April 2023

M id A tlantic Real Estate Journal — Spring Preview — April 2023 — 11A


I ndustrial R eal E state

By Alessandro (Alex) Conte, CCIM, SIOR, The Blau & Berg Company Federal Rate Hikes and the Industrial Real Estate Market


t was only a matter of time before the federal rate hikes started to take

by the end of the year 2023, and see a slow and gradual uptick in leases in the first half of 2024. For now, while many inves - tors are on the sidelines, they remain anxious to buy, salivat - ing at the opportunity to pur - chase quality assets in quality locations at a discount. Few investors, however, continue to prod this market for deals believing this may be the only opportunity they may have to acquire trophy assets at a dis - count, and position themselves with a strong foundation for

continued to devour space at record pace and prices. Many believe this was still part of the “hangover” following the industrial boom effects of the COVID-19 pandemic. Fast forward to the first quarter of 2023 where we are now seeing not only new con - struction coming to market, but the dreaded sub-lease space as well. Port Newark saw total cargo volumes drop from 1,524,298 in February of 2022 to 1,216,607 in February of 2023 reflecting a 20% drop in volume. The slowdown in

container activity coupled with the increase of available space leads us to the simple economics law of supply and demand reversal. If we look at the supply and demand curves, one could say that we reached equilibrium somewhere in the 3rd or 4th quarter of 2022. The question now posed to every analyst and real estate professional, is how far out the supply curve outweighs the demand curve moving forward? The consen - sus here is that we should, or will, reach the market bottom

the next cycle. Real estate cycles have a start and a finish. Fortunately, when one cycle ends a new one begins. The game never ends, pricing and demand histori - cally go up as the population continues to grow. There will be many opportunities in the months ahead, and those will - ing to capitalize on the dip will reap the most profit in the coming cycle. Alessandro (Alex) Conte, CCIM, SIOR is executive vice president of The Blau & Berg Company. MAREJ

their toll on real estate. Interestingly enough, the sale values of industrial space start - ed to adjust, almost im - mediately, in the invest -

Alessandro Conte

ment sector as institutional investors needed to reflect a high rate of return. What was helpful, however, was the lim - ited amount of available space on the market for tenants. For the better part of 2022 tenants Employee experience and. . . The most common ones are widespread, with five ameni - ties being available in 80%+ of tracked buildings: controlled access, on-site retail and food, fiber optic availability, nearby public transit, and on-site parking. Beyond those staples, occupiers are attracted to buildings with a selection of amenities that activate the space, offer convenience, and elevate employee wellness. The report also emphasizes that amenities alone are not the solution, and that occu - piers should make decisions based on their specific needs, culture, leadership goals, and feedback from employees. “What the team found inter - esting is that the amenities that make up recent flight to quality include the variety of experiences that provide convenience, activation, secu - rity, ease for commutes, and technology,” Smith said. “If occupiers had a choice between a building with high quality amenities versus less, the ex - pectation from occupiers will likely be more vs. less.” The survey of buildings covered multi-tenant office buildings with large lease signings over 12 months in 2022 from 15 urban and sub - urban markets. Buildings that were owner-occupied were excluded. Cushman & Wakefield is a leading global real estate services firm that delivers ex - ceptional value for real estate occupiers and owners. MAREJ continued from page 2A


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830 Morris Turnpike, Suite 201, Short Hills, NJ 07078 973.379.6644 www.blauberg.com Since 1932, The Blau & Berg Company has held a leading position in the New Jersey and Tri-State commercial real estate market. As an independent, full service commercial brokerage firm, we provide an array of services in the industrial, retail, multifamily and office fields. . . . . .

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