Although a recently inked deal between New Jersey and Amazon.com is bad news for those who haven’t been paying sales tax for their purchases through the online retailing giant, it may translate into good news for the central Jersey commercial market.
The deal could translate in millions of square feet of office space, over 1,000 new jobs, and more than $100 million added to the local economy.
Governor Chris Christie announced on May 30 that Amazon will establish twin distribution centers — each more than 1 million square feet in size — in New Jersey sometime next year. The state has also reached an agreement with the company, the governor said, under which Amazon will begin charging state sales tax on purchases in the middle of 2013.
“These distribution facilities are expected to result in at least $130 million in capital investment, along with the expected creation of several thousand quality jobs for our families, including plans for over 1,500 full-time jobs, as well as thousands of full-time temporary, seasonal, and construction jobs,” said an announcement from the governor’s office.
The investment commitment is contingent on the receipt of tax incentives from the state Economic Development Authority “that make such investment economically viable for both the State of New Jersey and the company,” says the governor’s office. Officials did not say how much relief the Seattle-based company would be seeking.
In March Assemblyman Albert Coutinho said he believed it is likely that Amazon would opt to locate the facilities in Mercer or Middlesex counties in buildings near Turnpike Exit 8A, which has become a popular location for similar operations.
William Barish, president of Commercial Property Network, says that though he can’t speak to specifics of Amazon or its needs, the Exit 8A region offers a number of factors that make it an attractive location.
“The Exit 8A market offers great benefits. It’s at a central location in the state with access to the Turnpike interchange and close to both New York and Philadelphia,” says Barish.
In addition, rent values are good in the market and it also “offers great access to employees through the center line of state,” Barish says. “That’s why 8A has been doing so well. It’s one of the strongest markets in northeast.”
Some also speculate that Amazon could locate further south in Mercer County. Michael G. McGuinness, CEO of the New Jersey chapter of NAIOP, a commercial real estate development association, has said some areas of Robbinsville and Hamilton Township have space zoned that would be suitable for Amazon’s facilities.
“Those two townships are ideally located for these sites. They lend themselves real well to this, because they are in the center of the state, and you can get the workers,” McGuinness said.
Meanwhile, under the tax accord reached between Amazon and the state, the company will collect 7 percent sales tax by July 1, 2013. Collection would start earlier if federal legislation is passed requiring the collection of sales tax from out-of-state retailers.