2A — February 13 - 26, 2015 — M id A tlantic
Real Estate Journal
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MAREJ A dvertising D irectory ACE Mentor Program. ...........................4C Advantage Engineers.............................4B Barley Snyder.........................................2C Bussel Realty Corp............................. IC-B Columbia Bank.......................................9B Cooper Horowitz.....................................9A CREW Lehigh Valley PA. ....................12C CREW NJ..............................................16B Crude Royalties. ................................. IC-A Crystal Window & Door Systems. .......12A Cushman & Wakefield. ..........................1B Deerwood Real Estate Capital ..............8A Earth Engineering..................................7C Ehrlich, Petriello, Gudin & Plaza........14A Electronic Office Systems.....................15B Elias B. Cohen & Associates................15A Friedman, LLP. ......................................4B Gebroe-Hammer Associates...................2B Harvey, Hanna & Associates.................6A Heller Industrial Parks..........................7B Hinerfeld Commercial Real Estate........1C Kaplin Stewart. ......................................2A Keast & Hood..........................................2C M&T Realty Capital Corporation........10A M. Miller & Son....................................16A Marcus & Millichap................................3A Martin Architectural Group...................9C Max Spann..............................................1A Mericle Commercial RE Services. .... BC-C Meridian Capital Group.......................13B NorthMarq Capital.................................6C Orndee Omnimedia..............................11A POA.......................................................18A Poskanzer Skott Architects....................3B Provident Bank.................................. BC-A Rittenhouse Realty Advisors. ................3C SEBCO Laundry Systems......................2B Sheldon Gross Realty, Inc....................17A Specialty Building Systems. ................13A Team Resources....................................14B The Berger Organization. ................. BC-B The Kislak Company..............................8B Warner Real Estate & Auction..............3A Whitesell.................................................3B Zimmel Associates..................................6B
Mid Atlantic R eal E state J ournal Publisher ............................................................................ Linda Christman Publisher ............................................................................... Joe Christman Section Publisher .................................................................... Steve Kelley Associate Publisher .............................................................Alissa Aronson Senior Editor/Graphic Artist .................................................Karen Vachon Production Assistant ....................................................................Julie King Office Manager .................................................................... Joanne Gavaza Contributing Columnists ........ .Steve Bussel, Bussel Realty Corp.;Sheldon Gross, Sheldon Gross Realty; David Zimmel, Zimmel Associates 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 3 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 The views expressed by contributing columnists are not necessarily representative of the Mid Atlantic Real Estate Journal
Mid Atlantic Real Estate Journal
Will Sales Cool Down in the NJ Industrial Market This Year? Steve Bussel I n the last fourth quarters, the Northern/Central New Jersey industrial market has experienced leasing and sales activity unseen since 2008, and some of the stron- gest market dynamics since I started in the business 40 years ago. But the BIG story is the “for sale” market. We are experiencing the lowest number of buildings for sale in a generation. Properties are selling 20-30% higher than 2 years ago, depending on the market and the property class. Investor buying frenzy is un- derway between Edison and Port Newark/Elizabeth. Cap rates for leased properties are as low as 5% in areas close to Port Newark/Elizabeth. Buy- ers are less fearful of overpay- ing for properties “betting on” a continued rise in rental rates. With the pace not subsid- ing anytime soon, will sale prices continuing rising, or are we at the cusp of a bubble? If you listen to economists,
they are predicting solid eco- nomic growth this year of 3% to 4% GDP. However, they expect interest rates to rise. If interest rates rise, we expect it to have a potential dampening effect on sales and pricing as properties become even more expensive. Also, many of these investment purchases are being underwritten at rental rates never seen before. It is questionable whether these rent projections can be sus- tained over the longer term. All of this we believe, will cause sales prices to moder- ate or level off and may scare off some potential investors. Nonetheless, cash-flush us- ers with solid business plans and profits will continue to
purchase properties as part of their strategy for business growth. Interest rates and rents being of secondary -- if any -- importance to them. On the leasing side, the Edi- son/287 and the Port Newark/ Elizabeth markets have avail- ability rates around 6% for quality product, with rental rates escalating. Exit 12 and the ports command some of the highest rates. On the flip side, we see weakening in the Exit 8A-7A market. We see spec building causing a potential oversupply. Asking rents for these spec properties are at historical high levels and may not be sustainable. Steve Bussel is president of Bussel Realty Corp. n
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