Despite a bump in big-box inventory in the wake of the A&P bankruptcy, the New Jersey retail real estate market continues to gain strength. Leasing activity remains robust, with strong suburban markets augmented by heightened urban activity. The inventory of properties for sale remains tight, while new development is highlighted by large-scale projects. This year’s major headline has been A&P’s bankruptcy. The sell-off of the grocer’s stores is ongoing, with Stop & Shop and Acme key bidders. Still, the stores remaining unsold are forcing landlords to think outside the box and/or redevelop their shopping centers, providing the opportunity to improve tenant mix and increase lease rates. Meanwhile, these immediate opportunities could slow down nearby projects in the works, including developments that could have come out of the ground in 2016 or 2017. Hot markets include Paramus, a perennial favorite. Also in the north, the redevelopment of Wayne Town Center has attracted Costco, Nordstrom Rack, Saks Off 5th, Dick’s Sporting Goods, and ULTA. In Bridgewater, Whole Foods signed a lease at Bridgewater Crossing, and negotiations are progressing with several major off-price and full-price specialty retailers. In Union County, Clark Commons opened with Whole Foods, LA Fitness, Home Goods, Michaels, Petco, ULTA, …
New Jersey and New York City employers have been expanding their ranks this year, allowing New Jersey residents to recognize new opportunities as economic growth in both areas continues to pick up steam. In Northern New Jersey, employment growth continues to follow a positive course as companies in New York City are attracted to the region’s lower operating costs and highly educated workforce. This year, companies are on track to add 29,000 employees, representing a year-over-year expansion of 1.4 percent. This will be the largest gain in jobs created since 2000. Job creation has been highest in the leisure and hospitality industry, as well as education and health services sectors, where 12,200 new jobs were created in the first half of the year. Newly employed professionals in search of affordable housing are opting for rentals in Northern New Jersey, where average rents can be half the cost of the greater New York City area. As a result of this growing demand for Northern New Jersey rentals, developers have expanded the pipeline of multifamily projects to more than 12,000 apartments with completions scheduled through 2017. Developers are on track to deliver over 7,900 apartments this year, representing the widest pipeline and …
For Newark, New Jersey, the well-documented trend toward urbanism and the emergence of creative solutions that position older properties to serve modern needs are creating strong momentum. At a time when leasing activity is ticking upward across the city’s diverse tenant base, it also is becoming clear that Newark’s superior data capacity positions the city to become a hub for tech start-ups and, ultimately, a national hub for the tech sector. For Millennials, Old is “In” According to new Pew Research Center analysis of U.S. Census Bureau data, it is estimated that about 53.5 million millennials (adults aged 18 to 34) are part of the U.S. workforce today. Companies run by or interested in attracting millennials — whether focused on technology or any other sector — are gravitating to 24/7 downtown or urban locations. And they are seeking smart, collaborative work spaces. The result? Old is “in” — at least when it comes to tenant preferences for office space. At The Berger Organization, we are stripping antiquated fit-outs and tapping into the popularity of exposed ductwork, open floor plans and loft-inspired architectural elements. The resulting environments speak to modern desires and individual company cultures, while paying homage to their urban …
With an increasing number of tenants seeking to relocate to New Jersey from parts of New York City, including Brooklyn and the Bronx, the Garden State’s industrial market is at its healthiest since first-quarter 2008. The amount of vacant space has now reached pre-recession levels, decreasing from 7.5 percent to 7.2 percent during the third quarter of 2015. Moreover, the vacancy rate experienced its best year-over-year improvement since the first quarter of 2014. Strong markets include central New Jersey submarkets Exit 8A, Exit 9/Brunswick, and Route 287 West, while the Meadowlands area remains the strongest submarket in northern New Jersey, followed by Exit 14/Newark near the port, and the Route 46/23/3 submarket. While transactions by large tenants, such as Amazon, dominated activity during the first half of the year, industrial buildings were filled up by smaller and mid-sized tenants during the third quarter of 2015. Retailers/wholesalers led the way, which is not surprising considering the continually growing e-commerce sector and recent increases in consumer spending. Supporting the recent economic resurgence of the sector, tenants in the manufacturing industry were also very active during the quarter, though many of their leases were small in size. Transportation companies also took space, enhancing …
For the first time in a long time in Central and Northern New Jersey, we can stop talking about the light at the end of the tunnel. The market has emerged into full sunshine, and the lingering aftereffects of the recession are now fully in the rearview mirror. The current strength of the market and robust activity in terms of new commercial development is something we have not seen for some time. Not only are there more opportunities for developers to get financing, but with rates at low ebb as well, developers are moving to take advantage. At the same time, banks and financial institutions are motivated and aggressively looking to make deals. The result is a perfect storm of sorts: the money is there, developers are willing and ready, and retailers are looking for quality space. That dynamic is good news not only for Central and Northern New Jersey, but also for all of the metropolitan New York City market. It is noteworthy that very few of the big box retail spaces that became available in the wake of high-profile closings and bankruptcies from brands like Linens ’N Things and Borders are still available. Slowly but surely, the inventory …
Momentum in Northern New Jersey’s multifamily market continues unabated, with investors aggressively pursuing opportunities, and developers actively launching projects along the Hudson River Gold Coast and west along transit lines. Heading into the heart of 2015, we are seeing demand drive up sales volume and values, and push cap rates down to historically low levels. Current investment velocity follows a strong 2014 capital markets performance. Last year, $1.3 billion in multifamily sales (including transactions of $10 million or more) marked the highest volume since 2007, and compares to approximately $900 million annually in both 2012 and 2013. For context, the market saw only $169 million in annual trades during the depth of the recession in 2009. The “buy” side today is dominated by institutional advisors, particularly for Class A apartment communities. Additionally, we are seeing privately held firms and raised funds making big splashes with value-add and Class B product. Northern New Jersey’s active sellers include developers and private owners looking to take advantage of valuations that have appreciated to historically high levels, as well as institutions that are cycling assets at the end of their traditionally long-term investment horizons. Additionally, multifamily cap rates have dropped consistently in Northern New …
The New Jersey industrial market is experiencing a renaissance of sorts with robust leasing activity in both Northern and Central regions of the state, increasing asking rents and more than 4.5 million square feet of industrial space delivered in 2014. All of these factors point to an even stronger 2015 as developers take advantage of improving market conditions. As we continue to see users and investors competing for the same properties, which in turn creates bidding contests resulting in higher sale prices, we pause and ask, “Can users compete with investors in this environment? And furthermore, should they?” To answer these questions, we need to look back at how we arrived at the current conditions. Towards the fourth quarter of 2013, asking rents and vacancy rates seemed to reach equilibrium. For each quarter after, asking rents steadily increased and vacancy dropped as demand rose. In the fourth quarter of 2014, vacancy in Central New Jersey fell to 7.2 percent, and asking rents rose from $5.35 to $5.42 per square foot with increasing demand along the New Jersey Turnpike corridor. Throughout the year, positive absorption totaled more than 2 million square feet in this region, making it the sixth year in …
Abundant financing, unrelenting demand in an undersupplied industry and low rates are driving Northern New Jersey’s multifamily investment market toward pre-recession levels. Nowhere is this more evident than in the urban commuter hub of Hudson County. Known as an integral part of New Jersey’s Gold Coast, Hudson County serves as one of the most active investment and rental markets in the region thanks to its proximity to Manhattan and high concentration of multifamily properties. Long-term owners in the area increasingly are aware of the market conditions, and trading has started to approach unprecedented levels. A prime example was the recent $21 million sale of a four-property Hudson County multifamily portfolio, with units located throughout Jersey City and Hoboken. The deal marks one of the most highly bid sales in Hudson County this year, with more than 20 competitive offers submitted for the portfolio consisting of 159 apartments and six commercial units. Following three rounds of bidding, the seller, which had owned the property for more than 40 years, accepted the highest non-contingent offer. All of the properties were fully occupied at the time of sale, and the largest — a mid-rise elevator building on Magnolia Avenue in Jersey City — …
The central theme of the Northern New Jersey retail market heading toward 2015 can be captured in three words: flight to quality. Strong tenant demand, driven by the region’s diverse inventory of well-located existing and new high-end supply, is translating to tightening vacancies and upward pressure on rents. As more young professionals choose to live in urban centers and densely populated communities along transit lines, downtown retail, in particular, is benefiting from the momentum. Millennials are starting families and are creating the need for larger living spaces and full-service, family-focused neighborhood amenities. As such, many national and regional concepts that traditionally have targeted regional malls are now entering these markets. Daycare centers, schools, grocery stores and fitness centers also are actively targeting quality downtown locations. In response, developers and owners are adding new supply and renovating existing properties to accommodate this new generation of tenants in the space-constrained Northern New Jersey region. Mixed-use projects containing retail, residential, office and/or hospitality components in infill locations continue to gain traction. Along the Hudson Waterfront and downtown, mixed-use projects illustrating this trend include Shuster Development’s project at 360 Ninth Street in the Hamilton Park neighborhood of Jersey City, which will add approximately 29,000 …
Cassidy Turley recently released its Third Quarter Office Market Snapshot for Northern and Central New Jersey. We detailed the absorption rates, asking rents and availability in both Central and Northern New Jersey and found the Grow NJ tax incentives and the movement of midsize companies played significant roles in shaping the market. Although not shocking revelations, these factors help explain surges and lags and why some markets are still feeling the crunch of previous quarters, even though employment rates have increased. Shifts in the Newark submarket, particularly Prudential vacating large portion of 3 Gateway Center and moving into its own office tower, created an uptick in availability. The resulting availability at the Gateway complex was a large factor in the 86,084 square feet of negative absorption recorded during the third quarter throughout Northern New Jersey. However, the impact was lessened as the owner of 3 Gateway recently announced Prudential has signed a lease to maintain a 160,000-square-foot presence in the building based on significant internal growth. Interestingly, in many submarkets, the development of a new office building indicates a thriving economy. However, Newark’s economic recovery has been slow. Panasonic’s recent move to a new headquarters and the development of new …