Mid Atlantic Real Estate Journal — New Jersey — March 15 - 28, 2013 — B


N orthern N ew J ersey

Cushman & Wakefield of New Jersey 2013 will see record setting low cap rates and per unit prices


ffice – David Bernhaut In 2012 NJ there were 27 office sale transac-

by or proximate to northeast population centers, but also appreciate the relative value of more rural opportunities that operate without completion and are the central focus of a community. Multifamily – Brian Whitmer With the first quarter of 2013 nearly behind us, the multifamily sales activity has started off at an encouraging pace. Two transactions greater than $10 million closed for a total volume of $99.0 million. Both were class A assets with cap rates ranging from mid-4% to mid-5%. If the pace holds, this year’s volume will be close

to par with 2010 and 2011, and two-thirds of the $634.7 million recorded in 2012. The number of transactions has been doubling each year since 2010, totaling 20 in 2012. While we do not anticipate the deal count in 2013 to match that of 2012, we believe this year will see record setting low cap rates and per unit prices. This is a re- sult of the increasing supply of capital waiting on the sidelines to invest. We expect the second quarter to be active with new listings, as sellers are waiting for the spring leasing season to strengthen their revenues before going to market. n

tions in New Jersey greater than 100,000 s/f totaling $1.4 billion and 10.4 million s/f. The average psfsale price was $131 ps/f and the weighted average cap rate was 8.43%. While transaction volume was down 11% from 2011, it was slightly higher than the previous 6 year average, as was the aver- age deal size of $50.0 million. Over the past 36 months, the market has been characterized by a flight to safety and quality. Investor interest has been keen on large, well leased trophy assets and long term single tenant net leases to credit ten- ants. Essentially the risk trade has been off due to a lack of strong leasing fundamentals, job growth and net absorption. There have been a number op- portunities in the market for the counter cyclical investor in the suburban markets. We expect those opportunities to remain in the months ahead. Industrial – Kyle Schmidt New Jersey’s industrial in- vestment sales market began 2013 on a rapid pace with year-to-date sales of $143.6 million, a 124% increase over the corresponding period in 2012. While volume has begun to accelerate on a relative basis, triple digit per square foot pric- ing for well located and leased industrial now exceeds office buildings in many markets. De- spite the recent uptick in sales, the NJ industrial remains very challenging to enter with only an average of $550 million of sales in any given year within a market of +-800 million s/f. As a result of the limited supply, and compelling fundamentals, cap rates have compressed dramatically to the point where year one NOI returns in the 5’s should now be expected for better buildings. Institutions are now embarking on a “build to core” strategy to control product, due to scarcity. As is typically the case in NJ, it is a great time to be a seller for anything industrial, and chal- lenging to be a buyer. Retail – Gary Gabriel Despite the growing impact of e-commerce, demand for re- tail investment remains high. For open air formats, the high grossing supermarket anchored neighborhood center remains the institutional favorite. There is growing acceptance outside of the “core” grocer anchored

David Bernhaut Kyle Schmidt Gary Gabriel Brian Whitmer space, however, as product sup- ply constraints and improving economic trends move invest- ment capital beyond its recent comfort range. Although our markets saw $365.4 million of retail trades in 2012, qual- ity assets available for sale remain traditionally slim. Our pipeline has been filing as late with a $40 million central NJ offering that has 85,000 s/f grocer component, two north- ern NJ supermarket anchored neighborhood centers, and a $30 million power center in PA. We continue to recommend in- fill center that are surrounded

Metropolitan Area Capital Markets Group

$1.3 billion oF investment sales in 2012

one barnes & noble way 1,145,000 sF sale oF single tenant industrial building monroe, nj

cross island plaza 225,000 sF sale oF multi-tenant oFFice building rosedale queens, ny

echelon glen 884 units

one matrix drive 259,000 sF single tenant

sale oF garden style apartment community voorhees, nj

industrial building monroe, township, nj

jFk portFolio 481,000 sF

Fmc campus 111,000 sF sale oF single-tenant oFFice building ewing township, nj

sale oF multi-tenant industrial portFolio queens, ny

Andrew J. Merin, Vice Chairman 201-460-3358 David W. Bernhaut, Vice Chairman 201-460-3356 H. Gary Gabriel, Exec. Vice President 201-460-3352 Brian J. Whitmer, Senior Director 201-508-5209

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