2B — May 31 - June 13, 2013 — Industrial / Distribution Centers — Mid Atlantic Real Estate Journal www.marejournal.com I ndustrIal r eal e state & d IstrIbutIon C enters By Kyle Schmidt, Cushman & Wakefield New Jersey’s industrial owners continue to benefit from a favorable sales environment N represents a 258% increase over the prior period in 2012, and 92% of aggregate sales in CY2012. ew Jersey’s industri- al owners continue to benefit from a fa-
foot to near record levels. The year-to-date average of $70.95 PSF is just shy of the 2006 peak of $77.64 PSF and is nearly $12 PSF above the trailing 9-year average of $58.08 PSF. The year-to-date average cap rate of 7.12% is 407 basis points tighter than the aver- age execution at the market depth in 2009, and the com- pression trend continues. Of the eleven transactions that have either closed or are under contract year- to-date, four traded below 7.00%. Industrial Income
Trust’s off-market acquisi- tion of 261 River Road in Clifton at ±5.00% represents the lowest cap rate year-to- date, which is a function of both the highly competitive marketplace, as well as the building’s below market in- place rent. Strengtheningmarket fun- damentals have also been accretive to industrial valu- ations. Increased leasing velocity, declining vacancy and increasing rental rates in nearly all New Jersey submarkets have added to investor enthusiasm. In
fact, New Jersey’s industrial fundamentals are supporting the construction of 4.7 mil- lion square feet in ten sepa- rate projects; six of which are speculative development. Why is now a great time to be a seller? Today’s mar- ket is an absolute seller’s market driven by cheap debt, abundant capital and a relative dearth of indus- trial product nationwide. In a recent survey conducted by Cushman & Wakefield’s Industrial Advisory Group (IAG), the capital to sales imbalance is approximately 2.5 to 1. More importantly for New Jersey, the IAG survey results showed that of the top 20 industrial markets nationwide, New Jersey is the most desirable, with a resounding 77% of investors surveyed targeting the state in 2013. New Jersey’s industrial landlords are well positioned to benefit from the product starved national capital mar- kets combined with strong and strengthening funda- mentals. As illustrated by record setting sales, inves- tors are eager to own in New Jersey, and appreciate the rarity of any offering. So long as this equation remains un- changed, recent trend lines in 2013 should continue. Kyle Schmidt, Cushman & Wakefield. n a section of the MARE Real Estate Journal P.O. Box 26, Accord, MA 02018 781-871-5298 • 800-584-1062 fax 781-871-5299 www.marejournal.com Publisher/CEO Linda Christman lchristman@marejournal.com Publisher Elaine Fanning efanning@marejournal.com Industrial R.E. & Distribution Ctrs.
vorable sales e n v i r o n - ment. After kicking-off 2013 with a significant increase in s a l e s vo l - ume, trans- action activ-
Capital market demand for industrial product is best illustrated by consistently low cap rates and record high pricing for the relatively few deals that come to market. Cornerstone Real Estate Advisers set the pace with its acquisition of 115 Moonachie for $159 PSF. Similarly, aggressive pricing on 2013 transactions throughout New Jersey has helped push the average price per square
Kyle Schmidt
ity has maintained its elevat- ed pace, which is expected to continue through the balance of this year. Year-to-date dol- lar volume of $496.4 million
Dominating our market
Northern New Jersey Market Share 1Q2002 to 1Q2013
Source: Real Capital Analytics (03/12/2013)
OFFICE
INDUSTRIAL
Volume ($Mil)
No. of Transactions
Volume ($Mil)
No. of Transactions
Rank
Broker
Rank
Broker
1
Cushman & Wakefield $6,565
110
1 2 3
Cushman & Wakefield $1,602
55 51 12
2
CBRE
$3,884
93
CBRE
$1,151
HFF
$315
3
Eastdil Secured
$1,910
36
4
Eastdil Secured
$305
14
4
HFF
$507
10
*Industrial sales >$10M since 12/31/2001; >25,000 SF
*Office sales >$10M since 12/31/2001; >25,000 SF
MULTIFAMILY
RETAIL
Volume ($Mil)
No. of Transactions
Volume ($Mil) $1,497
No. of Transactions
Rank
Broker
Rank
Broker
1
CBRE
39
1
Cushman & Wakefield $767
27
2
HFF
$1,261
25
2
CBRE
$608
18
3
Rockwood RE Advisors $1,252
15
3 4
JP Morgan
$341 $341
10 10
4
Cushman & Wakefield $1,130
16
Goldman Sachs
*Multifamily sales >$10M since 12/31/2001; >50 units
*Retail sales >$10M since 12/31/2001; >25,000 SF
Andrew J. Merin Vice Chairman
David W. Bernhaut Vice Chairman
H. Gary Gabriel Executive Vice President
Brian J. Whitmer Senior Director
Cushman & Wakefield, Inc. Capital Markets Group Licensed Real Estate Brokers One Meadowlands Plaza, 7th Floor East Rutherford, New Jersey 07073 (t) 201-935-4000 (e) investment.sales@cushwake.com
Section Editor Karen Vachon kjoy@marejournal.com
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