Mid Atlantic Real Estate Journal — January 17 - 30, 2014 — 21A


2014 F orecast David Zimmel, president, Zimmel Associates Corporate Real Estate Services Warehouse and flex space demand point to a strong 2014 D avid, What is your opinion on ware- house space in New

Ultimately interest rates are going to rise. Landlords will raise rents to service their debts. Three years ago po- tential tenants would start with lowball offers. During the height of the recession most landlords lowered rents. Today the situation is differ- ent. For example, in Carteret quality space runs from the low five’s to $6.75 triple net. I have heard of deals in the mid sevens—for a brand new building. What would you say to a potential investor? The biggest demand in to- day’s industrial market is for

flex space. We represent 4.5 million s/f or so of exclusive space in New Jersey and about one third of it is flex space, with units from 5,000 to 15,000 s/f. Our flex is 100% rented. Most landlords have low vacancy for good flex space. There is a high demand for the smaller units. To most investors, I say, go for a flex building. With big box if you lose your tenant, you have a whole building empty. Whereas with flex, you lose one tenant, one unit, you can handle it. Are there good deals out there now? There are always good deals.

The fact is, industrial build- ings are very popular with investors as opposed to office. More tenant improvement dol- lars are needed for office, there is more risk, less demand. People with money are chas- ing industrial buildings so the cap rates have declined. Yet, with so many investors look- ing for industrial deals there is always one group that steps up and pays more. They want the deal because it is a solid investment. What excites you about 2014? The industry is getting back to a situation where there is

less product available. Banks are lending again. Interest rates remain low for now. Companies that were on the sidelines are ready to make a move. I can tell by the sheer volume of phone calls and inquiries that there is more activity. At Zimmel, we don’t rely on one product type. We have the flexibility of different types of properties. I amhappy to say, “The market is looking good. “ David Zimmel is a Costar PowerBroker andpresident of Zimmel Associates Corpo- rate Real Estate Services, Edison, New Jersey. n


All aspects of warehouse space have c ome ba ck full circle and the prospects going forward are good. Two and a hal f

David Zimmel

years ago exit 8A of the NJ Turnpike had about 25 big box distribution- type build- ings available—now there are probably less than ten. The absorption rate has been dra- matic. We’ve also seen some speculative warehouse build- ing in certain areas, and it has been successful. Why is this the case? As we climb out of the re- cession, corporations have cash—they were not spend- ing money to expand for a few years, and there was a lot of pent up demand. Three to four years ago they pulled in the reins quite a bit, not knowing if consumers would be spending. The increased demand applies to all types of warehouse, not just big box. What about rents forware- house space? Rents have increased 10 to 20% this past year. Rents will continue to rise with demand and lack of available buildings. McDonough, Transwestern . . . Continued from page 13A that bolster its sense of real- ity. Unemployment, the true driver of the office market, is decreasing both nationally and locally, albeit slowly. Congress has finally removed significant uncertainty from the markets with their recent budget deal – the first in many years. The Federal Reserve has indicated an easing of its bond purchases. With strong corpo- rate earnings and some sem- blance of certainty fromWash- ington, the stock market has reacted favorably. For the first time in years we have one of the most important ingredients for a healthy Office Market – a sense in urgency. In New Jersey, the music is slowing down and tenants are looking for a chair. Matt McDonough serves as the Managing Director in Transwestern’s New Jersey office. n

Exclusively Offered by Zimmel Associates FOR SALE IN EDISON, NJ

Two High Tech Buildings

32,000 S/F Freestanding Building on 2.3 Acres

34,000 S/F Freestanding Building on 2.05 Acres

23 Nevsky Street

8 Olsen Avenue

• Price: $2.8 million • Fully Operational as Laboratory

• Price: $2.8 million • Ideal forWarehouse/Distribution/Assembly • Rib lock and Masonry Construction • 15,000 s/f warehouse + 17,000 s/f office • 22 ft. ceilings in warehouse • Tailboard loading • Ample parking • Nicely landscaped

• Ideal for Lab/Warehouse/Assembly/Manufacturing • 10,000 s/f warehouse, balance office and lab

• 16.5 s/f ceilings in warehouse • Tailboard and Drive-in loading • Ample parking • Nicely landscaped

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