Proposed Senate Bill 3688 calls for sweeping warehouse legislation across New Jersey

On April 26, 2021 Senate Bill 3688 was proposed by a trio of New Jersey senators in an effort to curb warehouse sprawl across New Jersey. On May 20, 2021, the bill was moved forward by the Senate Appropriations Committee and now will now face the Senate for approval and amendments. If passed through the Senate, it will follow the same progression through the House, and if it gains legislative approval it is likely to become law. Once it becomes law, the bill would have significant impact on warehouse development across New Jersey.
The goal of Senate Bill 3688 is to regionalize land use in New Jersey giving a voice to any municipality or region that could be negatively impacted by the development of large industrial sites in adjacent areas. Examples of negative impact include increased traffic, noise, environmental pollution, depletion of farmland or opens space. Under this bill, the land use development process would follow this progression:

  • Land use application is filed for large warehouse development.
  • Hosting municipality (where application is filed) notifies all adjoining municipalities and State Planning Commission of intention to develop large warehouse.
  • All adjoining municipalities have 20 days to determine if they will adopt a resolution of regional concern.
  • The State Planning Commission holds a hearing and ultimately has the power to prohibit approval of the application, applicant will have to prove that construction of the warehouse will not cause:
    • Substantial detriment to economic and fiscal impact of an adjoining municipality/region
    • Substantial detriment to the general welfare of adjoining municipalities/region
    • Substantial impairment of the intent and purpose of the master plan or zoning ordinance of any adjoining municipality/region
Should the bill pass:

Worst case scenario – The legislation would stifle long term development of new warehouse space in a critical U.S. distribution hub.

Best case scenario – The new legislation significantly delays the development timeline for industrial projects due to a lengthy approval process in a critical U.S. distribution hub.

The average timeline for senate bills to progress from inception to law is 263 days. Meaning occupiers of precious warehouse space across New Jersey should hold on to their space and consider renewing leases early, in advance of strong upward pressure on rents. Demand for industrial space in this heavily traveled logistics artery is not going to subside. Lengthier development timelines and the potential for developments to be denied approval altogether will increase the market price volatility.