A tight retail market, rising rents, and record low interest rates led to a jump in New York City multifamily investment sales in 2012. Multifamily building sales in New York City rose to $7.3 billion in 2012, a 45 percent increase compared to 2011, according to Ariel Property Advisors’ Multifamily 2012 Year in Review: New York City. There were 639 multifamily transactions comprised of 965 buildings in 2012, a year-over-year increase of 36 percent and 42 percent, respectively. The fourth quarter was particularly robust as investors rushed to close deals before tax increases took effect. In 2012, we also saw prices for multifamily buildings in prime New York City locations return to pre-financial crisis levels. In Manhattan, cap rates averaged below 4.75 percent and value-added assets traded at below 4 percent. Manhattan multifamily buildings operating at market rental rates even saw prices climb above $1,000 per square foot. One example of this was 105 West 29th Street, where a sale closed in June for $280 million, or $1,056 per square foot. This same institutional investor paid $475 million, or $498 per square foot, in January 2010 for a portfolio comprised of similar core assets at 415 East 53rd Street, 777 …
Northeast Market Reports
The vacancy rate for the 19.7 million-square-foot Cambridge office and lab market decreased from 11.5 percent to 10.3 percent during the third quarter, with more than 150,000 square feet of positive absorption. Year-to-date absorption totals 386,000 square feet, with all of the positive absorption occurring in the lab market. The lab market continues to be the driving engine of the Cambridge market and with four consecutive quarters of positive absorption, it shows no sign of slowing down. The two largest leases of the quarter were signed by Merrimack Pharmaceuticals (110,000 square feet), a homegrown Cambridge company, and Boston Biomedical Inc. (63,000 square feet), which will open an oncology R&D facility in Cambridge. Conditions in the Cambridge office market generally favor landlords despite three straight quarters of modestly negative net absorption. The office vacancy rate stands at 10.9 percent, but with some sizeable commitments expected to transact in the fourth quarter and a number of active tenants touring the market, conditions are tight, particularly in the East Cambridge submarket. Office Market The 10.3 million-square-foot Cambridge office market has been statistically flat for much of 2012, barely moving from 10 percent at 2011 year end to 10.9 percent at the end of …
New Jersey’s industrial market is showing signs of continued improvement, as evidenced by increased investment sales activity and the return of speculative development to the region. A number of significant development projects are already in progress, as well as a few proposed projects, including 2.8 million square feet of new construction at 2450 U.S. Highway 130 and 2.6 million square feet at Cranbury Half Acre Road, both located in Cranbury and within the Exit 8A submarket, which benefits from a central location that provides tremendous access to points both north and south. The Central New Jersey industrial market continues to have positive momentum with 583,653 square feet of positive net absorption in the third quarter, leading to a decline in the overall vacancy to 7.8 percent from 8.0 percent in the previous quarter. The vacancy rate is now below the 10-year historical average of 8.3 percent, an impressive recovery from a peak vacancy of 10.7 percent in the third quarter of 2009. Overall, market fundamentals remain strong and demand is expected to remain high for the remainder of 2012 and into 2013 based on a sizable number of tenants in the market and pending deals expected to close within the …
Despite the challenging and uncertain economic climate in New Jersey where the unemployment rate is now at its highest level in three decades and major companies are placing large blocks of space on the market, there is at least one encouraging sign of progress and glimmer of hope. Due to a number of factors, small and mid-sized biotech companies are choosing Central New Jersey — and areas adjacent to the Interstate 287/78 corridor — to base their operations. Several companies have located their headquarters or expanded branch functions in the I-287/78 corridor during 2012. In Bridgewater, Allergan leased 93,000 square feet, Dendreon leased 39,940 square feet, while Aptalis Pharma expanded into a total of 50,000 square feet. In Basking Ridge, Celgene renewed its 90,000-square-foot lease and Ipsen leased 32,500 square feet. Outside the I-287/78 corridor, Watson Pharmaceuticals recently expanded into an additional 32,000 square feet in Parsippany, and leased 32,000 square feet of lab/administrative space in North Brunswick. A recent study from BioNJ, a 300-member organization founded in 1994 that is focused on advancing the growth and prosperity of New Jersey’s biotechnology cluster, reinforces this trend and paints a vivid picture of its impact over the past few years. The …
The dense markets of northern and central New Jersey are showing some encouraging signs of momentum. Over the past 18 months, retailers have flocked to places like Paramus, Millburn, Wayne, Totowa, Springfield/Union, Livingston, East Hanover and Jersey City/Secaucus, to name a few. They are well aware that the major malls and retail corridors of Northern New Jersey, in particular, draw lots of traffic from nearby New York City. The pace of new construction has been sluggish in part because lenders now demand equity stakes of around 40 percent on projects that used to be financed at 70 or 80 percent. Therefore new supply is limited, which is helping to push up rents and drive down vacancies. In the northern and central parts of the state, in fact, the vacancy rate now stands at about 10 percent—a big improvement over the 20 percent average of 2010. Paramus, the state’s top retail market, has seen quite a nice recovery. Here, rents of smaller stores of less than 3,000 square feet now range from $35 to $60 per square foot. At stores of 5,000 to 10,000 square feet, space is leasing for between $30 and $40 per square foot. Paramus’ medium boxes, which …
The Boston apartment market will remain in favor of landlords in the coming quarters as new developments surface and rents reach peak levels, although residents may seek more affordable living options. The improving employment picture and a severe shortage of supply within Route 128 have tightened vacancy below 3 percent. By year end, asking rents will reach new record highs, which has already ignited a building frenzy throughout Boston. Nearly 1,500 units are under way in Suffolk County. These units will come online by 2014 and may ease rent growth. Meanwhile, demand in outlying areas is gaining steam as young professionals are being priced out of the core. Families and empty nesters alike are also migrating to the suburbs, where newer developments offer a sense of connection to the community similar to urban settings at more affordable rates. Developers are capitalizing on this trend and transforming areas near major transit stations into densely packed, master-planned communities. The redevelopment of the South Weymouth Naval Air Station, known as Southfield, is one example of this trend. The first phase of the mixed-use project in Norfolk County was recently completed and added 225 apartments, townhomes and top-notch amenities to the area. By the …
With all the construction vehicles on retail sites as you circle metro Boston, we can now quantify the retail slowdown attributable to the recession as a three-year window. Never has the local retail market been healthier than it is today. WS Development is under construction with its Whole Foods-anchored Meadowbrook Walk in Lynnfield. The Nordblom Company has begun 3rd Avenue, a Wegmans-anchored lifestyle project in Burlington. Market Basket is well under way at the former Polaroid site in Waltham. New England Development is building its Wegmans project in Chestnut Hill while WS redevelops the former Macy’s further east on Route 9. Also moving forward, though at a slightly earlier stage, is NED’s long-awaited Westwood project. A total of almost 3 million square feet of new high-profile — even iconic — retail space along Boston’s inner ring beltway is now upon us, exactly three years later than originally anticipated. Notably, grocery is driving all of these larger projects. While traditional market leader Stop & Shop makes only narrowly strategic moves and Shaw’s languishes, grocery chains of a wide range of sizes targeting distinct demographics have inspired development at both the local and regional level. Wegmans, Market Basket, Whole Foods, Price Rite …
Like many metro areas across the U.S., Boston’s 494 million-square-foot industrial market slowed as we approached elections and the end of 2012. Despite mixed signals, the situation isn’t entirely dour, and there are signs of optimism in terms of demand and activity, evidenced by a slight decrease in vacancy and 475,000 square feet of net absorption in the first half of 2012, according to CoStar Group. At a more macro level, the Boston area’s thriving technology sector has led to job growth and declining unemployment, which ultimately increases consumer demand and benefits the industrial property market. The Boston industrial market has been flat for more than three years now, but that’s created opportunities for end users to lease higher-quality properties than they previously inhabited while reducing occupancy costs, which is the prevalent trend both in Boston and nationwide. Tenants seek to improve efficiency by consolidating warehouse and distribution into more modern properties with higher clear-height ceilings and other features. While users demand more efficient and flexible industrial space, they also demand more flexible — and generally shorter — lease terms. If tenants can achieve both operational efficiency and lower costs through outsourcing to third-party logistics providers (3PLs), even better. End …
The retail market in Greater Rochester has been active for the first three quarters of 2012, and we anticipate steady demand into 2013. The most active retailers in the market have been national restaurant chains, dollar stores, retail bank branches, medical (urgent care) and gas stations. Overall market vacancy is currently 7.47 percent with the southeast market at 4.77 percent, and the northwest market at 5.06 percent, showing the tightest vacancy levels. The southeast market includes both the 1.3 million-square-foot Eastview Mall corridor in Victor and the Monroe Avenue corridor in Pittsford. The Monroe Avenue corridor is centered at Pittsford Plaza and Wegmans’ flagship grocery store. The southeast market boasts the highest household income demographics in the region, which has attracted retailers like Trader Joe’s, which is opening in Pittsford Plaza in October; The North Face, currently under construction across from Eastview Mall; and Von Maur, which is currently under construction and replacing The Bon Ton at Eastview Mall. Benderson Development is completing construction of the small shop space at Victor Crossing, a power center anchored by a Walmart Supercenter and Kohl’s on Route 96 just south of Eastview Mall. New tenants include HomeGoods, PetSmart, Dollar Tree, and Famous Footwear. …
The industrial market has remained very stable over the past four years in New York’s Capital District, and promises a strong pattern of growth for the next six to 12 months. As the office market struggles in the central business district, 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. With Upstate New York making a name for itself in the nanotech industry, a great deal of national attention has been drawn to the region, which had previously been characterized as not being nationally significant. In addition to the tech industry, national distribution groups have committed to and/or focused their site searches in the Capital District. One of the area’s most significant industrial deals this year involved a local manufacturer making a 15-year lease commitment to remain in the region, by tripling its footprint in a single-tenant building of 140,000 square feet. This commitment to the Albany marketplace was a further sign of the support from the state’s economic development officials, the abundant availability of the appropriate workforce, and the distribution characteristics of the region. At full capacity, this facility will …