R EAL E STATE J OURNAL the most comprehensive source for commercial real estate news
ISSUE HIGHLIGHTS Volume 26 Issue 1 January 17 - 30 , 2014
Developers & investors capitalize on the growing student housing market Rittenhouse Realty Advisors sells $6.95 million student housing portfolio P HILADELPHIA, PA — Rittenhouse Realty Advisors announced
2014 Forecast Spotlight
Developers and long-term investors continue to capital- ize on the growing Temple University student housing market. “As Philadelphia pushes to make greater ties between Center City and the universities, student housing will continue to be a desirable market for new and experi- enced investors,” said David Greenhalgh , associate at Rit- tenhouse Realty Advisors. “Student housing has re- ally become a niche market for RRA. We’ve had numerous student housing transactions in the Mid-Atlantic region over the past year,” said Co- rey Lonberger , managing partner of Rittenhouse Realty Advisors. n
LANDOVER, MD — A vi- son Young announced the sale of 8335-8373 Ardwick Ardmore Rd. in Landover, for $6.2 million. The sales team of Joe Friedman and Julian Etches represented the seller, Willco Companies on behalf of 2131 K Street Associates Limited Partner- ship. The asset is a 100,000 s/f light industrial distribution and storage warehouse in Landover. The property was built in 1979 and features the sale of a 116 bed student housing portfolio near Temple University in Philadelphia. The recently constructed build- ings feature a mix of one, two, three, four and five bedroom apartments. The units, which sold for $60,000 per bed, have modern amenities not typically offered in student housing, in- cluding: spacious living areas, granite counter tops, state-of- the-art appliances, hardwood floors, washers and dryers, and full security systems. Due to the excellent condi- tion of the properties and their convenient location near Temple University’s campus,
Temple Portfolio Tier 1
9A
they have had 100% occupancy since inception. “The new owner plans to take advantage of an excellent
return on a historically well performing asset,” said Ken Wellar , managing partner of Rittenhouse Realty Advisors.
Bussel brokers $5m+ purchase of industrial facility
Representing Willco Cos. on behalf of 2131 K Street Associates LP Friedman & Etches of Avison Young broker sale of 100,000 s/f industrial property for $6.2m
4B
CBRE represents owner in $40.5m 342,000 s/f aquisition
5C
Directory
DelMarVa.................................................... 5-8A Financial Digest....................................Section A New Jersey........................................... Section B Southern New Jersey. ............................... 5-11B Pennsylvania........................................ Section C Eastern PA................................................... 5-9C
for the region’s distributers, manufacturers and large employers. The sales team of Joe Fried- man and Julian Etches has closed eight investment sales transactions in 2013 and currently has four additional investment properties under contract or on the market 8335-8373 Ardwick Ardmore Rd.
20-foot clear heights, a mix of drive-in and dock-high doors, and 5% office build-out. The property is 100% leased with a 70,000 s/f GSAtenant as the major tenant. Located just 3 miles from Washington, DC, the property includes conve- nient access to I-95 and I-295, making it a location-of-choice
including office and retail assets in New Carrollton, Frederick, and Hagerstown, Maryland. They specialize in the disposition of income- producing suburban office, industrial/flex, and neigh- borhood retail assets in the Washington/Baltimore Met- ropolitan Region. n
Upcoming Spotlights January 31, 2014 Economic Development
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MAREJ A dvertisers D irectory A — January 17 - 30, 2014 — Mid Atlantic Real Estate Journal Altoona Blair County . ...................................... 4C Barton Partners.............................................FC-C Bayshore Recycling . ....................................... 12B Bennett Williams...............................................4C Berger - Epstein Associates............................... 2C Binswanger...................................................... 10A Bussel Realty................................................IFC-B CBRE..................................................................5C CIRC ORG.......................................................... 7A Commercial Mortgage Capital........................ 16A Cooper Horowitz.............................................. 26A Cushman & Wakefield............................7B & 15A Deerwood.......................................................... 27A Earth Engineering........................................... 11C GZA................................................................... 22A Gebroe-Hammer.............................................. 15B GFCIB.............................................................. 25A GREP..................................................................8C Griffin Land....................................................... 8C Harvey Hanna. .................................................. 8A Heller Industrial Parks..................................... 3B Henry’s Real Estate...........................................6A Hinerfeld............................................................ 9C Hutchinson Mechanical Services...................... 8B Jackson Cross Partners.............................. 19-20A Kaplin Stewart.................................................. 2A Kearny Federal Savings...............................IFC-A Keast & Hood................................................... 13C Lee & Associates................................................1B Lincoln PC......................................................BC-A M. Miller & Son................................................. 3A Maguire & Partners. ....................................... 12C Marcus & Millichap NY. ................................... 3A Marcus & Millichap......................................... 17A Mericle............................................................BC-C Meridian Capital Group.................................... 9B NAI Summit.......................................................8C NorthMarq......................................................... 6C Oppenheimer......................................................1A PennCap............................................................. 8C Poskanzer Skott............................................... 14B Rational Contracting......................................... 4B Regal Bank.....................................................BC-B Rittenhouse Realty Advisors........................... 18A SEBCO Laundry Systems................................. 2B Sheldon Gross Realty........................................ 3B Singer Financial.............................................. 24A Sitar Auctions.................................................... 4A SNJ AI.............................................................. 11B TimHaahs.........................................................13C The Kislak Co.. ......................................12A &13B Thompson Management.................................... 2B Transwestern................................................... 13A Tristate............................................................. 30A Vandemark & Lynch.........................................11A WCRE................................................................. 6B Whitesell........................................................BC-B Zimmel Associates........................................... 21A
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Mid Atlantic R eal E state J ournal Publisher ............................................................................ Linda Christman Publisher ............................................................................... Joe Christman Publisher/Senior Account Executive ................................. Elaine Fanning Section Publisher .................................................................... Steve Kelley Senior Editor/Graphic Artist .................................................Karen Vachon Production Assistant ....................................................................Julie King Office Manager .................................................................... Joanne Gavaza Mid Atlantic R eal E state J ournal ~ Published Semi-Monthly Periodicals postage paid at Rockland, Massachusetts and additional mailing offices Postmaster send address change to: Mid Atlantic Real Estate Journal, 312 Market St. Rockland, MA 02370 USPS #22-358 | Vol. 25 Issue 23 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
Mid Atlantic Real Estate Journal
Robin Kramer
Duval & Stachenfeld announces new land use practice with addition of Kramer
N
EWYORK, NY — Du- val & Stachenfeld LLP -- The Pure Play
inReal Estate Law -- announced today the formation of a new Land Use Practice Group with the addition of leading land use attorney, RobinA. Kramer , as a partner in its NewYork office. Kramer was formerly part of the prestigious Kramer Levin New York land use practice. “We are very proud and pleased to have Robin Kramer join Duval & Stachenfeld,” stated Terri L. Adler , chair of the firm’s real estate practice. “Robin is one of the top land use lawyers in New York City. Her arrival -- coupled with our existing environmental practice -- gives us a platform to create a leading land use practice in New York City. That is the goal.” “I am greatly excited by the opportunity to start a new land use practice at Duval & Stachenfeld LLP,” said Kramer. “I have wanted to do this for a long time. I had a wonderful ex-
The views expressed by contributing columnists are not necessarily representative of the Mid Atlantic Real Estate Journal
perience at Kramer Levin and this is my chance to step up and step out. Duval & Stachenfeld has a cutting-edge real estate practice -- the largest in New York City -- and yet no land use practice. I love the reputa- tion that Duval & Stachenfeld has for looking out for its cli- ents, making connections for them, and helping them build their clients’ businesses. This resonates with me as I have always felt it was exactly the way to practice law and I will be a great fit not only with the firm but with the firm’s clients as well. I am energized by everyone’s commitment here
to care for the client and for each other. I can’t wait to get going!” Kramer ’s land use prac- tice focuses on advising cli- ents about the development and uses of New York City properties; acquisitions of air rights; taking projects through ULURP and obtaining discre- tionary and non-discretionary approvalsPrior to joining Duval & Stachenfeld LLP, Kramer served as assistant counsel to the New York City Planning Commission and most recently for 8 years in the land use department at Kramer Levin Naftalis & Frankel. n
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M id A tlantic R eal E state J ournal 162 60th St. in West New York, NJ Michael Cervelli RE, LLC sells property for $695,000
The Real Estate Investment Leader. Contact us today to access the largest inventory in the country.
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EST NEW YORK, NJ — Mi chae l Cervelli Real Es-
tate, LLC announced the sale of 162 60th St. The all-cash transaction of 6 apartments and one retail store was bro- kered by agents Christopher Cervelli , representing the seller, and Harald Jonas- sen , representing the buyer. The property which sold for $695,000 is situated in the West New York downtown business corridor. n Laguna 100% leased in under six months JERSEY CITY, NJ — La- guna, Newport’s newest up- scale residential property, has reached 100% leased in less than six months, demonstrat- ing the strength of Jersey City’s high-end rental market. The lease for the last remaining residence begins on December 31, 2013. The building, located adjacent to the Hudson River, surpassed leasing expectations and outpaced other rental towers in the city’s booming waterfront district. “Discerning renters seeking alternatives to New York City are discovering that Newport, with its sweeping views of the city, well-conceived amenities and a short commute, offers better value than areas like Brooklyn, Long Island City and parts of Manhattan,” said Richard LeFrak , chairman and CEO of LeFrak , the com- pany developing the master- planned community. “There is strong demand for larger, well-appointed homes offering a full-suite of amenities such as rooftop lounges, screening rooms and expanded fitness centers. Newport meets those demands.” Located at 45 Park Ln. South, the 19-story Laguna is the first new development adjacent to Newport Green, the neighborhood’s award-win- ning 4.25-acre park. Newport Green is the focal point of the community’s final phase of development, which is now underway with the successful lease up of Laguna. The attrac- tive building, comprised of 158 one-, two- and three-bedroom homes, was designed by the NJ-based architectural firm of Poskanzer/Skott . Interiors and amenities at Laguna were finished by Ste- vens B. Jacobs Group and Andi Pepper Design . n
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A — January 17 - 30, 2014 — Mid Atlantic Real Estate Journal
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Mid Atlantic R eal E state J ournal N e w J e r s e y • P e n n s y lva n i a • D e l awa r e • M a ry l a n d • W a s h i n g t o n D . C . • V i r g i n i a • Auctioneers Directory
Real Estate Auction 2.24 Acres (358.5’x276’) & Existing Building 130Great BendTurnpike, Route 371,Mount Pleasant Twp,WayneCounty, PA18453. CornerRoute 670 *Well & Septic *Forest City School District *Wayne County Deed Book R-2988/Page0195 *TaxMap # 16-0-0190-0029 *Assessment: Land $48,000.00 *Improvements $30,900.00. *Inspection: By Appointment &One Hour Prior to Sale TERMS : Fifteen Percent non-refundable deposit by successful bidder, Balance due upon closing within 45 Days. Time being of the essence! Property sold “As is andWhere is”, Not contingent upon financing! Sale Subject to Approval of Motivated Seller! Saturday February 8th@1:00P.M. (Snowdate, Feb. 15@1:00P.M.) HiretheCommercial, Industrial &Real EstateAuctioneers! Formore Information&Photo’s, checkoutourWebsite Col. Steve Sitar & Co. Ph:(570) 586-1397 www.sitarauctions.com PA.LICAU2124-L
P lace your B usiness C ard in our A uction D irectory T oday ! AUCTIONEERS P romote Y our C ompany and its S ervices in our T wice monthly D irectory E mail L inda T oday ! lchristman @ marejournal . com
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Mid Atlantic Real Estate Journal — January 17 - 30, 2014 — 5A
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Governor Markell cuts ribbon to open new facility at Ferris School $5m juvenile education facility constructed by Emory Hill & Co. seeks LEED Gold certification
ILMINGTON, DE — Governor Jack Markell was on hand for a ribbon cutting cer- emony to officially open the Department’s new Juvenile Multi-Purpose Education Fa- cility at the Ferris School for Boys just outside Wilmington. The facility was constructed by Emory Hill & Company of New Castle for the Dela- ware Children’s Department, which is seeking LEED Gold certification. W
certification by mid-2014. Fea- tures such as the use of re- cycled materials in the flooring and other building materials, low flow fixtures to save on water usage, and automatic light dimmers to reduce energy usage were selected to increase the sustainability of the facil- ity over the long term. “Working to the strict stan- dards of the State Department was a challenge, but one we welcomed,” said Emory Hill & Company project manager Lew Larson . “It was very re- warding to be part of such a vi- sionary project that is expected to provide so many benefits not only to the employees and resi- dents of the facility, but to the entire state of Delaware.” The nearly 14-thousand s/f state of the art building which sits on the Agency’s adminis- trative campus near Newport
will be the new educational home for youth who are com- mitted to the Department’s Level IV Residential Cot- tages. The Cottages are staff secure residential treatment programs designed to meet the needs of adjudicated youth and assist with their success- ful transition back into the community. “We cannot fully address all of the challenges that these youth will face when they leave – but if we can help them to gain resiliency, better decision-making skills, and improved academic status, and show them a path forward that they did not think was possible when they arrived, we will have provided them with criti- cal tools to help them to be suc- cessful,” said Secretary Jen- nifer Ranji of the Delaware Children’s Department. n
Ferris School
The new $5 million dol- lar facility was funded as a result of the Capital Budget process through the Building Delaware’s Future Now Fund- ing. The building was designed in accordance with Governor Markell’s EO 18 to design new state buildings to be LEED certified. The Department is pursuing Gold level LEED
January 17 - 30, 2014
HI-LIGHTS
Commercial-Industrial Realty Council
IREC completes renovation of storage facility outside Baltimore
Finksburg, MD — In- vestment Real Estate Con- struction, LLC (IREC) an- nounced the renovation of the 140 Mini Storage facility outside of Baltimore in Finks- burg. Finksburg is located in Carroll County. The property is located at 3240 Old West- minster Pike in Finksburg, sit- ting off Baltimore Blvd three miles west of I-795. Not only did IRE broker the sale of 140 Mini Storage, but the new owner hired IRE’s management division (Invest- ment Real Estate Manage- ment) to take over property management at the facility and contracted with IREC (Investment Real Estate Con- struction) for the renovation project. When IRE facilitated the prior sale of the property, 140 Mini Storage was dilapidated in appearance and in much need of repair. The buildings on the property had a large number of broken storage unit doors, which were either dam- aged, non-operational or both, leaving those units empty and
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3240 Old Westminster Pike
unrentable. The grounds were overrun by weeds and had poor landscaping throughout. The office, porch and stairs were in need of major repairs as well. The renovations were com- pleted in October of this year, making every self storage unit rentable and giving a facelift to the entire property. Below are some project high- lights: • Total Renovated Area: 24,475 s/f • Start date: 8/2013 • Completion date: 10/2013
Renovations Include: - Landscaping upgrades - Replaced 327 roll-up doors - Re-skinned all buildings The facility includes 28,475 s/f and 6 single story drive-up self storage buildings with 270 units plus 42 RV parking spac- es. It is paved and fully fenced with surveillance cameras and onsite rental office. Entry is provided with a keypad code at gate. n - Installed bollards - Upgraded lighting
January 31st •Economic development •ODM: Healthcare •ShoppingCtrs.: ICSCConference&D.M. Deadline: January20th
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A — January 17 - 30, 2014 — Mid Atlantic Real Estate Journal
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WANTED 150 Acres for a 800,000 square foot Manufacturing Plant Needed: 40 Megawatts of Electricity, Natural Gas and 1.5 million gallons of water and sewerage
Level Land is ideal with rail access to a major highway
States of virginia, West Virginia, and Pennsylvania preferred
Please Contact: Henry Doughty Henry’s Real Estate Company 860-208-9060 HDoughty@yahoo.com
Mid Atlantic Real Estate Journal — January 17 - 30, 2014 — A
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DE ·Construction of a 17,000 s/f Planet Fitness in Salisbury MD ·Development of the Fire Training Burn Building in Melfa, VA ·Interior fit out in Seagull Square for the State Comp- troller’s Office ·Interior renovations for Trinity United Methodist Church in Salisbury, MD ·Construction of the 67th Street Town Center Retail Fa- cility in Ocean City, MD. n
ASHINGTON, DC – Hines and the TFI US Real Es- tate Fund , developers of CityCenterDC, announced several significant milestones this week at the 10-acre, landmark, mixed-use devel- opment located in the heart of the Nation’s Capital. The developers announced the official re-opening of 10th St. and I St. – marking the first time these thoroughfares have been accessible to the public in more than 30 years
A — January 17 - 30, 2014 — Mid Atlantic Real Estate Journal
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M id A tlantic R eal E state J ournal 2014 F orecast
Mid Atlantic Real Estate Journal — January 17 - 30, 2014 — A
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Pete Davisson Jackson Cross Partners
Mark Duszak Rittenhouse Realty Advisors
Nancy Erickson Cushman & Wakefield New Jersey
Robert Holland The Kislak Company
Steve Johns VanDemark & Lynch
Thomas McConnell Marcus & Millichap
Matt McDonough Transwestern New Jersey
John Morrissey Jackson Cross Partners
Mark Scott Commercial Mortgage Capital
Michael Shaw GZA GeoEnvironmental, Inc.
David Zimmel Zimmel Associates
10A — January 17 - 30, 2014 — Mid Atlantic Real Estate Journal
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Excellent crane-served warehouse building totaling 378,148 sq. ft. on 24.79 acres in B ensalem , P ennsylvania
3RZHUVXSSOLHGE\3HFR(QHUJ\ H[WHULRUWUDQVIRUPHUZLWK SULPDU\GHOWDDQG< VHFRQGDU\ < $SSUR[LPDWHO\VTIW of office space 1LQHRYHUKHDGGRRUVLQFOXGLQJ VHYHQGULYHLQDQGWZRWDLOJDWHV WKUHHGULYHWKUXORDGLQJODQHV Located just south of the Woodhaven 5RDGLQWHUFKDQJHRI, WKHSURSHUW\ SURYLGHVYLUWXDOO\LPPHGLDWH access to DOOPDMRUKLJKZD\VDVZHOODVEULGJHV WR1HZ-HUVH\ PLOHVWR&HQWHU &LW\3KLODGHOSKLDPLOHVWR 3KLODGHOSKLD,QWHUQDWLRQDO$LUSRUW
Plant/Warehouse 335,934 sq. ft. Office 35,314 sq. ft. Main Building 371,248 sq. ft. Maintenance 6,900 sq. ft. Total 378,148 sq. ft. 8" reinforced concrete floor 6WDLQOHVVVWHHOH[WHULRUZDOOV 6WHHO´,µEHDPVRQ FHQWHUV VSDFHG [ (3'0UXEEHUPHPEUDQHURRI &HLOLQJKHLJKWVXSWR FOHDU FUDQHVIURPWRWRQV )OXRUHVFHQWOLJKWLQJLQRIILFH 7 KLJKED\OLJKWLQJDQGKLJKSUHVVXUH VRGLXPIL[WXUHVLQZDUHKRXVH 'XDOKHDWV\VWHPLQRIILFHV KRWZDWHUUDGLDQWV\VWHPZLWKQDWXUDO JDVIRUFHGDLURYHUKHDG RIILFH FRROLQJE\FHQWUDOIRUFHGDLUZLWK VXSSOHPHQWDU\URRIWRSXQLWV ZDUHKRXVH KHDWLQJSURYLGHGE\FHLOLQJPRXQWHG infrared radiant natural gas units
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Delivering Global Real Estate Solutions For more information, please contact Frank Cullen or Chris Pennington BINSWANGER TWo loGAN SquARE PhIlAdElPhIA, PA 19103-2759 t FCullEN@BINSWANGER.CoM CPENNINGToN@BINSWANGER.CoM www.binswanger.com/bensalem
Chestnut Hill PA
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NJ 130
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70
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Mid Atlantic Real Estate Journal — January 17 - 30, 2014 — 11A
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2014 F orecast By Steve Johns, PE, PLS, VanDemark & Lynch, Inc. Land Development in 2014
C
onsulting engineers are often the first to know of new develop-
increased willingness of con- sumers to “swipe” their credit cards. While the holiday sea- son started slowly, there is still renewed interest in com- mercial development. We are seeing this trend more in smaller, community-centered businesses and larger, central shopping areas (malls), while strip shopping centers are con- tinuing to have low occupancy rates, and less development interest. And, while it is still slow, there is increased interest in creating new lots for single family homes. This interest is focused on high end homes,
workforce homes, and infill lots. Development interest is trending towards higher density in or near “walkable” communities. Regardless of the health of the economy, obtaining the necessary regulatory ap- provals for construction is still required. Regulatory agencies have been much more willing to help resolve regulatory issues, especially if the project will have a posi- tive economic impact. On the other hand, public concerns about environmental impacts, preservation of open space, and traffic congestion, still
impact the approval process. Local opposition to just about any proposed development is causing serious delays and increasing the headaches and cost involved with obtaining approvals. Negotiating the approval process can take a significant amount of time, especially with the political pressures caused by local op- position (NIMBYs). Therefore, it is important to start the process as soon as possible. Simple projects may only take one month to design, but ob- taining the necessary approv- als may take another four to ten months; and, depending
on project particulars, larger projects can take well over a year. Compounding the difficul- ties in obtaining approvals are continued changes in regula- tions. New stormwater regu- lations in Delaware, as well as in the entire Chesapeake Bay watershed, are now being promulgated. TMDL (Total Maximum Daily Loads) has become a term everyone needs to know, as the new regula- tions limit TMDL’s watershed by watershed. These new regu- lations will make the design and approval process difficult Continued on page 28A
ment plans because their expertise in the land de- v e l opmen t p r o c e s s i s c r i t i c a l when some- one wants to
Steve Johns
build new or expanded facili- ties. Consulting engineering firms’ provide project plan- ning, site and building de- sign, and coordination of the regulatory approval process. These all have an early impact on commercial, industrial, institutional, or residential development. Therefore, if we review the number, size, and type of projects “on our boards”, we can spot trends developing in land use. Based on a review of our past year’s business, the sta- bility of the development busi- ness has improved. While we did not see the growth spurt that showed up in late 2012, our clients continued to call us throughout the year with new projects. This kept the development business on a slow but steady growth trend. The single family housing in- dustry continues to be the last and slowest to climb out of the recession, but other segments of the development world are showing real life. This is led by companies that finally feel comfortable spending mon- ies to catch up on deferred maintenance, and take risks on new opportunities. One of the leading areas of growth for the past year was apartments, and the de- mand for this segment of the industry does not seem to be slowing down. Another area of renewed business has been the increased activity at refin- eries and other manufacturing facilities. The transport by rail of crude oil to area refin- eries from North Dakota and Alberta Canada has renewed the viability of local refineries. In addition, manufacturers are eyeing the availability of cheap natural gas from cen- tral Pennsylvania, and the easy access to Ports. This com- bination of stable, inexpensive energy and rawmaterial, with easy transport of goods, is en- ticing more manufacturers to the region. The other condition that appears to be helping the development industry is the
12A — January 17 - 30, 2014 — Mid Atlantic Real Estate Journal
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2014 F orecast
By Robert Holland, president, The Kislak Company, Inc. New year promises strong multifamily opportunities
A
s another year begins, it is reassuring to see the multifamily real
a market leader. In 2014, we expect the cur- rent strong multifamily mar- ket to continue, with the most significant and likely variable being the potential for an increase in interest rates. The historically low interest rates we are experiencing have contributed to aggres- sive pricing and purchasing. Investors are demonstrating healthy appetites for multi- family properties, and we are seeing high demand for all property types. In our primary markets of New Jersey, Pennsylvania,
New York and Delaware, business is brisk and there is great interest in multifam- ily properties. Last year ’s extraordinary sales volume nationwide was a clear in-
In some situations, it may be too difficult to meet the demanding qualifications for a mortgage. In other cases, people are deciding to rent and wait for home prices to
Apartment buildings in the northeast are selling at record prices, which directly reflect the demand, low inter- est rates for financing, and the low rate of return on so many other types of invest- ments. Although the stock market again has reached record heights, many fear the inevitable correction. Invest- ing in multifamily real estate offers a level of certainty that is highly appealing. This is true for longtime and novice individual investors, as well as for institutional investors. In addition, many foreign investors seeking stable U.S. assets are looking to the mul- tifamily arena. Factors contributing to this strong multifamily activity in our region include: •Investors value the sta- bility and reliability of mul- tifamily properties as long- term investments. •Occupancy rates are very high. For example, northern New Jersey averages are in the 95 percent to 98 percent range. •Rent growth, with renewal increases of 3 percent to 4 percent, and few concessions offered to new renters. •Limited space for building new multifamily apartments, which creates greater demand for existing properties. Other keys to the high level of activity can be seen in our population density, job market, and proximity to New York City, where the cost of living is higher. As an alternative to Manhat- tan, Hoboken is the hottest market in New Jersey. The Hudson waterfront is highly popular and the interest spreads south to Jersey City and north to Weehawken and beyond. Multifamily real estate can also be a great career choice for sales professionals, with rewards directly related to dedication and drive. Kislak’s intensive training program focuses on our hallmarks: building personal relation- ships and providing stellar service. In 2014, we plan to build our sales team and expand within and beyond our cur- rent coverage area. For Kis- lak and the multifamily sec- tor, the forecast is bright. Robert Holland is the president of The Kislak Company, Inc. n
estate pic - ture remains robust. Still, we canno t i gnore the o n g o i n g overall eco- nomi c and market vola-
“In 2014, we plan to build our sales team and expand within and beyond our current coverage area. For Kislak and the multifamily sector, the forecast is bright.”
Robert Holland
tility. Adapting and thriving through such challenges re- quires expertise and agility – characteristics that have helped establish the 108- year-old Kislak Company as
dication investors recognize and appreciate the steady flow of rental income as reli- able, viable and attractive. By chance or by choice, more and more people are renting.
drop further, while others are choosing to downsize and rent in retirement. As the number of renters increases, the ap- peal of apartment ownership is further enhanced.
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Investment Real Estate Brokerage
Newark, New Jersey 99,000± SF Medical Office Robert Squires ext 287
Marlboro, New Jersey 90 Residential Units Daniel Lanni ext 248
Paterson, New Jersey 92 Residential Units Joseph Keenan ext 256 Jonathan Greenberg ext 258
Pennsville, New Jersey 72 Residential Units Matt Weilheimer ext 253
Bethlehem, Pennsylvania 62 Residential Units Robert Holland ext 285
Plainfield, New Jersey 42 Condominium Units Barry Waisbrod ext 272
multifamily. retail. office.
www.kislakrealty.com 732 750 3000
The Kislak Company, Inc.
Mid Atlantic Real Estate Journal — January 17 - 30, 2014 — 13A
www.marejournal.com
2014 F orecast
By Matt McDonough, Transwestern New Jersey NJ office tenants stop playingmusical chairs: urgency leads tomore office leasing activity in 2014
I
t takes a long time for com- mercial real estate mar- kets to change. But when
decided to change their office layout from many private of- fices to a more “open and col- laborative” space, generating another need for 200,000 s/f of first-class office space. Sensing limited quality op- portunities large enough to accommodate their needs, both more moved rapidly, suddenly precluding some of the 50,000- 80,000 s/f Tenants that had been looking into space in the market. The 200,000 s/f prospect focused their attention on 300 Kimball Dr., a newly reno- vated, 400,000 s/f first-class office building in Parsippany,
for which Transwestern is in charge of leasing. In order to accommodate their request, we were forced to make the kind of call that we had not made in over five years – asking another tenant to refocus their attention on a different space in the building. After working with a pro- spective tenant on 50,000 s/f for over six months, we had to suggest to that they focus their attention to a different location within our building. With available space becoming limited at 300 Kimball, delays from the 50,000 s/f prospect suddenly disappeared and we
quickly went to lease. Simultaneously, the same pharmaceutical company relo- cating fromHunterdon toUnion began focusing their attention on the Class A headquarters of a large European firm that had expressed interest in con- solidating their Morris County, NJ, facility from 150,000 to 80,000 s/f. The pharmaceutical company needed the space by the spring of 2014, generating a very immediate need for 80,000 s/f of class A space from the European company. After making an overly ag- gressive proposal for space at 300 Kimball, the European
company was dismayed when our response was significantly above proposals that we had issued as recently as last sum- mer. Pushed by the large phar- maceutical company’s urgent need for space in spring 2014, and facing formidable competi- tion for space at 300 Kimball, the European company pros- pect abandoned interest in 300 Kimball and is moving quickly to execute a lease at their sec- ond choice. These are merely antidotal evidence of a market shift here in New Jersey, but there are some very real indicators Continued to page 21A
they do, they change quite quickly. Cor- p o r a t i o n s seem to read the same tea- leaves andact in concert. In New Jersey,
Matt McDonough
we are starting to see the first signs of a change, and they seem to be accelerating. The recession of 2008-2009 caught many by surprise. Strong leasing activity dur- ing 2006 and 2007 came to an abrupt halt. An anemic recovery in 2010 was quickly extinguished in the summer of 2011. Since then, there has been no sense of urgency in the market. The longer a tenant waited, the better deal they were able to achieve. The deal cycle stretched out and tenants began testing the market early. Occupancy dates stretched from a normal 9 to 10 months to 14 to 18 months out. Multiple site visits and end- less technical reviews typically ensued. Instead of two or three rounds of negotiations, five or six became more common. Attorney comments trickled in slowly and when they did arrive, they were overly ex- tensive. With no market forces pushing them, no decisions were made. The overall thought from tenants was, “The space was there last quarter. It will be there next quarter too.” But this is starting to change. Even as recently as the summer of 2013, tenants were still drag- ging their feet as transactions languished. But by December, tenants were stepping up to make commitments. The sense of urgency, absent for so long, was suddenly back. Precipitated by a spurt of ac- tivity by a few big players, and compounded by a lack of new or freshly renovated first class of- fice space, there were suddenly too many tenants and too little space in the New Jersey office market. Transactions that had been pending for six to seven months were suddenly on the front burner. A large pharmaceutical com- pany’s move from Hunterdon to Union County spawned two Morris County requirements in excess of 100,000 s/f. Another large pharmaceutical firm
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14A — January 17 - 30, 2014 — Mid Atlantic Real Estate Journal
www.marejournal.com
2014 F orecast
Nancy Erickson, Cushman & Wakefield Portfolio optimization, new momentum define NJ retail market
E
rebranding/remodeling, re- negotiating of existing stores (sometimes with a smaller footprint to lower occupancy costs). On the flip side, more and more landlords are filling their vacancies with alterna- tive retailers, such as quasi- medical and seasonal pop-up stores. Crossing over, we are finding that office buildings are looking to upgrade or again add amenities into their retail space. For example, we have been approached by several landlords wanting to change out their fitness tenants. Two years ago, they would have been grateful just to have the current tenant paying rent. What “traditional” ten- ant categories are most active? While dollar and discount type stores had been the trend during the downturn, today’s health craze has spurred the rapid growth of gyms, massage and healthy food franchises. Fitness concepts like Life Time Fitness are rapidly expanding into alter- native locations like vacant grocery stores at shopping centers and amenity space at office properties. Massage Envy has opened several new locations in New Jersey. This trend is also evident with an increase in smaller specialty food markets like Trader Joe’s and Fairway in downtown
markets and shopping cen- ters previously dominated by fashion and apparel chains. Additionally, New Jersey con- tinues to see new children’s entertainment concepts and growth in educational-focused retailers proving successful. Franchises like School of Rock and stores catering to hobbies, like AC Moore, continue to grow here and nationally. Are new tenants coming into New Jersey? New Jersey, in particular, has become a target market for retailers that have been successful in other parts of the country and abroad, and are now ready to take their concepts to the East Coast. For example, we represent 99 Ranch, an Asian food grocer concept out of California, who is actively seeking space here. While Manhattan is the retail mecca, New Jersey of- fers opportunities in densely populated areas for big box retailers with large land re- quirements such as Cabela’s and CarMax. Also, up-and- coming New Jersey downtown and residential developments have brought fashion and food retailers across the river from Manhattan. Has ecommerce had a tangible impact on re- tail real estate? How are bricks-and-mortar retail- ers responding? E-commerce is just so easy.
If we did not have to go to physical locations for our hair, massage, nails, fitness classes, dry cleaners and (of course) frozen yogurt, we would not. But certain retail categories will always need storefront lo- cations, which is good news for retail brokers and landlords. In addition to traditional personal services and din- ing tenants, we are seeing a huge influx of medical/health services organizations going into retail strip centers, and an increase in daycare chains turning empty buildings into fun, bright learning centers. Additionally, a number of ex- isting retailers that are doing well on the Internet are opting to downsize or open smaller footprints, which is generating activity. If you had a crystal ball, what would it show for 2014? So far, 2013 has proved to be positive in many respects. Retailers have found enough confidence in their analyses to move forward with previously halted expansion plans. For ex- ample, Kool Smiles and Reso- lution Dental grew from two to 140 locations from 2004-2010, then slowed development to re- evaluate all aspects of the busi- ness including operations, site selection and so forth. They ul- timately just announced more growth for 2014. We also have several new-to-the-state large town Manhattan. “Leeward wanted proximity to New York City and looked at a number of sites in Northern New Jersey,” said Baumstein. “Glenpointe provides that proximity, as well as a class A office environment for the company.” H Capital has relocated to Glenpointe from Parker Plaza in Fort Lee, NJ. “The firm was looking to expand and wanted to go to an up- scale building,” said Baum- stein. “After an extensive site search, Glenpointe ultimately provided the best possible so- lution for the company’s very specific requirements.” Glenpointe is strategically situated at the intersection of I-80 and I-95, just three miles from the George Washington
retailers coming in with eight- to 12-acre requirements. That may take some time to match up in our highly dense state, but the demand represents a positive indicator overall. Additionally, a number of projects that were on hold have broken ground. Our offices sit across from MetLife Stadium (home to Super Bowl XLVIII in February) and the adjacent AmericanDreamdevelopment. Twice over the past couple of months, I have taken a tour of the future Mall of East Rutherford site there, and the plans are exciting. With all of this in mind, we are expecting positive things for New Jersey retail in 2014. Prior to heading Cushman & Wakefield’s New Jersey retail team, Erickson for eight years specialized in national tenant representation with the com- pany’s Manhattan headquar- ters office. Other key members of her group include Gabriela Iannotta and Jennifer Sofia. As landlord representatives, they represent more than one dozen New Jersey retail properties totaling more than 225,000 s/f. Their regional and national tenants include Hess, Cabela’s, Burger King, ASAP Urgent Care, Retro Fitness, Kool Smiles, School of Rock, 99 Ranch, The Vein Clinic, London Day School, several specialty startups and others. n Bridge, with easy access to NewYork, New England, and such major thoroughfares as the New Jersey Turn- pike, Garden State Parkway, Routes 4 and 46, and all area airports. The 650,000 s/f complex on 50 acres encom- passes the Glenpointe Centre West, East and Atrium of- fice buildings, the 350-room Teaneck Marriott Hotel and Conference Center, and the 26,000 s/f Glenpointe Spa & Fitness Center. Approvals are in place for the 242,150- square-foot Glenpointe Cen- tre South. Cushman & Wakefield is currently marketing office units ranging from 1,000 to 12,500 s/f at Glenpointe as well as the entire Glenpointe South. n
AST RUTHERFORD, NJ — The economy in recent years has placed
real estate portfolio op- timization as a high priori- ty for Garden State retail- ers and retail l and l o r d s . According to
Nancy Erickson
Nancy Erickson , director of the New Jersey retail team at commercial real estate services firm Cushman & Wakefield in East Rutherford, this has resulted in a number of notable market shifts – as well as strong demand for experienced brokers who can help evaluate strategies and head expansion plans. In the following interview, Erickson discusses the state of New Jersey retail, its changing tenant base, the impact of e-commerce and what 2014 may bring. What significant changes have taken place in the lo- cal retail market? The recovery momentum continues to rise steadily, with more leases being ex- ecuted and deals completed than in the immediate past. Retailers are focusing largely on the strategic placement of new stores (for example, Hess is now looking only at inter- sections with traffic lights), and the relocation, closing, TEANECK, NJ — Com- mercial real estate services firm Cushman &Wakefield has arranged 8,500 s/f of of- fice leases at Glenpointe in Teaneck. In separate transac- tions, Leeward International, Inc. has signed a 5,100 s/f headquarters lease, and H Capital has inked a 3,400 s/f lease. The East Rutherford, NJ-based team of Richard Baumstein , Marc Graham and Christian Politan rep- resented both the tenant and Glenpointe owner Al- fred Sanzari Enterprises of Hackensack, NJ in both transactions. For Leeward, a manu- facturer and distributor of women’s apparel, the trans- action marks a relocation to New Jersey from Mid-
Baumstein, Graham, & Politan of Cushman & Wakefield arrange 8,500 s/f of office leases at Glenpointe in Teaneck
Glenpointe
Mid Atlantic Real Estate Journal — January 17 - 30, 2014 — 15A
www.marejournal.com
COMMERCIAL REAL ESTATE 2 0 1 4 F O R E C A S T
2004 as a seasoned industry professional. She specializes in retail real estate brokerage and services, locally and nationally.
CUSHMAN &WAKEFIELD OF NEW JERSEY, INC. Licensed Real Estate Broker - One Meadowlands Plaza - East Rutherford, NJ 07073
Experts Forcast_MareJournal_Ad_10.25x13.indd 1
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16A — January 17 - 30, 2014 — Mid Atlantic Real Estate Journal
www.marejournal.com
2014 F orecast
By Mark Scott, founder & president, Commercial Mortgage Capital The future for real estate is bright
A
of the year. Add in the CREF- Mortgage Bankers convention in the first week of February and spreads further compress. The convention is usually where the tenor and mood of the upcoming year’s market can be gauged. There remain a number of unknowns that should play out in the first quarter, which will impact the lending environ- ment. Namely the fate of the Federal Open Market Commit- tee’s (FOMC) monthly $85 bil- lion economic stimulus in the form of Treasury notes more commonly known as Quantita- tive Easing 3 or QE3, which has
led to suppressed interest rate levels for the past year. The Fed recently announced that it will reduce bond purchases by
This sentiment is supported by the findings of the Emerg- ing Trends in Real Estate® 2014 report released by PwC
and discomfort over higher in- terest rates, which will muddle the exit strategy for investors if cap rates rise. “The question on everybody’s mind is how long interest rates are going to stay low. What happens when, five years from now, rates are up?,” noted a real estate service provider in the report. In addition, there are still questions regarding the econ- omy’s overall health. While 2013 saw steady improvement in unemployment, both at the national and state level, it cer- tainly has not been due to any sort of fiscal responsibility on the part of Congress or Presi- dent Barack Obama. And with debt projected to be up a whop- ping 238% from below $7 tril- lion to over $22 trillion by the end of the President’s second term in 2017, there is a very real sense of fear that rates will skyrocket and ratings agency downgrades will take hold, especially with confusion about Obamacare further clouding employers hiring practices. Despite economic uncer- tainty, the real estate recovery will gain momentum in 2014, according to the Emerging Trends in Real Estate® 2014 report. This should be good news to an industry that has experienced a recovery of fun- damentals that has been much slower than it is used to after a recession. Economic and de- mographic changes will drive demands for real estate that are familiar and some that will require the industry to adapt, according to the report. Equity and debt capital will continue to be attracted to the asset class, and the deployment of this capital will include more investment strategies that will involve a wider set of markets and property types. In particular, moderate- and high-income apartment devel- opment prospects, as well as moderate-income investment prospects, remain among the strongest of all sectors rated for 2014 by the Emerging Trends survey respondents. Millenni- als (or ‘gen Yers’), who show a preference for living in a walk- able, urban area, regardless of the size of the city where they live, will continue as a strong source of demand. They are less likely to buy their own homes, according toAmerica in 2013: AULI Survey of Views on Housing, Transportation, and Community. Drawing from a Continued on Page 18A
s we enter 2014, it is important to take stock of the market
and to prop- e r l y p l a n for the year ahead. The f i r s t quar- ter, in par- ticular, often serves as a b e l l we t he r
“With real estate fundamentals improving following a tumultuous fall over the past several years and interest rates forecast to rise, now is the time to invest and lock in low rates.”
$10 billion per month effective immediately, but the future remains unclear – will they continue tightening or ease off the brake? Owners should look forward, evaluate prepay premiums and recast debt now, locking in these historically low rates before they are gone.
US and the Urban Land Insti- tute (ULI), which notes that interest rates will rise in 2014. Interview subjects and survey respondents agree that inter- est rates are going to rise just moderately this year. The po- tential for rising rates leaves a lingering shred of uncertainty
Mark Scott
for the health of the overall lending market and is key to getting great loan pricing. Lenders are eager to hit their budget goals early and thus pricing (loan spreads) typically are tight in the first quarter
$200,075,000 in Closed Loans - 2013 Many Thanks to our Valued Clients and Lenders. We Wish You All the Best in 2014!
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