ASG Puts 1M SF of NJ Meadowlands Warehouses on Selling Block

ASG Equities has tapped Newmark to market a portfolio of four fully leased warehouses encompassing 1M SF in Secaucus, a deal aiming for $400M per SF.

While bids on the individual properties will be considered, the portfolio is being touted as a rare opportunity to achieve industrial scale on the NJ Meadowlands, which has been one of the hottest industrial markets in the US in recent years, according to a report in Green Street.

A prospective buyer’s initial annual yield on the portfolio would be 4.6%, based on net operating income of $18.5M. The portfolio has a weighted average remaining lease term of 10.9 years, with in-place rents averaging $18.15 per SF, well below the market-rate average of $25.15 per SF.

UPS is leasing three of the four Secaucus warehouses, which has leases encompassing 693K SF with 12.2 years of remaining term, generating $11.9M of NOI annually.

The warehouses leased by UPS, which were built from 1967 to 1978, are located at 1 Century Way (434K SF); 70 Enterprise Avenue North (162K SF) and 700 Secaucus Road (97K SF). UPS, which owns a campus adjacent to 1 Century Way that serves as a regional hub, is expected to renew its lease on the Century Way facility, the report said.

UP is subleasing the space at 70 Enterprise Avenue and 700 Secaucus Road, which is being marketed as an opportunity for a buyer to convert and expand these properties for use as data centers.

The fourth warehouse in the package encompasses 321K SF at 1 Emerson Lane. Built in 1978, the facility is fully leased to ZT Systems under an agreement that expires in eight years and generates $6.5M of NOI.

If the Secaucus warehouse portfolio offered by ASG fetches $400M, the deal will become the largest industrial trade in northern NJ this year. Thus far, the largest industrial trade in NJ occurred last month, when Morgan Stanley and Saxum Real Estate purchased a 1.2M SF portfolio in Morris County for $217.5M.

The statewide record for an industrial sale in NJ was set in 2021 with the $265M sale of a 1.1M SF distribution center in Logan Township near Philadelphia.

While nationally investment sales in industrial properties have dropped 39% during H1 2023 in a year-over-year comparison, industrial sales in New Jersey have remained brisk, according to Green Street’s Sales Comps Database.

About $2.1B of deals worth at least $25M have changed hands this year, putting NJ on track to exceed last year’s total of $2.3B, according to Green Street.