B — September 13 - 26, 2013 — New Jersey — Mid Atlantic Real Estate Journal


N orthern N ew J ersey

By Brian J. Whitmer, CCIM, Cushman & Wakefield of New Jersey, Inc. Northern New Jersey market report



the Hudson River Gold Coast. Sales activity year-date-date in 2013 for transactions in excess of $10 million totaled 1,598 units in 10 communi- ties comprising $456 million. For the same period in 2012, 3,310 units traded in 15 com- munities totaling $546 million. Cap rates for classAcommuni- ties have generally remained stable dating back to 2010 and range 4.50% to 5.25%, whereas for class B the range is 5.50% to 6.50%. We believe that these cap rate ranges will hold in the near future as there remains an excess of capital from both

investors and lenders seeking multifamily product. Also, demand remains strong for de- velopment sites. This is driven by continued high occupancy rates and steady rent growth. The 2Q13 vacancy rate is 3.6%, down from 3.9% in 2Q12, and the current average rent is $1,596, up 1.9% over 2Q12. RETAIL Amazon Nation? The impact on traditional hard goods retailers from internet sales has been notable, and the victims run the gamut from Wal-Mart to mom and pops. This has brought about a shift

in preferences by developers and investors to have shopping centers with a tenant mix that includes goods or services that cannot be sold online. Not only is this important for stability, but it is increasingly neces- sary as a draw for hard goods retailers. Amazon launched same day delivery in Seattle and LosAngeles, and is also of- fering grocery delivery within hours of placing an order. As this business model goes national, there will be an im- pact on necessity retailers and poses threats to traditional sales channels never seen

before. Regarding the capital markets, investor demand is steady but tempered by a highly discriminatory envi- ronment as there is a narrow window defining best in class. Grocery anchored centers have been trading in the low 5% cap range, and despite a lot of dis- cussion, an uptick in cap rates from interest rate movements has yet to be seen. OFFICE The first 2/3rds of 2013 has seen a dramatic uptick in the amount of investment sales in northern New Jersey. In all of 2012, there were 27 office sales greater than 100,000 sf totaling $1.4 billion and 10.4 million square feet. Year to date, including transactions that have closed and are un- der contract, volume totals 29 sales totaling $1.1 Billion. With a strong forth quarter finish we are likely to see the strongest sales volumes since the 2004-2006 market peak. The investment sales market remains very bifurcated, with the best quality class A assets and single tenant net leased properties trading at near record low cap rates and value added assets selling for ¼ of their replacement cost. The most interesting trend the past few months has been that the risk trade is back on. Inves- tors sensing that the market is poised to recover have once again begun creating bidding wars for low basis value added opportunities. This demand is being fed by a large number of special servicer and REO deals coming to market. Anecdotally this can be seen by the average psf selling price of $100 psf which is lower than at anytime during the past 15 years. INDUSTRIAL New Jersey’s industrial mar- ket is on a record setting pace. After kicking off CY2013 with a significant increase in sales volume, transaction activity has maintained it’s strength, which is expected to continue through year end. Year-to-date dollar volume, including deals currently under contract, of $821MM represents a 32% increase over aggregate sales in CY2012 and is $101MM, or 11%, shy of the all time volume record attained in CY2006. Several high profile transac- tions illustrate current capital market demand forNewJersey industrial product. Per square continued on page 7B

No r t h e r n New Jersey’s multifam-

ily sales vol- ume in 2013 has been at a slower pace c o m p a r e d to last year. This is not a reflection for the demand for multifam-

Brian Whitmer

ily assets as cap rates still remain at historic lows for all asset classes – especially class A communities, includ- ing those that are located on

G William Group LLC Commercial Building Consultants Serving the Tri-State Area with Decades of Experience At GWG, we start every project with our clients’ vision. Our experienced design team will walk you through every step of the process, from getting your first ideas on paper, to developing a full set of plans for construction. Contact us and see how we can bring your vision to life. Services: •DESiGn •EnGinEErinG •OpErATiOnS iMprOVEMEnT •COnSTruCTiOn & prOjECT MAnAGEMEnT • BuiLDinG inSpECTiOnS


Made with FlippingBook Annual report