Northeast Market Reports

Not Urban, Not Suburban: Why Surban Living is Here to Stay

by Taylor Williams March 25, 2021

By Lenny Tartamella, COO of Larken Associates Since the moment the first subdivision was built, the debate defining the residential and multifamily development process has been centered around the core question of, “Where do people want to live?” As we look to answer this question in 2021, the answer is not as clear as it seemed only several years ago. It is obvious that the living preferences of millennials — those born between 1981 and 1996 who at 70 million now represent the largest segment of the U.S. adult population — and the generation after them, Gen Z, will be a key piece of the answer. Similarly, and not to be forgotten when we are answering this question, the preferences of seniors and those nearing retirement age will also factor heavily into how our multifamily communities continue to evolve. While the differences between those two groups already make answering the core question behind multifamily development difficult, the COVID-19 pandemic and its disruption to how we live, work and play have only added further complexity to the answer. However, as we move towards a post-pandemic future of a live-work-play lifestyle, a new word is entering our lexicon that precisely defines where this …

March 25, 2021

Market Reports Northeast Northeast Market Reports

Deal Volume Will Resurge in 2021, Say Northeast Industry Professionals

by Taylor Williams March 19, 2021

By Taylor Williams It shouldn’t come as a surprise that most commercial real estate professionals expect a year that follows a global pandemic to be an improvement from the previous one. But the anticipation of a drastically strong rebound across an entire region seems a bit unusual, especially given that mass vaccination and herd immunity are still months away, ensuring that much of 2021 will to some degree be marked by similar COVID-19 headwinds to property types like office, retail and hospitality. Yet in the true spirit of the commercial real estate industry, optimism is prevailing, at least according to the results of Northeast Real Estate Business’ annual forecast survey of brokers, developers/owners/managers, as well as lenders and financial intermediaries. The survey encompassed approximately 150 professionals throughout the region across these three groups. Based on majority responses, brokers expect leasing activity to pick back up to varying degrees across all asset classes. Owners see major opportunity to grow their portfolios, particularly with regard to distressed assets whose pricing levels have come down due to occupancy and cash flow concerns. Piggybacking on the elevated opportunity for more investment volume are greater opportunities for lenders to finance new developments and acquisitions — …

March 19, 2021

Industrial Market Reports Massachusetts Northeast Northeast Market Reports

Strong Fundamentals Drive Capital into Boston Industrial Market

by Taylor Williams March 16, 2021

By Brian Pinch, managing director, Newmark On a national level, the industrial market continues to perform well amidst the coronavirus-induced market correction that has impacted other asset classes. Industrial fundamentals ended 2020 on solid footing, with outsized demand, rising rents and a healthy supply pipeline. Despite the impacts of COVID-19, key logistics hubs like Los Angeles and the Inland Empire are doing well, as are smaller metros like Boston. The continued shift towards e-commerce and online shopping, as well as a greater emphasis on strong distribution networks and supply chains, are driving activity within tertiary markets as well. Combined with sustained cap rate compression, such positive fundamentals have led to increased investor interest in the industrial asset class. Capital that was previously allocated for other property types is now flowing into the industrial market, and low interest rates are giving buyers increased purchasing power. As a result, pricing for industrial product continues to climb across many metros, including greater Boston. In fact, greater Boston’s industrial market maintains one of the most dynamic investment landscapes in the country, as historically tight vacancies and rapidly rising rents attract record levels of capital. Though the metro-wide vacancy rate is below 6 percent — …

March 16, 2021

Broadstone-Watch-City-Waltham-Massachusetts

Market Reports Massachusetts Multifamily Northeast Northeast Market Reports

Suburban Submarkets Will Lead Boston Multifamily Market’s Recovery in 2021

by Taylor Williams February 12, 2021

By Steve Callahan Jr., vice president of business development, Callahan Construction Managers Despite the turmoil caused by the COVID-19 pandemic, Boston has experienced significant job growth over the last 12 to 18 months in the life sciences, healthcare, technology and finance sectors. The health of these industries will require that employees in these fields have access to much needed, reasonably priced housing as companies continue to grow and build, creating more local jobs. Demand for rental housing over the past few years has been mostly driven by millennials who work in these fields. This trend is expected to continue as young professionals in these sectors no longer need to commute to the office by virtue of the pandemic forcing many companies to adopt work-from-home programs. In addition, these renters are seeking to upgrade to larger units with more modern amenities and access to outdoor spaces and activities. More than 7,100 units were delivered last year in the Boston area, only slightly less than the cyclical high of nearly 7,500 apartments added in 2018. However, most projects that were either started or delivered in 2020 were aimed at lifestyle renters in or near Boston’s city center. This could spell trouble for …

February 12, 2021

Industrial Market Reports New Jersey Northeast Northeast Market Reports

Demand-Build-Repeat Cycle Characterizes Southern New Jersey Industrial Market

by Taylor Williams February 8, 2021

By Scott Mertz, SIOR, president, NAI Mertz The industrial sector has proven to be the only entity with innate immunity to the coronavirus. The onset of the virus has had nary an impact on the soaring demand, rising lease rates and rapid pace of new construction in the major industrial markets throughout the nation. If anything, the increased reliance on home delivery due to stay-at-home orders has only elevated the need for well-located warehouse space from e-commerce companies. That’s been the story in Southern New Jersey, where demand remains high and inventory is in short supply. The vacancy rate has dropped below 4.5 percent, and market rent has been on a steady ascent, standing at $6.55 per square foot at the end of 2020. With more players than open seats, it’s no surprise that developers are seeking to build on any viable plot of land in the region. Construction start activity reached a crescendo in the third quarter of 2020 with 4.2 million square feet entering development. All told, there is 7.1 million square feet of new construction on the way in Southern New Jersey. Many of these facilities will be delivered to market fully occupied. Over the past five …

February 8, 2021

Market Reports New York Northeast Northeast Market Reports Retail

NYC Retail Market Embraces Hard Change on the Fly

by Taylor Williams January 12, 2021

By Kristin Hiller and Taylor Williams Retail and restaurant reopenings this fall gave a modest boost to the New York City retail market in the third quarter. But even with the easing of some operational restrictions, business activity remains diminished in a city known for its hustle and bustle. Both retail tenants and landlords have had to regroup and quickly adapt to the curveballs thrown at them by COVID-19 over the past nine months. While retail and restaurant users in some areas are finding more success than others, the market as a whole has been characterized by falling rents and a pronounced shift to delivering goods, services and experiences through different channels. In order to get a better handle on current market conditions and the outlook for 2021, Northeast Real Estate Business spoke with retail real estate experts in New York City, Northern New Jersey and surrounding markets. Submarket Fortunes Vary Without question, the city’s retail market is still suffering from a lack of office workers and a reduced tourist population as a result of COVID-19. According to recent data from CBRE, through September, the average office re-occupancy rate in Manhattan was 11 percent, meaning that roughly 89 percent of …

January 12, 2021

Market Reports New Jersey Northeast Northeast Market Reports Office

Will 2020 Be A Year to Remember or Forget for the New Jersey Office Market?

by Taylor Williams January 6, 2021

By Jonathan Glick, executive vice president, Sheldon Gross Realty Projecting future trends is always challenging, particularly when you’re attempting to do it during a global pandemic. But to date, several promising signs suggest that New Jersey’s office market is moving in a positive direction —sluggishly and bumpily, perhaps — but in an encouraging direction nonetheless. Newly delivered projects can provide insight on where the Garden State’s office market is headed in terms of geography, design, functionality and usage. We offer several examples of 2020 deals that help illustrate these trends. Sheldon Gross marketed and brokered the sale of a two-story 13,000-square-foot office building in Cranbury that featured an appealing location, just off exit 8A of the New Jersey Turnpike. The structure had been for sale and vacant for two years, but its out-of-state owner was willing to wait until a fair market offer materialized, which it did just prior to the COVID-19 outbreak. But with the pandemic unleashed on the market, all communication and negotiations ceased. By May, the prospective purchaser had withdrawn from the transaction. It wasn’t until September that a new deal was negotiated with a buyer that intended to occupy most of the building, rather than sharing …

January 6, 2021

Market Reports Northeast Northeast Market Reports

Commercial Real Estate Trends for 2021: Building Documentation Enters the 21st Century

by Taylor Williams December 23, 2020

By Kurt Yeghian, CEO, and Jared Curtis, president, Existing Conditions Surveys Commercial and institutional real estate developers in the Northeast have one priority mantra for 2021: no more costly surprises. With property deals and development projects resuming in an industry badly scarred by the coronavirus pandemic, the CRE community wants certainty above all — certainty in determining the value of their assets, in acquiring struggling portfolios and in repurposing vacant spaces and structures. As-built conditions form the basic DNA of any development. Nowhere are those specifics more suspect than in the Northeast, where the only record of square footage, dimensions, walls, floors and other structural features are blueprints created decades ago by architectural interns with tape measurers or surveyors relying on low-tech equipment. Property owners encounter inaccurate blueprints more often in the Northeast than in other parts of the country, but it’s a common problem in any region with older development. Smart players in the development community are avoiding expensive surprises — and sometimes uncovering hidden value — by turning to 21st century building documentation techniques. These practices rely on the same digital reality capture technology that has fueled advancements in robotics, self-driving vehicles and drones. Our experience in this …

December 23, 2020

Market Reports Northeast Northeast Market Reports

COVID-19 Catalyzes Innovation in Marketing, Delivery of Real Estate Services

by Taylor Williams December 18, 2020

By Natalie Hwang, founding managing partner of Apeira Capital Advisors In the 1920s, President Calvin Coolidge made the saying famous that the business of America is business. Now, for the real estate sector in the age of COVID-19, the business of real estate is innovation. To build value in the pandemic economy, real estate companies need to find new modes of distribution, facilitated by technology, to connect with consumers, partners, tenants, investors and other key stakeholders. Once upon a time, and not all that long ago, bricks and mortar were king. Today, the COVID crisis has sharply accelerated online shopping and upended our traditional dependence on physical real estate as an exclusive distribution point for content, goods and services. This trend is nothing new, as businesses reliant on public contact have been casualties of tech innovation for decades. Long before the pandemic hit, e-commerce was displacing retail, robots were replacing warehouse workers and an erosion of labor’s bargaining power was placing downward pressure on service-sector wages. COVID-19 has only expedited the trajectory of these market participants and revealed the weaknesses of businesses that depend mainly on in-person contact. The urgency and suddenness of the lockdowns earlier this year demonstrated how …

December 18, 2020

Affordable Housing Market Reports Multifamily Northeast Northeast Market Reports

Creative Solutions Expand Affordable Housing Supply in Northeast Markets

by Taylor Williams November 23, 2020

By Taylor Williams A severe shortage of affordable housing that has been building for years and may soon be exacerbated by the expiration of the federal eviction moratorium is forcing developers to be more aggressive and innovative in terms of how they add much-needed supply in dense, high-growth markets. According to a 2020 report by the National Low Income Housing Coalition, when it comes to housing that American renters whose incomes levels are at or below 30 percent of their area median income (AMI) can afford, the United States comes up about 7 million units short. On average, for every 100 extremely low-income renter households in the country, there are only 36 affordable housing units. In addition, there is considerable overlap between renters whose incomes dictate that they seek housing that has been designated as affordable or workforce and industries that have been hard hit by COVID-19, most commonly the retail and hospitality sectors. The federal mandate that prohibits evicting renters who cannot pay rent due to COVID-related job losses has served to keep units occupied and the supply-demand imbalance from worsening — for the time being. Rental collection rates for affordable housing properties have not fluctuated much during prime …

November 23, 2020

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