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ISSUE HIGHLIGHTS Volume 25 Issue 12 June 28 - July 11, 2013 MidYear Review Spotlight
Representing 1340 Poydras, LLC in acquisition Iselin, NJ’s Sitar Realty sells 378,895 s/f New Orleans office bldg. totaling $14.5m
N
ew Orleans , LA — Sitar Realty Company repre-
5-16A
Elizabeth, NJ — Bus- sel Realty Corp. (BRC) has completed 160,000 s/f in new lease transactions at 1000 Jefferson Ave. in Elizabeth, a 195,000 s/f industrial building. Vice president JordanMetz of BRC represented the landlord, TemplerAssociates Inc. , and leased 38,000 s/f to I&L Distri- bution; 52,000 s/f to McGinley Transportation Services; and 70,000 s/f to Duro Standard Products. Metz closed the three leases within three weeks, bringing the property to fully-leased sented 1340 Poydras, LLC in its acquisition of a 378,895 s/f office building in the Cen- tral Business District in New Orleans. 1340 Poydras St., formerly known as the Amoco build- ing, is located next to the Louisiana Superdome. The 21-story, 280 feet tall skyscraper was constructed in 1977 of black aluminum and a glass curtain wall. At time of sale was approxi- mately 68% occupied and is primarily used for leas-
Ben Franklin TechVentures® earns LEED Gold Cert.
William Sitar able office area with some retail space on the ground level. William Sitar, Esq. and Douglas Sitar, Esq. of Sitar Realty Compa- ny , located in Sitar Realty Company’s Iselin, NJ office, negotiated the transaction on behalf of the buyer. The facil- ity was purchased for $14.5 million. n Douglas Sitar
12B
1340 Poydras St.
Project of the Month The Promenade at Wyomissing Square
Bussel Realty Corp. leases 160,000 s/f in Elizabeth, NJ bringing vacant property to fully-leased
6C
Celebrates 5 Years Section C
Directory
1000 Jefferson Ave.
Mid Year Review. .............................5-16A Owners, Developers & Managers..Section B Green Buildings............................. 19-22B Shopping Centers.................... Section C
tailboards. The property is just minutes to Exit 13A of the New Jersey Turnpike, Routes 1&9, and Port Elizabeth/Newark and Newark Liberty International Airport. “Before taking over the as- signment, 1000 Jefferson Ave. sat mostly vacant for over a year,” said Metz. “We brought tremendous exposure and activ- ity to the property but nothing came to fruition until March, when several users started making us offers to lease the
property. By May, we were in serious negotiations resulting in several deals closing -- one after the other in rapid succes- sion. The Port Newark market is currently so tight, it was re- ally a matter of time until those companies seeking space were going to land here. All three of these new tenants who viewed the property, first scoured the market, and ultimately came back to us as we offered an af- fordable, functional warehouse in a great location.” n
status. The owner/landlord oc- cupies the balance of the space. Metz and David Posner of BRC represented both ten- ants, I&L and McGinley, while Barry Cohorsky and Russel Verducci of NAI Hanson rep- resented Duro in the respective transactions. Strategically located next to Port Newark and Newark Liberty International Airport, 1000 Jefferson Ave., sits on 6 acres, has 16’ to 20’ high ceil- ings, 75 parking spaces, and 25
Upcoming Spotlight July 26, 2013 Brokerage Directory
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Inside Cover A — June 28 - July 11, 2013 — Mid Atlantic Real Estate Journal
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COMMERCIAL LOANS SBA 504 & 7A PROGRAMS
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Please contact John Burke with any loan scenarios. 732-297-4700 Ext. 11 1882 Rt. 1 North, North Brunswick, NJ 08902 www.sbacoastal.com
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Sitar Realty Company - the largest remaining regional real estate firm in New Jersey
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Seeking salespeople who wish to work in an inviting, friendly and professional environment. Please call William Sitar, CEO, at 731.283.9000 to schedule a confidential interview.
1481 Oak Tree Road - Iselin, NJ 08830 T: 732.283.9000 F: 732.283.3103 503 Washington Boulevard, Sea Girt, NJ T: 732: 449.2000 658 Cookman Avenue, #6 Asbury Park, NJ 07712 T: 732.775.3000 F: 732.775.5520 www.sitarcompany.com Sitar Realty Company is one of the few real estate companies able to take complete control of troubled assets by providing receivership services, property management services, offering Banks single source accountability.
A — June 28 - July 11, 2013 — Mid Atlantic Real Estate Journal Accutech Environmental Services, Inc................6B Aldo Design Group..............................................18B Allied Building Corporation...............................12B American Architectural Window & Door.............1B Atlantic Real Estate Services.............................19A Atlantic Real Estate Services...............................3A Auctioneers Directory...........................................4A Azarian Group.......................................................2C Benchmark Construction Company, Inc..............9B Bennett Williams Realty, Inc.. .............................8C Billboard Directory.............................................19A Breslin Realty Development Corp.. ...................10A Brubacher Excavating, Inc.................................11C Business Card Service Directory. ......................17A Campbell Commercial Real Estate, Inc.............17A Capitol Aerials.....................................................18B Caryl Communications Inc.................................17A Coastal Commercial Group...............................IC-A Cushman & Wakefield..........................................9A Deerwood Real Estate Capital...........................14A duradek..................................................................5C Earth Engineering Incorporated..........................8C Ehrlich, Petriello, Gudin & Plaza Law Offices....7B Entech Digital Controls......................................20B Fortna Auctioneers & Marketing Group. ............4A Fowler Commercial Laundry Specialists...........17A Fowler Commercial Laundry Specialists...........23B G & C Electronics................................................15C Gebroe-Hammer Associates. ................................8A Genova Burns Giantomasi Webster, Attorneys 14C Genova Burns Giantomasi Webster, Attorneys 20B Gilbeaux Associates, P.C.....................................18B Greater Reading Economic Partnership............17A GZA GeoEnvironmental, Inc..............................15A GZA GeoEnvironmental, Inc................................7A Haftek CWS. .......................................................17B Hillmann Consulting...................................... IBC-A Hinerfeld Commercial Real Estate....................19A Hollenbach Construction, Inc.............................10B Hutchinson Mechanical Services.........................2B Institure of Real Estate Management...............25B Jottan Inc., Roofing Contractors & Consultants...BC-B Kaplin|Stewart Attorneys at Law.......................4C The Kislak Co......................................................19A LMS Commercial..................................................2C M&E Enginees, Inc.............................................12A M. Miller & Son.....................................................3B Mainardi Managemet.........................................17A Marcus & Millichap............................................10A Max Spann Real Estate & Auction Co.................4A Montecalvo Material Recovery Facility.............21B Nai Summit........................................................10C NorthMarq. ...........................................................6A P. Cooper Roofing, Inc.........................................13B Poskanzer Skott Architects................................16C Premier Compaction Systems..............................8B Promenade at Wymossing Square. ......................6C Quaint Oak Mortgage.........................................17A Regal Bank.......................................................... 11A RD Management............................................. IC-1C Remco Realty Group........................................ BC-C Rittenhouse Realty Advisors..........................3, 13A ROCK Commercial................................................4C Security Resources........................................... BC-A Security Resources, Inc.. ....................................11C Sheldon Good & Company....................................4A Sitar Realty Co......................................................1A Spillman Farmer Architects...............................12B Subway......................................................... 19A, 4C The Green Group................................................17A Warner Real Estate & Auction Company, Inc.....4A Zamir Equities......................................................3A MAREJ A dvertisers D irectory To advertise, call 1-800-584-1062
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Mid Atlantic R eal E state J ournal Publisher ............................................................................Linda Christman Publisher ...............................................................................Joe Christman Section Publisher ................................................................Elaine Fanning Section Publisher ....................................................................Steve Kelley Senior Editor/Graphic Artist ................................................ Karen Vachon Office Manager ....................................................................Joanne Gavaza Contributing Columnists ............................................. Matthew K. Harding Mid Atlantic R eal E state J ournal ~ Published Semi-Monthly P.O. Box 26 Accord, MA 02018 (Mail) 312 Market Street, Rockland, MA 02370 (Overnight) Periodicals postage paid at Rockland, Massachusetts and additional mailing offices Postmaster send address change to: Mid Atlantic Real Estate Journal, P.O. Box 26, Accord, MA 02018 USPS #22-358 | Vol. 24 Issue 12 Subscription rates: $99 - one year, $198 - two years, $4 - single copy REPORT AN ERROR IMMEDIATELY MARE Journal will not be responsible for more than one incorrect insertion Toll-Free: (800) 584-1062 | MA: (781) 871-5298 | Fax: (781) 871-5299 www.marejournal.com The views expressed by contributing columnists are not necessarily representative of the Mid Atlantic Real Estate Journal
Mid Atlantic Real Estate Journal
ollowing 2012’s marked improvement in retail leasing, 2013 is off to a F By Matthew K. Harding Retail “State of The Market” Solid Heading Into Heart of 2013 great start in the Northeast. We are seeing demand from national, local and franchise companies. The category base reflects broad variety as well, with restaurants, apparel, pet supplies, gyms and personal services tenants among the most active tenant types – fol- lowing several years in which value-oriented retailers domi- nated. Nationwide optimism was evident among both retailers and developers at ICSC’s recent RECon meeting in Las Vegas. The event brought 33,000 in- dustry participants together, and everyone we spoke with agreed they were able to con- duct more productive network- ing, leasing meetings and new business development than in the recent past. We also observed increased talk about new projects, which is a time- proven indicator of increased market strength. One emerging trend worth watching includes stepped up activity from non-traditional retail tenants. Among them, healthcare-related businesses increasingly are targeting shop- ping center locations. Within our own leased and managed portfolio, LabCorp, a medical laboratory tests and services provider, recently signed a 1,700 s/f lease at the Centre Plaza in Bensalem, PA. At another property, we currently are negotiating a 10,000 s/f lease with a different
medical user. Last week, we received a requirement from a 100-location medical chain. Earlier in the year, one of our first non-traditional healthcare tenants, Jersey College School of Nursing, tripled its space at Capitol Plaza in Ewing, N.J. The private, post-second- ary educational institution leased with us in 2002 and now occupies 30,000 s/f at that property. In terms of size require- ments, supermarkets still are opening large stores. Many are incorporating online shopping/ store pick-up operations that require dedicated space. Other categories, like office supplies and department stores, con- tinue in a right-sizing direction with smaller formats. What does all of this mean in terms of fundamentals? Retail remains a “tale of two cities.” Top-tier properties absolutely are in demand, resulting in tighter vacancy rates and an upward trending in rents. At the same time, credit tenants remain focused on these bet- ter-quality, well-located assets. This poses continued challenges
for class B properties and those in secondary locations. Capital Markets Take Note Investors and financing en- tities are taking note of retail real estate’s strengthening state, especially in light of the improving general economy and continued low interest rates. Top-quality properties are in high demand, with gro- cery-anchored centers in prime locations remaining the most coveted asset type. Importantly, financing is freeing up to ac- commodate increased market activity. Within this context, many owners are recognizing that this is an opportune time to examine their existing portfo- lios for refinancing. We recently were able to refinance two properties for one of our clients in the range of 3%. They were able to use the proceeds to pay off the existing financing on those assets as well as a mort- gage held on a third property. The new payments on the re- financed properties are about the same as they were before, continued on next page
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AVAILABLE 235,714 SQ. FT. Manufacturing - Warehouse
M id A tlantic R eal E state J ournal L Garibaldi & Eric Maurer orchestrate transactions Two lease 67,000 s/f at Eastman’s Eisenhower Corp. Campus ivingston, NJ — The first quarter of the New Year ush-
Former L’Oréal Manufacturing Facility 200-222 Terminal Avenue, Clark, New Jersey • ± 17,587 sq. ft. office • ± 51,536 sq. ft. warehouse • ± 166,591 sq. ft. air-conditioned manufacturing, production • 124 car parking spaces • 6000 Amps dual service • 20-21 foot ceiling height in warehouse • 15 Loading docks; 1 drive in door • Warehouse Racking with ± 2,718 pallet locations • Immediate Availability • Strategic location just off The Garden State Parkway exit 135 For further information, call: Ed Dudzinski, SIOR, CCIM Jim Foran (908) 429-4334 Atlantic Real Estate Services 1031 Route 22 West, Bridgewater, New Jersey EXCLUSIVE BROKER All information is from sourcesdeemed reliable but not guaranteed.Verificationof all information is encouraged. Submitted subject to errors,omissions, andwithdrawalwithout notice.
Features:
ered in some big changes at Eisenhower Corporate Cam- pus in Livingston, with the announcement by Eastman Management Corporation , the building’s owner-developer and its Joint Venture partner, Long Wharf Real Estate Partners , of the addition of two national corporate tenants to the Campus’ roster. According to Eastman’s managing partners, Michael and Peter Schofel , Citrin Cooperman & Company, LLP and Veritext Corp. leased of- fice space totaling in excess of 67,000 s/f in the 385,000 s/f class A facility. Winner of a recent BOMA Award for Best Building in its size category, Eisenhower Corporate Cam- pus is situated on the Rte. 10 Circle in Livingston. Both of these latest leasing deals at Eisenhower Corporate and the third mortgage was eliminated altogether, leaving that property free and clear of mortgage debt. Positioning Properties For Success From an individual retail property perspective, stepped up leasing and capital mar- kets activity make competitive positioning a vitally impor- tant component for attracting shoppers and tenants, as well as investors in a disposition scenario. Sound management strategy is the key. Maximizing a property’s re- turn on investment is directly related to operating as effi- ciently as possible. Each shop-
Individual Membership Society of Industrial and Office Realtors
Individual Membership Certified Commercial Investment Member
Eisenhower Corporate Campus
Campus were orchestrated by a team led by Jeffrey Garib- aldi , president of Garibaldi/ CORFAC International and Eric Maurer , director of leas- ing for Eastman Management Corporation. Citrin Cooper- man & Company, LLP, signed a long-term lease involving more than 23,000 s/f of office space; a move, according to Joel Cooperman, the compa- ny’s managing partner, that is designed to complement its ping center must be individu- ally examined continually for ways to save money – securing the best services at the best prices and keeping utility costs down in vacant spaces, among other measures. The obvious challenge is to minimize costs without sacrificing quality, and all the while maintaining or improving curb appeal. Levin Management has ac- complished this in many loca- tions, most recently at Ham- ilton Plaza in Hamilton Twp., NJ. We fully renovated that 184,272 s/f center, added pad sites and expanded an end cap. At the same time, long-time anchor tenant ShopRite ex- panded its store at the property
network of regional office op- erations in White Plains, NY and Philadelphia, PA, along with its headquarters in New York City. The company oc- cupied its new home at Eisen- hower Corporate Campus in late January. Brokering the deal on be- half of Citrin Cooperman & Company, LLP, was Ken Rapp from CB Richard El- lis (CBRE) and Sarah Jones from CBRE’s NJ offices. n from 50,000 s/f to 83,000 s/f. A.C. Moore, another long-time anchor, renovated its 20,400 s/f store as well. Today Hamilton Plaza looks brand new, traffic has increased and leasing inter- est remains strong. The bottom line is that at- tractive shopping centers draw customers. Properties with customers appeal to tenants. Stabilized assets attract inves- tors and financing. Owners looking to take advantage of the industry’s renewed momentum are taking measures to achieve this “perfect storm” to position their properties for success. Matthew K. Harding is president of LevinManage- ment. n
continued from page 2A Retail “State of The Market” Solid heading into heart of . . .
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W illiam A mann , P.E., DCEP, LEED AP, M&E E ngineers , I nc .
A lan F ruitman 1031 tax . com
J onathan H ornik N avesink R iver C apital
C orey L onberger R ittenhouse R ealty A dvisors
T homas M c C onnell M arcus & M illichap
J ohn J. O berer GZA G eo E nvironmental
M ichael S haw GZA G eo E nvironmental
D avid O rbach R egal B ank
K en U ranowitz , G ebroe -H ammer A ssociates
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Inside: Commercial Lending David Orbach, Regal Bank.............................................11A Due Diligence Michael Shaw, GZA GeoEnvironmental, Inc...............15A Financing NorthMarq Capital...........................................................6A Deerwood Real Estate Capital..........................................7A Investment Sales Cushman & Wakefield of New Jersey, Inc. LEED William Amann, P.E., DCEP, LEED AP, M&E Engineers, Inc. 12A
Licensed Site Remediation Professionals John J. Oberer, LSRP, GZA GeoEnvironmental, Inc......7A MultiFamily Investments Ken Uranowitz, Gebroe-Hammer Associates..................8A NJ Multifamily Thomas McConnell, CCIM, Marcus & Millichap........10A Philadelphia-Multifamiliy Ken Wellar & Corey Lonberger, Rittenhouse Realty Advisors. ..13A Triple Net Properties Alan Fruitman, 1031tax.com........................................14A
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F inancing
In Northern and Central New Jersey Navesink River Capital closes loans totaling $1.5 million funding covers Exxon Properties
F
reehold , N J— Navesink River Capi- tal, LLC has closed
funding was obtained by Jiah Corp., a New Jersey corpora- tion controlled by the Halaka
a one-story Exxon retail gas station that includes a service bay and a snack shop on a
two l o an s aggregating $1.5 million, announced J o n a t h a n H o r n i k , founder and CEO of the F r e e h o l d based direct
In West Orange, the borrower similarly needed a bridge loan quickly in order to close on the property prior to obtaining permanent financing,” Jonathan Hornik said.
family, for a one-year term with an interest rate of 12%. The borrower’s property is situated at 2055 Route 35 in the Monmouth County community, and consists of
half-acre site. In West Orange, $650,000 in financing was provided to Prospect of New Jersey, Inc., similarly carrying a one-year term at an interest rate of 12%. The borrower’s property at 486 ProspectAvenue in Es- sex County consists of an Exx- on retail gas station including a three-bay auto repair shop on a .61-acre parcel. “In both cases, the borrow- ers were seeking short-term loans until they are able to arrange for permanent financing with a regional or national lender,” said Hornik. “In Holmdel, the borrower needed to close quickly relat- ing to a ‘time of the essence’ closing. Proceeds of the loan were utilized to enable the borrower to purchase the real estate from the Exxon Mobil Corp. “And in West Orange, the borrower similarly needed a bridge loan quickly in order to close on the property prior to obtaining permanent financ- ing,” he said. n
Jonathan Hornik
private commercial lender. The financing was provided to Exxon franchises in Holmdel and West Orange, NJ. In Holmdel, $850,000 in
486 Prospect Avenue in Essex County
Mid Year Review
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 Steve Kelley skelley@marejournal.com
Section Editor Karen Vachon kjoy@marejournal.com
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L icensed S ite R emediation P rofessionals
By John J. Oberer, LSRP, GZA GeoEnvironmental, Inc. LSRP: The Case for Client Advocacy
I
t has been said, by more than a few that the LSRP Code of Professional Con-
of you would be surprised to learn that LSRPs are able to implement remedies that pre- viously would not have been possible. While LSRPS are not yet able to conduct risk based cleanup actions, there are numerous other tools available to the LSRP, that did not exist just a few years ago, including: presumptive remedies, compliance aver- aging, use of conceptual site models to assess pathways, and use of actual site condi- tions to develop site specific remediation standards (which in itself is a step towards risk
based cleanup). The remediating parties have the ability, as they al- ways have, to develop rela- tionships with remediation professionals, get to know their approach to investiga- tion and remediation, and ultimately to select reme- diation professionals they are comfortable with. Com- petition will select against those professionals who are too conservative for the mar- ketplace to bear. Treating the LSRP as adversarial in the process merely wastes the client’s money. In fact,
under the LSRP program, cleanups can be completed with fewer resources and in far less time (which is critical in due diligence situations) than under the conventional program. You can now sit down with your remediation professional, discuss options, and develop an acceptable so- lution. Because the response action outcome can only be overturned by the NJDEP if it is not protective, there is no argument over whether you needed four samples to complete your delineation instead of three.
Folks in the NJDEP Site Remediation Program will be the first to admit, that after four decades something had to change. All things considered, the LSRP program repre- sents a significant improve- ment to the site investigation and remediation process in New Jersey, and should allow more sites to reach closure with more options and in less time. John J. Oberer, LSRP is associate principal at GZA GeoEnvironmental’s Fort Washington, PA office and Hammonton, NJ office. n
duct, as put forth in the New Jersey Site Remedi- ation Reform Act (SRRA), d e t e r s L i - censed Site Remediation Profession-
John J. Oberer
als (LSRPs) from advocating for their clients. Others have described LSRPs as the foxes watching the proverbial hen- house. Still others view the LSRP as an extension of the NJDEP. But nowhere in the SRRA does it say that the LSRP’s obligation to protect public health and safety and the environment precludes the LSRP from developing solutions that make sense. Compare the LSRP Code of Conduct to that of other professionals, many of whom would be working on these same sites. The first canon of engineering ethics states that “engineers shall hold paramount the safety, health and welfare of the public.” That sounds a lot like the first paragraph of the LSRP Code of Conduct. In fact, the LSRP Code of Conduct does not pre- vent the LSRP from acting in the client’s interest. On the contrary, there are numerous provisions of the Code of Con- duct presented in the SRRA which foster the LSRP-client relationship. Admittedly, some of the confusion over the LSRP role is due to certain report- ing obligations of the LSRP which have been widely mis- interpreted. Consider that the LSRP is obligated under SRRA to report a discharge only if it represents an im- minent threat or unless that LSRP is “responsible” for the site. In essence, the LSRPs discharge reporting obliga- tions are no different from those of the client. Likewise, the LSRP also has reporting requirements with respect to deviations fromwork plans or other reports that are similar to those of the client. The SRRA provides for the use of professional judgment by theLSRPwhenremediating a site. Professional judgment is the most important tool in the LSRP tool box because it allows the LSRP to act in ways that make sense. Many
When you combine a culture of anticipating clients’ needs with the commitment of an entire organization around the success of every project, what you end up with is no surprises - just effective and efficient project success. That’s Proactive by Design.
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ummer slowdown? Not for multi-family invest- ments, the “hottest” com- By Ken Uranowitz, Gebroe-Hammer Associates Mid-Year Report: Multifamily investments continue scorching reign S M ulti F amily I nvestments conversions and other energy conservation measures.
Throughout theMid-Atlantic region, institutional investors, individuals and private invest- ment groups lead the pack when it comes to augmenting their apartment-building port- folios. Despite a substantial imbalance in supply of avail- able for-sale product and de- mand, stabilized properties are garnering the greatest atten- tion across all class categories. Today’s experienced investors are discovering the greatest value by minimizing expenses in the current rent environ- ment while implementing tried-and-true management efficiencies, such as oil-to-gas
ranged the sale of 261 apart- ment-rental units and five commercial units in the multi- family investment stronghold of Northern New Jersey. These mid-rise properties offered a tremendous opportunity for the respective investors, each of whom recognized the long- term potential. From simple common-area refurbishments, like painting and new flooring, to unit up- grades, including new kitchens and bathrooms with modern appliances and fixtures and enhanced amenities, current and new owners are increas- ing the appeal of their product.
This return to core fundamen- tals, through visible improve- ments, is making rising rents more palatable to current ten- ants while owners cast their net to attract an even wider renter pool. One interestingnewphenom- enon within the multi-family investment sector is the cur- rent influx of once-distressed properties being delivered to market. Troubled just 18 to 24 months ago, these newly stabi- lized, income-producing build- ings are attracting new ten- ants and fortifying occupancies thanks to a much-needed capi- tal infusion. Rent appreciation now renders these formerly under-performing properties highly competitive, with rents approaching or exceeding last year’s U.S. average of approxi- mately $1,048.46, as reported by REIS. Today’s long-time owners, many of whom are second- and third-generation family mem- bers, acknowledge there is no time like the present to sell. Favorable market conditions, an extended tenant life cycle and compressed cap rates that contribute toward competitive- to-aggressive pricing put those considering a disposition at an advantage. This trend to monetize as- sets is illustrated by a recent 1031 Exchange engineered by Gebroe-Hammer Associates. A long-time client of the firm and a veteran multi-family investor had owned a well- located property package in a popular commuter hub for 28 years. The package, comprised of 29 apartment-rental units and an adjacent two-bedroom single-family home containing a 19-space parking lot, met the requirements of the buyer, who successfully completed the back-end of an Exchange, while simultaneously selling a 39-unit building the buyer owned for several years. The sale of this high-quality, high- performing multi-family asset allowed the seller to maximize the return on his original in- vestment with a per-unit price of approximately $160,000. Some of the most densely populated counties inAmerica are located throughout the Mid-Atlantic region, where apartments are the favored residential living option of choice. Investors have always had, and always will have, a penchant for these commuter- continued on page 13A
Even though Class A/B+ product will always be the investment superstar, albeit extremely scarce in terms of available inventory to buy, Class B and C buildings are easily outpacing their more upscale counterparts. With a high concentration of these post-war era buildings stra- tegically situated along the Northeast Corridor, investors are looking beyond a building’s bricks-and-mortar façade to realize its value-add opportuni- ties. Such was the case when Gebroe-Hammer recently ar-
mercial real estate sector. At mid-year, steady rent growth, amid a still strug- g l i ng r e s i - dential home market, and abundantly
Ken Uranowitz
available financing – at his- torically low interest rates – continue to add fuel to the investment fire, with momen- tum on pace to increase for the third straight year.
Dominance: “...most influential, having a commanding position.” (Webster’s) Q1 2013 • 23 DEALS • Averaged 2 Deals per Week DOMINANCE. New Jersey’s dominant brokerage firm specializing in the sale of
multi-family, retail, and commercial investment properties for private investors, REITS, and other institutional clients.
INVESTMENT REAL ESTATE 2 West Northfield Road, Livingston, NJ 07039 Tel. (973) 994-4500 Fax (973) 994-9752 Visit us on the web at: www.gebroehammer.com Email: info@gebroehammer.com
Mid Atlantic Real Estate Journal — Mid Year Review — June 28 - July 11, 2013 — A
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I nvestment S ales
Metropolitan Area Capital Markets Group
$1.3 BILLION OF INVESTMENT SALES IN 2012
1200 MAdISON AVENuE 246,000 SF SALE OF MuLTI-TENANT INduSTrIAL BuILdINg PATErSON, NJ
CrOSS ISLANd PLAzA 225,000 SF SALE OF MuLTI-TENANT OFFICE BuILdINg rOSEdALE QuEENS, NY
MONTCLAIr rEdEVELOPMENT SITE 3.4 ACrES
445 SOuTh STrEET 320,000 SF SALE OF MuLTI-TENANT CLASS A OFFICE BuILdINg MOrrIS TOwNShIP, NJ
SALE OF MIxEd-uSE dEVELOPMENT SITE MONTCLAIr, NJ
gATEwAY BuSINESS CENTEr 250,000 SF
SOuNd ShOrE APArTMENTS 206 uNITS SALE OF hIgh-rISE MuLTI-FAMILY COMMuNITY NEw rOChELLE, NY
SALE OF MuLTI-TENANT INduSTrIAL BuILdINg SOuTh BruNSwICk, NJ
Andrew J. Merin, Vice Chairman 201-460-3358 David W. Bernhaut, Vice Chairman 201-460-3356 H. Gary Gabriel, Exec. Vice President 201-460-3352 Brian J. Whitmer, Senior Director 201-508-5209
10A— June 28 - July 11, 2013 — Mid Year Review — Mid Atlantic Real Estate Journal
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NJ M ultifamily
By Thomas McConnell, CCIM, Marcus & Millichap Northern New Jersey apartment market shines as demand spills across the Hudson
N
most recent 12-month stretch, thanks to investors that were eager to place capital while interest rates were still at historic lows and before capital gains taxes rose. Last year, the median sales price dropped 5% to $80,500 per unit as investors focused on smaller, older prop- erties in the region that would give them higher yields. Aver- age cap rates declined 20 basis points during the last year to the low-6% range as bidding activity intensified, particu- larly in Bergen County, which accounted for the majority of the drop in cap rates. Looking ahead, I know that some investors have stockpiled their cash over the past few years thinking that they would eventually see fire-sale condi- tions similar to the 1980s RTC pricing. Obviously that hasn’t happened and probably won’t, so many vulture funds have been stuck on the sidelines twiddling their thumbs. Now these buyers are back and ready to target more stabilized assets. Without a doubt, there prob- ably has never been a better time to finance an apartment property purchase, since in- terest rates may never be this low again in our lifetime. This is true for investors looking to expand their portfolios, and also for seasoned investors who are scouring the area look- ing for value-add assets with potential upside. At the same time, some long-term owners will become sellers while cap rates are low in order to place capital into less management intensive properties that are net leased. First-time buyers will con- tinue looking for apartment properties with market-rate rents and low-to-no vacancy. Average cap rates for these properties are in the high-5 to low-6% range, or about 150 ba- sis points higher than similar assets in New York. Investors’ appetite for these properties will remain intense this year, especially as cap rates in other areas compress. With plenty of inexpensive financing and sidelined cash ready to return to the market, Northern New Jersey apart- ment sellers should be able to dictate terms for several more months. Hello Summer! ThomasMcConnell, CCIM, is a Director in Marcus & Millichap’s National Multi Housing Group (NMHG). n
ow that we are fast- approaching the back half of 2013, it’s becom-
well-publicized, and they are actually encouraging some renters to move across the Hudson in search of lower-cost housing options. This trend looks likely to continue for quite some time, and I expect apartment vacancies to remain low this year as job growth out- paces the national average. That’s not a bad scenario if you are an owner, but today there is a great deal of demand for apartment properties, pri- marily due to the improved fundamentals in the busi- ness. Thankfully, the national
economic recovery is still tak- ing hold and the Northern New Jersey economy is expected to see some pretty robust job growth this year. After adding 29,700 jobs in 2012, employers in Northern New Jersey will pump up the payroll volume by adding 47,000 positions in 2013, which is a healthy 2.5% increase. Now, guess what comes with the job growth and increased apartment demand? If you guessed new construction then you are right on the money. De- velopers will deliver 1,800 new multifamily units this year, an
increase over the 1,240 units completed in 2012. Some 2,800 units are under construction, including the 475-unit The Modern apartment towers in Bergen County, which will become the county’s tallest structures when completed. By year end, I expect the ris- ing demand for apartments to help bump up effective rents by 2.8% to $2,005 per month. That’s just a little off the 2012 effective rent growth of 3.2%. In my area of true expertise, the sales market, apartment deal flow across Northern New Jersey jumped 13% during the
ing increas- ingly evident to me that in the Northern New Jersey a p a r tme n t market, now i s a g r e a t time to be a seller.
Thomas McConnell
Why? Because more and more I am noticing what I like to call the “New York effect.” By now the skyrocketing rents in Manhattan have become
Recent closings arranged by Thomas McConnell & Kevin McCrann of Marcus & Millichap’s National Multi Housing Group
Experience the Difference — Profit from the Results
Clifton, NJ
Maywood, NJ
Ocean, NJ
West New York, NJ
Thomas McConnell, CCIM, Director National Multi Housing Group Office 201-582-1031 • Cell 732-977-7079 thomas.mcconnell@marcusmillichap.com
Kevin McCrann, Director National Multi Housing Group
Office 201-582-1024 • Cell 973-727-9935 kevin.mccrann@marcusmillichap.com
Offices Nationwide
www.marcusmillichap.com
Investment Sales Financing Research Advisory Services
Mid Atlantic Real Estate Journal — Mid Year Review — June 28 - July 11, 2013 — 11A
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C ommercial L ending
By David Orbach, Regal Bank Activity continues to be strong for investors looking to refinance their properties in the remainder of 2013 R egal Bank has fast earned a reputation as an area specialist
tion among lenders. Suddenly banks of all sizes are chasing multifamily deals in this area, realizing that these loans held up through the recession. Be- fore the recession, banks were wooing borrowers with what effectively was 80, 90 or 100 percent financing. Now, banks are holding true to 75% loan-to- value financing with stable cap rates, but instead are chasing rate and term. Some banks are throwing very lengthy terms out there for a rate that is not commensurate to the interest rate risk. At Regal Bank, multifamily and mixed use lending has been
our focus from the beginning. We are experts in commercial real estate financing and are well known in the marketplace for our competitive pricing, professionalism, and quick ex- ecution on loans. We’re not trying to be some- thing that we’re not. We’re not trying to offer products in which we have no background. All our commercial lenders have exten- sive real estate backgrounds, so that’s what we do and we do it better than most. As I learned frommy banking mentor “Keep it simple. Take in deposits and lend them out.” You will see the difference
particularly when it comes to response time and accessibility. When borrowers deal with the bigger banks, they may (and I stress may) get a slightly lower rate. But here you can speak directly to me, to our bank president or chief lend- ing officer. I don’t know of any banks where a borrower/broker can have that high a degree of contact. If we couldn’t produce the rates and the dollars a borrower needs, that wouldn’t matter. But when we can meet the parameters of a loan and give that exceptional level of service/contact, it’s a real win for our customers.
Looking forward to the re- mainder of 2013, I think activ- ity will continue to be strong for investors looking to refinance their properties. Whether this recent rate uptick is a trend or not, people always need to refinance. Even if rates do start to steadily tick up, it likely will be a slow progression. And whether or not other banks start pulling back on their lon- ger terms remains to be seen. However, at Regal Bank, we will continue to stick to what we know works and continue to do great business. DavidOrbach is chairman of Regal Bank. n
in multifam- ily and mixed use lending, e n a b l i n g current and prospective a p a r t me n t building in- v e s t o r s t o purchase or
David Orbach
refinance their properties with loan amounts currently up to $4.5 million. The recession and market turmoil which began in 2008 still provides an overhang on new homeownership these days. Despite current favorable con- ditions for purchasing a home, would-be homebuyers seem to be delaying home ownership for various reasons, whether it be to fix their credit, save up for a down payment or wait until the market further stabilizes. While the U.S. homeownership rate plunged 65% in the first quarter of this year to its low- est level in 18 years, our area’s number of occupied rental units has grown. Being a densely populated portion of the state adjacent to the New York metropolitan area, northern New Jersey en- joyed a high occupancy rate for rentals the past several years and continues to enjoy such robust levels. Now that the re- cession is over, North Jersey’s rental market shows no signs of slowing. This is positive news for in- vestors, as well as lenders who cater to this product. At Regal Bank, we are seeing numerous requests for refinancing due to an increase in a property’s value (from higher rents or renovations) or an upcoming ex- piration of a loan. Investors are trying to lock in rates at these historical low levels because they believe rates are going to start to creep up again. And in fact, over the last week or two, they have. We’re even seeing a good number of borrowers opting to pay another bank’s prepayment penalty in only the second or third year of their loan term. They are choosing to do this in some instances to get ad- ditional cash out but mostly because their rate is so much higher from only a year or two ago that it’s worth it for them to refinance their loan. Naturally, this kind of market creates a frenzy of competi-
Specializing in multi-family, Regal Bank is ready to lend.
$2,100,000 34 unit multi family building Roselle, NJ
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• Non-recourse loans available up to $4.5 million • Low interest rates • Extended amortization • Flexible prepayment options
Livingston, Roseland, Florham Park & Millburn regalbanknj.com
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12A— June 28 - July 11, 2013 — Mid Year Review — Mid Atlantic Real Estate Journal
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LEED
By William Amann, P.E., DCEP, LEED AP, M&E Engineers, Inc. Green Buildings Success Stories and Failures
true success stories. They use consider- ably less en- ergy and have a healthier in- door environ- ment. They cost less to operate and W
e have seen a lot of buildings designed for LEED that are
In most cases, the “additional” costs to achieve LEED are pretty insignificant. On the other hand, we have seen projects that are supposed to be LEED certified, or at least designed to LEED standards, that are only marginally better then the cheap, corner-cutting, offerings that some builders have been constructing for the past 30 years. While arguably, these buildings are marginally better, I consider these projects to be failures. There are some common fac- tors that differentiate the suc- cessful projects from the fail-
ures. Typically, in a successful proj- ect, the Client/Owner is actively engaged in the design process. They provide clear direction that the building be designed in accordance to best practices as opposed to code minimums. They are true champions of the project goals. That is not to suggest that the design team has carte blanche, keeping the project within budget is para- mount. But successful LEED projects are generally those in which the budget is generous enough for the team to design and build a well-built building.
There is very little “nickel and diming” the project. On the less-successful proj- ects, the Owner makes an initial statement or requirement about earning LEED , and then rarely discusses it again. Instead of maintaining a focus on the en- ergy efficiency goals, achieving LEED becomes a sidebar conver- sation, like selecting the finish colors or furniture. With little or no reinforcement of commit- ment, goals are marginalized, minimized, and delegated. Another touchstone of a suc- cessful project is that the design team has enough time in the
schedule to consider design features, research materials and systems appropriate for the particular project, complete analysis, and to create the de- tails that show how the building envelop is to be built. When a design team is driven by schedule, the design is often substantially complete before there is any discussion about energy. At this point some ad- ditional inches of insulation or a high performance glass may be considered. The architect throws the design over the fence to the HVAC engineer, who is supposed to somehow tweak energy savings out of the build- ing by selecting high efficiency equipment. By that point, much if not most of the potential en- ergy savings are already lost due to the lack of an integrated design process. Of course the minimum efficiencies required by ASHRAE are increasing which make the “after thought” approach more difficult. These buildings may still achieve some level of LEED certification, and they get a plaque, but the real potential value is largely squandered. In my experience, the most successful projects are those in which there is a LEEDmanager or consultant that keeps every- one cognizant of the issues. Once a team member has committed that “Yes, we can earn that point,” it has been very benefi- cial to have periodic reviews to make sure the credits are still on track. While the design process inevitably includes changes, no team member wants to disap- point the other team members (or the client) by reporting that a point has been lost. In cases where achieving a point becomes expensive, other team members quite often start of- fering suggestions on how to still achieve the point at lower cost. It seems to me that the LEED target score becomes a source of pride for all the team members, and they develop a stronger comradery because of this common goal. It is essential that a practical, integrated, thoughtful approach to designing and building LEED projects becomes the standard. In doing so, the successes of the future will vastly outweigh the failures. I know they will out- perform them. WilliamAmann, P.E., DCEP, LEED AP is president of M&E Engineers, Inc. & is chairman of the Somerset County Energy Council. n
William Amann
have a much lower impact on the environment. Perhaps more importantly, the people inside the buildings are healthier, happier and more productive.
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