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2A — May 15 - 28, 2015 — M id A tlantic

Real Estate Journal

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Mid Atlantic R eal E state J ournal Publisher ............................................................................ Linda Christman Publisher ............................................................................... Joe Christman Section Publisher .................................................................... Steve Kelley Associate Publisher .............................................................Alissa Aronson Associate Publisher ..........................................................Barbara Holyoke Senior Editor/Graphic Artist .................................................Karen Vachon Production Assistant ....................................................................Julie King Office Manager .................................................................... Joanne Gavaza Contributing Columnists ........................................................ Eugene Diaz 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. 27 Issue 9 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

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Regional Commercial Real Estate Predictions Do Not Require a Crystal Ball Eugene Diaz I f commercial real estate practitioners had crystal balls, would that be a good thing? We might know the future, but the jury is out on whether being able to better anticipate shifts in our cyclical industry would make a difference – or just cause more gray hair. That said, being able to “see” where things are headed does not always require clairvoy- ance – just experience and observation. Following are a few New Jersey/New York re- gional market predictions for the coming months and years. And with the first quarter of 2015 coming to a close, several are already ringing true. 1. As hospitals, managed care companies and pharma- ceutical firms all continue to adjust to the rapidly chang- ing healthcare landscape, the market will be punctuated with multiple, large health- care-related transactions. Already this year, the HUMC/ Seton Hall medical school

J.D. Parker Manhattan

Brian Hosey New Jersey (201) 582-1000 Bryn Merrey Washington, D.C. (202) 536-3700

(212) 430-5100 Brenton Baskin Philadelphia (215) 531-7000

The views expressed by contributing columnists are not necessarily representative of the Mid Atlantic Real Estate Journal

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announcement and Cigna’s acquisition of QualCare have made headlines. Additionally, merger discussions are under- way between the Barnabas and Robert Wood Johnson health systems. 2. Office investment will accelerate, and office values will rise as the improving job market and the hunt for higher yields brings increased demand for this asset class. In February, Morris Corporate Center IV, a nearly vacant, 350,000 s/f property in Par- sippany, traded to an Inter- continental/Ivy joint venture partnership. The sale price, which was not disclosed, is ru- mored to be double that which the market would have sup-

continued on page 20A 3. Multi-family warning shots will be fired when in- terest rate and supply-side increases combine to scare weaker participants into lower effective rents as absorption returns to normalcy. This will back-up CAP rates, provid- ing opportunities for smarter folks to buy toward the end of the year and into 2016. While we are still waiting for this predication to show some legs, we are looking past it to forecast the resilience of the market proving out, buoyed ported one year ago. Looking ahead, a return of structured finance transactions will help to bridge the bid/ask between buyers and sellers.

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