How long will the scorching hot multifamily market hold up? The transactional markets continue to be bolstered by low interest rates, as well as an insatiable appetite from both private and institutional equity. I don’t believe the multifamily market will cool off in 2015. Our HFF multifamily team in Philadelphia will soon be shattering price per unit records in both the suburbs and in Center City Philadelphia. Interestingly enough, half of our transactions will be purchased by new buyers, meaning buyers new to our market, new start-up companies, or established funds that are new to the multifamily arena. As is typically the case, attractive debt and abundant equity are fueling the fire. With respect to multifamily debt, it has been encouraging to see some true competition back in the market. We enter 2015 with an extremely robust debt environment wherein the agencies are being forced to compete with regional banks, life companies and CMBS options. Back in October, HFF brokered the sale of Yardley Crossing in Bucks County. This 196-unit, Class B asset, built in the early 1970s, was priced slightly below a 6 percent cap rate and roughly $170,000 per unit, but still commanded 25 tours and 15 offers. …
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 …
Apartment rents and multifamily asset values are rising while vacancy remains low in Connecticut’s New Haven and Fairfield counties. Young professionals and commuters are moving out of suburban areas to reside in downtown locations so they can take advantage of transit-oriented, live-work-play environments. Costly single-family housing is another factor contributing to new residents seeking rentals rather than buying homes. There is a strong demand for apartments, which keeps vacancy low and prompts new development in the region, so much so that delivery of multifamily housing units this year will more than double those built in 2013. Demand however, outweighs the new supply and the current, record-low vacancy levels will be unaffected. Average prices for apartment assets in New Haven and Fairfield counties rose 3 percent over the last year to $169,000 per unit as the overall quality of listings improved. While the region experiences strong rent growth and higher yields than the likes of New York City and Boston, more foreign investors and institutional buyers continue to emerge with sights set on multifamily assets; and in particular, top-tier assets with more than 250 units in primary markets. Properties near Metro North commuter rail stations and employment centers will generate elevated …
Large-scale new retail development in Connecticut has historically been relegated to super-regional markets or traditional retail nodes — north of Fairfield County, for the most part. It’s really a simple formula: strong national and regional retailers typically want to be surrounded by dynamic retail synergy, and if there’s a great enough demand for a specific market, developers jump on the opportunity to capitalize. It’s happened in Manchester/South Windsor, it’s happened in Milford and its happened in Danbury. From time to time we see pockets of development in less traditional markets but overall, developers stick to “less risky” markets where demand is imminent and the municipalities are of the pro-development variety. Recently, though, larger-scale developments in smaller towns are starting to appear more frequently and retailers and brokers seem to be slowly embracing the emerging trend. Are we running out of developable land in the super regional markets? I don’t think this is the case. I think developers are recognizing that well-placed, large-scale retail projects in smaller towns are garnering significant interest from national brands of all sizes. Developers have had success getting the ever-important anchors to these sites, and that is more than half the battle. -Smaller-format retailers follow in …
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 …
The Boston apartment market ranked among the nation’s top cities for revenue growth throughout much of 2013 and 2014. Apartment developers took note of the region’s strong revenue performances and construction levels ramped up, reaching over 7,000 units during the past four quarters. Construction has remained elevated and supply volumes have increased, but not outpacing demand of more than 8,000 units per year. The new luxury apartments provide a lifestyle that is very attractive and, in many cases, comparable to condominium living for would-be buyers who are now renting when faced with few options for buying the limited supply of new condominiums. Luxury apartments offer an excellent alternative and a lifestyle experience that is more akin to condo living than what previous rental buildings offered. Boston has needed new rental inventory for some time now, given that 60 percent of the existing apartment inventory was built prior to 1980. Many of the new luxury buildings feature condo-style finishes, state-of-the-art amenities and services, windows that open, high ceilings, and updated systems. These new buildings also offer a greater variety of floor plans that better address the needs of millennials and professionals who are flocking to downtown Boston for jobs and social …
Boston is known for its top-notch universities that spawn world-class technology, pharmaceutical and bio firms, not to mention its leading money management and financial services base. These factors support one of the most vibrant office, residential and retail markets in the nation. Often overlooked, Boston’s industrial market may not be as glamorous as gleaming new office and multifamily projects rising along the waterfront, but its steady performance and strong recovery are impressive nonetheless. Vacancy in Boston’s 117 million-square-foot industrial market declined 1 percent between the second quarter of 2013 and mid-2014, from 13.2 percent to 12.1 percent. A paucity of new construction and deliveries suggests further vacancy declines. Only 41,000 square feet of industrial product has been delivered through midyear, and 76,000 square feet was under construction at that point. Looking ahead slightly, the industrial market is on track to absorb approximately 1.4 million square feet in 2014, with 680,000 square feet of absorption recorded through June. This total would exceed 2011 and 2012 totals but trail 2013’s 1.8 million square feet of net absorption. Boston’s Bread & Butter and E-commerce High land values and competition from markets such as Central and Northern New Jersey, which can serve broader populations …
The New York Capital Region’s industrial market has experienced strong growth over the past 24 months, and promises a continued pattern of growth for the next 12 to 24 months. As the office market in the central business district struggles to right itself fueled by the State’s tenuous occupancy of numerous privately held properties, the industrial marketplace has flourished with extended commitments from existing users and the entrance of new users. Upstate New York is making a name for itself in the nanotech industry, and a great deal of national and international attention has been drawn to the region. In addition to activity driven by high-tech companies, national distribution and manufacturing groups have committed to the region or have focused their site searches in the Capital District. The most significant job creation mechanism in the region has been the nanotech industry. Billions of private and public sector money has been invested since 2010 into Luther Forest Technology Campus in Malta, N.Y., as well as SUNY Polytechnic Institute (also known as the Colleges of Nanoscale Science and Engineering). These facilities have placed our region firmly on the international map and have transformed the appearance of New York’s Capital Region. The strongest …
Accessibility, amenities and coworking spaces are driving the suburban and urban real estate markets in Philadelphia. While suburban office tenants prefer to have access to transit and amenities, Center City office tenants seek experiences and collaboration with new coworkers. Suburban Perspective The Philadelphia suburban market consists of 59.4 million square feet comprising 13 distinct submarkets. The majority of this inventory consists of dated commodity office space, mostly built prior to 1990. With an overall vacancy rate of 20.8 percent and average asking rents of $24.90 per square foot, the Philadelphia suburban market has been less dynamic than its Center City counterpart. Although many older properties suffer from functional obsolescence, well-maintained assets with access to major roadways/public transit and amenities outperform the market average. For example, the Radnor, Conshohocken and Bala Cynwyd submarkets remain the three strongest submarkets in the region. Vacancy rates in these markets range from 2 to 14 percent, with average asking rents ranging from $30.75 to $37.00 per square foot. All three of these submarkets have immediate access to major roadways, public transit and amenities. Suburban office developers have taken note of the strong fundamentals in these areas as well as Center City Philadelphia. They have created …