Permits and Air Rights.
Improving critical business incentives (e.g., the ERG grant and UTHTC) by allowing for the carry forward of tax credits incurred.
State of the Industry
The exodus of private-sector jobs has cost New Jersey billions of dollars, and economists tell us we will not return to pre-recession employment levels for years to come.
While office and industrial vacancy rates for Northern and Central New Jersey have improved ever so slightly, these positive trends are tenuous and may not be sustainable.
Real estate is a derived-demand business. We can only provide supply; we have no control over demand. That is directly tied to job growth. To date, New Jersey job growth is lagging other states, which continues to limit space absorption. New Jersey lost nearly 250,000 jobs from February 2008 to January 2010 and gained only 8,200 jobs from February 2010 to December 2010 - for a net loss of nearly 240,000 jobs.
Slow employment growth is blocking a true market upswing. Availability rates remain high on an historical basis, and landlords are forced to offer large concession packages to make deals. While average asking rents have increased slightly for consecutive quarters for the first time in almost two years, net effective rents have actually decreased when adjusted for these concession packages and higher operating expenses.
Tenants also are using their space much more efficiently; in some cases, companies are renewing leases for 20 to 30 percent less space with the same number of employees. This excess, known as shadow space, can have huge implications on the market recovery.
Commercial Real Estate Drives Economic Growth
There is no economic development without real estate development. The commercial real estate industry:
- Creates jobs and brings work places close to families.
- Contributes billions in local spending and infrastructure improvements, and increases the tax base.
- Cleans and reclaims blighted, disused and contaminated areas, returning properties to productive use and chasing out crime.
- Is the key to unlocking the huge potential for growth in our Port Regions.
- Includes the logistics industry, which accounts for nearly $50 billion or 10.9 percent of the total state Gross Domestic Product.
- Creates healthy and accessible work environments that meet tenants’ needs with green and sustainable technology and materials.
Building the human environment…jobs, homes, and places to shop and play...is what fuels our economy. The cumulative impact of an unfriendly business climate, unending tax and fee increases, the COAH jobs tax and a crushing regulatory burden (too often with no link to real science or meaningful benefits) has compromised the commercial real estate’s ability to drive New Jersey’s economy.
Despite the many positive achievements of the Christie Administration, New Jersey still ranks at or near the bottom on the majority of business climate indicators, including personal and corporate income tax rates, property taxes, energy costs, state and local government spending and highway cost effectiveness. Our tax policies, lengthy, costly and unpredictable permit process, unrelated impact fees, and aging and congested transportation infrastructure do not look like a welcome mat for business.
As a high-cost border state, we need to be relentless in demonstrating a commitment to economic development. Attracting new private-sector jobs and improving our business climate is all about cutting costs and providing certainty to existing and prospective businesses. Although the commercial real estate sector traditionally lags recovery in other sectors, enacting pro-growth reforms and initiatives will help create and attract the good private-sector jobs New Jersey needs now.
