18 — September 2024 — Fall Preview — M id A tlantic Real Estate Journal
www.marej.com
F all P review
By Jason Crimmins, The Blau & Berg Company Analyzing the shifting dynamics in Northern New Jersey’s commercial real estate market
A
s we transition from the warmth of Sum - mer to the crispness
to establish themselves in the vibrant Northern New Jersey market are all contributing to a dynamic, evolving environment. Following the initial post- pandemic surge, the intense demand for last-mile logis - tics facilities has stabilized, influenced by factors such as heightened delivery volumes, rising interest rates, and moderate consumer spend - ing. This shift has led to a normalization in the market, with vacancy rates on the rise and rental prices experienc - ing a downward trend from
2023 through 2024. Despite these challenges, leasing ac - tivity has shown resilience, particularly driven by 3PLs, food and beverage compa - nies, and an influx of Asian logistics firms. Noteworthy is the completion of fourteen significant deals exceeding 175,000 s/f in the first half of the year, a sizeable in - crease compared to the same period in 2023. Industrial rents have slightly decreased, and vacancies have risen to 6.5% in the first half of the year, primarily due to the
completion of new distribu - tion centers and an uptick in sublease availability. There has been a growing demand for smaller spaces within the 25,000-75,000 s/f range. It is anticipated that the prevailing trends will per - sist throughout the remain - der of the year. Looking ahead to 2025, a diminishing pipeline is expected to drive a surge in leasing activ - ity. Landlords have already started and will continue to adjust their rental rates to attract high-caliber tenants
and remain competitive in the market. The office sector is grap - pling with the challenge of historically high inventory levels and persistent vacancy rates hovering around 25%. Major positive players include financial services, insurance firms, pharmaceutical compa - nies, and the tech/information sectors, which have been at the forefront of significant trans - actions. Moving forward, the shift towards multi-use devel - opment is expected to alleviate some of the surplus inventory as older office buildings are gradually replaced by more versatile mixed-use spaces. The brick-and-mortar re - tail sector is undergoing a period of transformation and adaptation, navigating challenges such as consumer confidence fluctuations, la - bor concerns, and the grow - ing impact of artificial in - telligence on consumer be - havior and in-store product displays. While traditional retail faces hurdles, anchor centers are showing resil - ience, and the blending of retail spaces within mixed- use developments appears poised to shape the future of this sector. Once we get past the elec - tion cycle and investors have a clearer picture of the eco - nomic landscape, along with a slow rollback on inter - est rates over the coming months, it is reasonable to anticipate a smoother 2025 as the economy finally puts the influences of the pan - demic in the rear-view mir - ror. There was a sentiment of “Survive until 25” heading into this current year, and, while some sectors have remained relatively strong, there has been some pain through the unwinding of the untenable trends of sky - rocketing industrial demand and plummeting office de - mand. There is cash on the sidelines, and 2025 should see some of that enter the market as clarity on the fiscal policies of the next four years and downward pressure on interest rates take effect. Jason Crimmins is the president, principal, and broker of record of The Blau & Berg Company, a full-service real estate firm located in Short Hills, New Jersey. MAREJ
of Fall, the commercial real estate landscape is being shaped by a multi - tude of com - plex factors. The impend - ing presiden -
Jason Crimmins
tial election, potential interest rate adjustments, economic uncertainties, and changing demands of businesses seeking
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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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