8C — May 26 - June 8, 2017 — Industrial / Distribution Centers — M id A tlantic

Real Estate Journal


NAI J ames E. H anson By Scott K. Perkins, SIOR, CCIM, NAI James E. Hanson Overview of development in Northern, New Jersey

D evelopment in North- ern New Jersey has progressed at a mea-

project at a time. Inexpensive money has contributed to the continued retrained trajec- tory in development. The real estate development industry is not known for its restraint. Bank regulation in the form of the Dodd-Frank Wall Street Reform and Consumer Protec- tion Act and Basel III could be a contributing factor to the development restraint. It requires banks to hold more capital on their books as a means of managing risk. Al- ternative lenders, including private equity funds and mort- gage real estate investment

trusts, are poised to pick up some of the slack, particularly when it comes to acquisition, development and construction loans (ADC) classified under “High Volatility Commercial Real Estate.” The rule—which was implemented on Janu- ary 1, 2015 as a part of Basel III—forces banks to retain 150 percent of risk weight on a loan that falls under HVCRE, compared to the 100 percent required previously. In short, greater capital requirements on part of banks limit their ability to lend as much and to provide higher-leverage debt.

New projects have leased at a healthy rate. For example, Clarion’s 991,348 s/f develop- ment in Cranbury, The Morris Companies 706,000 s/f devel- opment in Newark and Seagis’ 923,000 s/f development in Edison have all been leased. A relatively restrained pipe- line of new development cou- pled with positive absorption has caused rents to increase. We anticipate rents to con- tinue to climb this year, but at a measured pace. We also believe new developments will continue to be proposed this year, but at a slower pace as

developers look beyond 2017 contemplating economic con- ditions. Scott K. Perkins, SIOR, CCIM is managing director of Corporate Services NAI James E. Hanson. n NAI Hanson arranges sale of 126,000 s/f ind. bui lding in North Bergen, NJ

sured pace s i n c e t h e Gr e a t Re - cession. We don’t believe that overde- v e l o pme n t will be the cause of the next econom-

ic downturn nor will it exac- erbate a market “correction”. With the exception of Bridge Development, most develop- ers are concentrating on one Scott K. Perkins

7777 West Side Ave.

North Bergen, NJ — NAI James E. Hanson ’s team of Andrew Somple, SIOR, Scott Perkins, SIOR , and Christopher Todd announces it has brokered the sale/lease- back of a 126,000 s/f industrial building located at 7777 West Side Ave. in North Bergen. Somple, Perkins and Todd rep- resented the buyer, Terreno Realty Corporation , and the seller, Dermarite, in this off market transaction. “This sale is a continuance of the trend of investors search- ing for quality brick and mor- tar investment opportunities. Through this sale/leaseback ar- rangement, Dermarite was able to sell to Terreno and continue to occupy space while focusing on their primary business,” said Somple. “The former owners of Der- marite recognized the benefits of this transaction and worked with NAI James E. Hanson because of our expertise. We advised them and the buyer Terreno to execute a deal that was mutually beneficial for both parties and in line with their long-term business goals,” added Perkins. The transaction began two years ago and evolved due to the complexities of the former ownership and the sale of Der- marite’s business. Dermarite, a manufacturer and distribu- tor of high-quality advanced wound care and nutritional supplements, had owned the building for five years and was seeking an opportunity to re- deploy their capital that was tied up in their ownership of the property. The single-story building has 20’ ceilings and offers easy access to NYC via the George Washington Bridge and Lincoln Tunnel. n

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SOLD North Bergen 126,000 sf Mahwah 108,238 sf NOTABLE 2017 NJ DEALS

LEASED Jersey City

130,963 sf 119,268 sf 74,368 sf 52,800 sf 35,746 sf 33,000 sf 32,000 sf


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