A — July 13 - 26, 2012 — Mid Atlantic Real Estate Journal


M id A tlantic R eal E state J ournal

continued from page 2A NJ Multi-Family Development Pipeline Takes Center Stage . . .

llentown, PA — Alvin H. Butz broke ground on the 50,000 Located at 824 & 830 Hamilton St. in Allentown, PA Alvin H. Butz breaks ground on 50,000 s/f expansion A

A transactions per year. In 2012, we have seen a num- ber of generational sellers put properties on the market. They believe that pricing is peaking and are uncertain about what the capital gains tax is going to look like moving forward. The market also is ripe with REIT and institutional sellers choos- ing to exit non-core properties and those they purchased be- fore the recession and now can sell at a profit. Active buyers include a diverse mix of insti- tutions, private investors and opportunity funds. Equity capital loves mul- tifamily. While the economic recovery may well be under way, investors still see retail, office and industrial p roperty as a relatively more risky asset class. Multifamily is accepted as the “safest” hard asset invest- ment alternative, and, histori- cally, the returns appreciation have been more stable than the other commercial sectors. Additionally, the propensity for successful professionals to rent has increased. Some are transient and do not want to establish roots, while others may not have the 20 percent down payment needed to secure a mortgage. A growing number of qualified would-be buyers have seen home-owning family members and friends struggle during the past few years. So whether due to an aversion or inability to buy, the pool of pro- spective multi-family residents has deepened. These factors all have con- tributed to a greater share of in- vestment capital being shifted into multifamily versus the other real estate asset types. As we head into the heart of 2012, transaction volume is picking up. This, along with Northern New Jersey’s incredible devel- opment pipeline and impressive fundamentals, will keep the regional multifamily market among the most interesting industry discussion topics for foreseeable future. Brian Whitmer is senior director of the Metropoli- tan Area Capital Markets Group of Cushman&Wake- field, Inc. in East Ruther- ford, NJ. n

improve. Since then, vacancy rates have declined to their current rate of 3.9 percent, according to REIS, which mir- rors pre-recession levels. This, in turn, has driven rental rates to the highest point in recorded history, per REIS. The average Class A rent currently is $1,973. The previous peak, of $1,968, oc- curred during the third quar- ter of 2008. Northern New Jersey recorded 2.4 percent rent growth in 2011; this ranks first in the Northeast out of 15 metropolitan areas and fourth in the entire United States. Simply put, New Jersey is in a good place in terms of fun- damentals. Second, debt and equity capital, as well as construction financing, came back into mul- tifamily and quickly picked up pace. Fannie Mae and Freddie Mac are lending on existing assets, with rates that are all-time lows in the 3% range depending on loan term. This is creating a yield arbitrage for buyers coming into multifam- ily. We also have seen local and regional banks become more aggressive to compete with the agencies. This com- bination of available financ- ing at rates that continue to decline has created cap rate compression that is driving up pricing. Since the first quarter of 2010, cap rates for Class A product have largely remained between 4.5% and 5.0%. When owners see this appreciation, it fuels their motivation to sell. The result? Aperfect storm for stepped-up property transac- tion volume. WHY DO INVESTORS LOVE MULTIFAMILY? In 2010, 10 multi-family sales in excess of $10 million in size, totaling $523 million, closed in Northern New Jersey; three involved Class A properties. In 2011, 13 transactions total- ing $825 million closed; nine involved Class A assets. This year, New Jersey seems in line for volume somewhere in be- tween, with one or two Class A trades per half year. Looking back nearly a decade, New Jer- sey sees on average three class

s/f, class-A office and retail expansion located at 824 and 830 Hamilton St. The expan- sion is Phase II of the Butz Corporate Center project. Butz will pursue Leader- ship in Energy and Envi- ronmental Design (LEED) Certification. The building will be de- signed by Roberson Butz Architects and built by Alvin H. Butz Inc. “This day is very significant to our company’s future. We see a great opportunity here for other companies looking to do business in Pennsylvania,” says Greg Butz, president NEW CASTLE, DE — Del- aware’s first Yogen Früz, con- structed by Emory Hill & Company, will be opening in Christiana Mall in the Tar- get courtyard just in time for summer! The innovative new store of- fers patrons a “mix it” yourself frozen yogurt and sorbet bar in which patrons select a low- fat frozen yogurt or fat-free sorbet and then choose from a large variety of fruits (like mango, pineapple, raspberry, kiwi, watermelon and more) or other toppings (including Oreo, Cap’n Crunch, granola and dark and white chocolate shavings) which are then blended to create customized frozen creations. Yogen Früz will also offer self-soft serve. Co-owners Michael Geon- notti of PA and Ron Perruzza of Toronto own several stores in the Tri-State area and plan to open more stores in Delaware once the mall store is underway. “We’re excited to be in the First State and

824 and 830 Hamilton St.

and CEO. “We look forward to filling our expanded building with high quality businesses

that can reap the rewards of being located in downtown Allentown.” n

Emory Hill Builds “Yogen Früz” in Christiana Mall

Yogen Früz interior

of their local knowledge and 30 years of commercial con- struction expertise. “We look forward to a long-standing re- lationship with Emory Hill in years to come,” Geonnotti said. “They have been outstanding to work with every step of the way, giving us the personal- ized attention we needed.” n

know the mall store will be a tremendous success, and we look forward to opening more stores throughout Delaware,” said Geonnotti. He said he and his partner chose Emory Hill & Company as the construction manager and general contractor for the 543 s/f mall store because

TRENTON, NJ—Acompre- hensive study by the Edward J. Bloustein School of Planning and Public Policy at Rutgers, The State University of New Jersey and commissioned by the New JerseyApartmentAs- sociation (NJAA), analyzes the economic contribution of the multi-family apartment indus- try to the New Jersey economy and concludes that the apart- ment industry – comprising over 500,000 rental units in 5+ unit buildings – is a significant NJAA commissions New Jersey multifamily economic study component of the New Jersey economy. The study estimates that in 2010, the industry di- rectly or indirectly supported over 44,000 jobs (1.2% of the state’s total employment), contributed $5.7 billion to the State Gross Domestic Product (GDP), generated over $1 bil- lion in local tax revenues, and $140 million in tax revenue to the State of New Jersey. The NJAAcommissioned the Bloustein School to perform a comprehensive economic analysis of the apartment industry in order to provide officials and the industry with the insights required for future effective long-range housing policy planning. One-third of New Jersey’s working families, young cou- ples and seniors – some three million people – call apart- ment living “home.” The economic impact of the multi-family housing industry in the Garden State goes well beyond that of its employees. n

Baltimore, MD — RMS Omega Technologies Group leased 6,160 s/f at 9635 Phila- delphia Rd. Middleton Smith, Richard Blue, Jr., SIOR and Paul Obrecht, III, SIOR of Blue & Obrecht Realty, LLC represented the tenant, and Beetle Smith and David Lin- Blue & Obrecht Realty handles 7,420 s/f ton of RKS Realty represented the landlord. Hill, Barnes & McInerney, LLC leased 1,260 s/f of office space at 1643 Liberty Rd. in Eldersburg. Patrick Smith of Blue & Obrecht Realty, LLC represented the landlord, Lib- erty, LLC. n

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