Industrial demand in New Jersey has picked up dramatically over the past year, in tandem with a clear shift in corporate America’s mindset to get serious about dealmaking while conditions remain favorable. During the market downturn, tenants with two or three years left on their leases frequently tested the market, making offers that expected property owners and developers to assume the trailing liability of existing lease terms. Most owners simply were not willing to do that, and deals regularly fell apart or remained stagnant. Beginning in mid-2010 and through the first three quarters of 2011, we have experienced a promising increase in real commitments. In fact, during the first six months of this year, some 11.1 million square feet of new industrial leasing took place in Northern and Central New Jersey — a 74 percent year-over-year increase. This included 12 transactions over 100,000 square feet during the second quarter alone. The largest involved Wakefern Food Corporation’s impressive 1 million-square-foot lease at 8001 Industrial Ave. in Carteret. Why the jump? While we are seeing the stock market decimated what seems like every other week, corporate America for the most part is flush with cash. At this point, companies have extracted about …
Northeast Market Reports
The Pittsburgh retail market remained tight throughout the third quarter of 2011, maintaining a vacancy rate at just over 5 percent. Absorption within the market edged close to 200,000 square feet, with new big box and specialty retailers entering the region. The influx of grocery and discount chains continued with the opening of Trader Joe’s in Pittsburgh’s South Route 19 submarket. The 12,000-square-foot specialty market is the company’s second location in the area. In addition, Fresh Market confirmed its entrance in the Pittsburgh region just down the street from Trader Joe’s. The high-end specialty grocer has purchased a former Roth Carpet site and plans to demolish the existing building in preparation for a new 18,000-square-foot store. Construction is scheduled to commence in the spring of 2012. Big box retailers ALDI, Bottom Dollar, Walmart and BJ’s Wholesale Club are scouting the area for additional locations as well. Bottom Dollar Foods has taken occupancy of more than 60,000 square feet year-to-date and has approximately 40,000 square feet in two new locations scheduled to open in early 2012. The discount food chain prefers to anchor strip centers or neighborhood shopping centers within the area’s suburban submarkets. Though development activity has been largely focused …
The Boston apartment market is on fire. As a result there is a vast amount of equity, developer interest, and investor interest focused on the Greater Boston Market. What does this mean for the future of the Greater Boston Apartment market? First a matter of definition, the metro Boston market encompasses all towns within Interstate 495 (Boston’s second beltway) and inwards and, therefore, does not include Central and Western Massachusetts, New Hampshire nor Rhode Island. The overall vacancy was 4.2 percent in second quarter 2011 (REIS: Metro Boston submarket). Class A property has seen the greatest rent growth, 1.5 percent in Q2 2011, alone. However, Class B property has maintained a lower vacancy at 4.5 percent during Q2 2011, dropping from 5.9 percent. The city of Boston has exhibited the most rental growth of any submarket of all the Greater Boston submarkets. In the city, rent is up 6.5 percent over the first half of 2011 with rents exceeding $4 per square foot and an average rent of $4,400 per unit based on a recent ARA Class A Survey. These rents are attracting developers and capital. The most recent development start is the 187-unit Avalon Exeter Apartments at the Prudential …
Proving its historic resilience once again, a hale and hearty multifamily investment market continues to outpace other commercial real estate sectors in the wake of the latest economic dip. Thanks to an ailing housing market that doesn’t seem to have a tangible cure in the foreseeable future, the “new normal” in residential living is apartment rentals. Strong leasing fundamentals; 1950s-era, bank-friendly interest rates; and the lack of other risk-averse investment options have contributed toward a dramatic increase in sales velocity along the highly sought-after South/Central/Northern New Jersey corridor. Demand is unrelenting. Just 18 to 24 months ago, many investors were sitting on the sidelines waiting for multifamily properties to follow in the footsteps of other hard-hit commercial real estate assets, including office, non- grocery-anchored retail and industrial, where vacancies skyrocketed and lending came to a virtual standstill. These fears had little-to-no impact on multifamily properties, which possess certain inherent “recession-proof” characteristics. Rental living provides a viable, affordable alternative to people who are concerned about their long-term employment outlook, cannot qualify for a single-family residential home loan or are displaced due to rising foreclosures or natural disaster, such as flooding in the aftermath of Hurricane Irene. As the economic recovery continues …
In 2011, the Boston commercial real estate market has shown some signs of life, with most movement attributed to small and medium-sized companies. 2012 appears to promise much of the same, with the greatest demand coming from the 5,000- to 25,000-square-foot users who are growing. Meanwhile, larger tenants are still active in the market but taking less space, effectively offsetting what smaller companies are growing into. The largest users in the Financial District are law offices and financial services firms, and the downsizing in these industries has resulted in increased vacancies. In addition, major businesses have become more efficient users of office space (fewer administrative employees per attorney, more “hoteling,” equal sized offices for all, etc.) and more conservative in growth projections, resulting in less space demand for companies when they do grow. Over the last 12 to 18 months, Boston’s top commercial real estate markets have shifted. The Back Bay area has started to run away from the Financial District as the preferred submarket in Boston. Its appeal is shared between employers and employees alike, with a “24/7” neighborhood feel, new retail shops and restaurants and easy access from the Pike for commuters. These qualities have helped the Back …
Operations will remain tight in the urban core as retailers expand to premier locations in Boston, while stagnant building activity and an uptick in demand will allow operators to backfill under-utilized space in the suburbs. As businesses expand payrolls in the Financial District, residents will migrate toward major employment hubs and entertainment districts in surrounding areas. As a result, global and national retailers will expand or relocate from older centers in peripheral neighborhoods to newer, redeveloped infill properties in Boston. Prime shopping districts in Back Bay, including Newbury Street, Commonwealth Avenue, and Boylston Street will garner the most consideration this year as tenants lease quality, street-level store fronts with high visibility. As available space shrinks in the submarket, vacancy will drop to a metrowide best of 3.4 percent this year, giving owners enough leverage to raise rents. Meanwhile, muted construction and large lease signings will support positive net absorption in third-ring suburbs such as Bristol County and Merrimac Valley submarkets, reducing vacancy an average of 100 basis points this year. Solid retail sales and job growth encouraged tenants to move forward with expansions, underpinning a 60-basis-point decrease in vacancy over the past year to 6.5 percent. In the prior 12 …
New Hampshire has a big story to tell: a lower than average unemployment rate, low poverty and crime rate, high median household income and a well-educated population. We are among the healthiest and safest states in which to live. All of these factors contribute to continued population growth which will drive the goods and services sectors. New Hampshire also benefits from its proximity to Massachusetts and Maine as well as Canada whose shoppers are eager to take advantage of the absence of a sales tax. Prior to 2009, the Northern New England retail market was vibrant and active. However, retail expansion in the market came to a halt in 2009 and 2010 while the economy tried to dig itself out of stagnation. This year has seen a moderate uptick in activity both from a local and national perspective. Demand for retail space in northern New England is slowly returning. For the past several months, national retailers have been focusing on major metropolitan markets rather than peripheral markets. If retailers have a limited open to buy, chances are smaller cities such as Portsmouth may not be on their initial target list for expansion. However, quality retail space is continually being absorbed. …
The commercial real estate market in Fairfield County reflects the issues affecting the greater national economy. Due to the fundamentals of commercial real estate and how the marketplace functions, the region will be in a state of malaise for the foreseeable future. The marketplace has bottomed, however, and will improve over time. From 2005 through mid 2008, employment was increasing, companies were expanding; there was competition to put money to work through loans and investments. Capital formation grew at a torrid pace as the national capitalistic system sought higher and higher returns in a market where the risk seemed to diminish each month. As that feel-good locomotive hit the wall in 2008, there were tremendous lay-offs and all capital sources that had been pushing money at the real estate asset class evaporated. In the first three quarters of 2009, tenants stopped conducting real estate business almost altogether. Even tenants driven by lease expirations often opted for short-term renewals due to the cataclysmic uncertainties that decision makers were facing. Additionally, tenant renewals were driven by give-backs of space as companies needed less space due to fewer employees. Companies took space proactively in 2007 because they anticipated hiring more employees, but they …
Demand for industrial space remains moderate in Northern and Central New Jersey. People are, undoubtedly, out in the marketplace, but much of our regional activity ties to lease renewals. Tenants facing term expirations are opting to remain in place, reflecting the “wait and see” approach that so many companies have chosen in this tough economic climate. Relocations almost always involve a flight to quality, with tenants taking advantage of opportunities to land attractive deals for Class A space. Deals today are being made at aggressive rental rates. As a result, available Class A space, especially in the Exit 8A submarket, has seen some absorption over the past 12 months. Across all submarkets in Northern and Central New Jersey, renewal activity comprises the bulk of leasing activity. Although year-to-date leasing totals are up from a year ago by approximately 1.2 million square feet, vacancies have held steady during the past 12 months. At the end of 2010’s third quarter, the overall Northern and Central New Jersey vacancy rate rested at 11.3 percent. That figure is identical to the rate recorded at this time last year. The average direct triple-net rental rate for Northern and Central New Jersey was $5.84 per square …
With a strong economic foundation based upon the education, healthcare and pharmaceutical industries, the greater Philadelphia market has long been revered as one of the most stable markets in the United Statesthat isunaffected by the manic swings often experienced by other major markets. Even at the height of the recession, savvy retailers remained relatively active in top-tier, well-positioned segments of the market. In fact, several used the recession to position themselves more strategically and affordably in tough-to-penetrate areas, minus the frenzied competition they faced before the downturn. The black eye created by the closures of Circuit City and Linens ‘N Things, two of the most high-profile retail bankruptcies of the recession, has seemingly healed faster here than elsewhere,as many of the junior anchor spaces they vacated are getting absorbed by several electronics retailers. hhgregg, which had 12 simultaneous openings in the region on May 20, 6th Avenue Electronics and P.C. Richard & Sons are the most conspicuous of said retailers. hhgregg is making its first retail foray into the Northeast while the more regionally oriented 6th Avenue Electronics and P.C. Richard & Sons found themselves conveniently based in the New York metropolitan area and able to take advantage of these …