Northeast Market Reports

Three Key Trends to Monitor in Philadelphia’s Multifamily Market

by Taylor Williams September 11, 2020

By Christine Beechan, area vice president, Morgan Properties If there’s one certainty about the unusual year that is 2020, it’s that COVID-19 has significantly impacted every industry across the globe. For apartment owners and operators, we’ve entered uncharted territory in terms of changing renter demands, unconventional leasing methods and new operational procedures. Consequently, it’s especially important right now for apartment professionals to understand the complexities of the current state of the market and where it’s heading. As 2021 is fast approaching, here are three key trends we can expect to see in the Philadelphia multifamily market for the remainder of 2020 and into the new year. Demand Remains Stable When the pandemic initially hit, we noticed a decrease in leasing because Pennsylvania was under strict orders to shelter-in-place. Because of this uncertainty, people wanted to see how the pandemic would shake out and ultimately decided to stay put, affecting markets across the nation. However, as those restrictions were lifted and the economy started to stabilize, we noticed people felt more comfortable moving into new units, which is typical during the summer season prior to school commencing. Unlike most cities, both urban and suburban parts of Philadelphia have seen accelerated growth …

September 11, 2020

Industrial Market Reports New Jersey Northeast Northeast Market Reports

New Jersey Industrial Market Displays Remarkable Resiliency Amid Pandemic

by Taylor Williams September 4, 2020

By Mark Russo, director of research, Newmark Knight Frank The industrial markets of Northern and Central New Jersey have held strong thus far in 2020 as heightened e-commerce activity has offset the disruption caused by COVID-19. Total e-commerce sales rose by 31.8 percent in the second quarter relative to that period in 2019, according to data from the U.S. Department of Commerce. While demand for retail and office space has been negatively impacted, steady rent growth and stable vacancy highlight the resilience of the industrial sector. Industrial tenants moving into new deliveries have helped generate 4.2 million square feet of positive net absorption year-to-date. Vacancy currently averages 4.3 percent, down from 4.5 percent a year ago. Meanwhile, the average asking rent grew by 2.1 percent over the past year to a record mark of $9.20 per square foot. Online Shopping Fuels Leasing Social distancing measures and store closures caused by the pandemic have accelerated the adoption of online shopping. This has led to increased demand for logistics and distribution space among e-commerce companies. In fact, e-commerce deals have accounted for 75 percent of industrial leasing activity in Northern and Central New Jersey since April, compared to a quarterly average of …

September 4, 2020

Market Reports Northeast Northeast Market Reports Office Pennsylvania

Philadelphia Office Market Enters ‘Wait-and-See’ Mode

by Taylor Williams September 1, 2020

By Tom Weitzel, managing director, JLL The Philadelphia office market at the moment is running in place, which is to say that there is certainly energy being expended, but it is going nowhere fast. Tenants and landlords alike are partnering with real estate experts to navigate this challenging time. However, while office users evaluate businesses and study workforces, the benefit of making a decision has not yet outweighed the downside of making a wrong decision, so most users are adopting a “wait-and-see” approach. Tenant Perspective Tenants are finding it challenging to make long-term decisions about their office spaces given the lack of clarity in the future. Business leaders and executives are tasked with considering factors such as health and safety, productivity, profitability and overall employee morale on a daily basis as they evaluate their physical office space usage during COVID-19. Throughout the region, executives continue to balance health and safety concerns with operational needs as they advance office re-entry plans. They are also assessing the current productivity of their employees compared to that at the beginning of the pandemic. Many companies that we have spoken with have cited declining productivity and creativity from their employees. At the same time, these …

September 1, 2020

Industrial Market Reports New Jersey Northeast Northeast Market Reports Pennsylvania

Philadelphia, Southern New Jersey Industrial Market: Everything Investors Need to Know

by Taylor Williams August 28, 2020

By Marc Isdaner, senior managing director, principal, Colliers International; and Ian Richman, senior managing director, Colliers International Strong job and population growth in recent years have caused the Philadelphia/Southern New Jersey industrial market to continually rise on the radars of both investors and developers. As the nation battles COVID-19, we see demand for industrial space growing as more users look to service last-mile customers in densely populated areas. This market is no exception. With the right guidance and counseling, investors can achieve strong returns here, even as variables like user demand and land/construction costs continue to rise, bringing valuations and sales prices along with them. Projects Get Bigger We continue to see developers take down large tracts near major thoroughfares in this region, oftentimes building on speculative bases. Examples of such projects are Mansfield Logistics Park, a 960,000-square-foot, two-building spec development by Clarion Partners off Interstate 295 in Burlington County that is nearing completion; and The Cubes at East Greenwich, a two-building spec development located off I-295 in Gloucester County. The latter project is being developed in an area that was largely inactive until 2018, as land sites and established industrial parks such as Pureland were essential built out. Scout …

August 28, 2020

Company News Market Reports New Jersey Northeast Northeast Market Reports Retail

Jersey Mike’s Sandwich Chain Invests in Delivery, Pick-Up

by Taylor Williams August 18, 2020

By Alex Patton During the business lull caused by the outbreak of COVID-19, fast casual sandwich chain Jersey Mike’s made news by rolling out a $150 million nationwide retrofit project for its stores. The project will include aesthetic and comfortability upgrades for 1,700 franchise stores, as well as expanded functionality for delivery and pick-up services — all paid for by the company. “Paying for the retrofits ourselves is a tactical move on our part,” says Peter Cancro, CEO of Jersey Mike’s. “Whenever you put money in your business, it always comes back. It’s an investment into our people — every dollar we put into the project we’ll get back in loyalty and trust from our franchise owners and our customers.” The Manasquan, New Jersey-based company operates approximately 1,750 stores across 48 states and plans to expand to 2,000 by the end of 2021. Though the company is growing its store count quickly, it is still a relatively small player in the national sandwich game. By comparison, Jersey Mike’s two closest competitors, Subway and Jimmy John’s, operate 24,000 and 2,800 stores in the United States, respectively. Amid state-mandated temporary closures of retail stores and restaurants, Jersey Mike’s was able to continue …

August 18, 2020

Market Reports Northeast Northeast Market Reports

Northeast Lenders Eye Fourth-Quarter Recovery

by Taylor Williams August 11, 2020

By Taylor Williams Decreased acquisition activity across virtually all asset classes is among the most visible impacts that COVID-19 has had on commercial real estate, but capital markets professionals say there’s reason to believe deal volume will rebound sharply toward the end of the year. For most property owners, the net result of the economic disruption and job losses has been a decrease in cash flows. With net incomes faltering or dissolving for property owners, many prospective investors have temporarily hit the pause button on new acquisitions. As the pandemic has unfolded, bureaucracies have taken action. The federal government appropriated hundreds of billions in small business loans and stimulus payments to taxpayers, and state coffers have been gutted by disbursements to the unemployed. While this activity was designed to stimulate consumer spending and help businesses stave off permanent closures, it has done little to fuel sales of commercial properties. Numbers Tell All Real Capital Analytics (RCA) tracks investment sales activity across the country, including in nine major markets in the Northeast region. The New York City-based research firm recently released its findings for the second quarter. Per RCA, the total volume of commercial sales during this period clocked in at …

August 11, 2020

Market Reports Massachusetts Northeast Northeast Market Reports Retail

Wanted: Essential, Durable Retailers in Boston

by Taylor Williams August 7, 2020

By Alex Patton Retail real estate investors in Boston are cautiously evaluating the risk profiles of tenants even as businesses reopen following temporary closures due to the COVID-19 pandemic. The emerging consensus is that until a vaccine is developed to safely treat the virus, the safest investments are tied to essential tenants with reliable incomes. That short list includes grocers, drugstores, home improvement businesses and liquor stores. Like the rest of the country, all nonessential retail businesses in Massachusetts were forced to close temporarily in early March, for what was originally expected to be a short period. After several weeks, the commonwealth’s government implemented a phased reopening system that allowed some retail businesses to resume operations. However, after months with significantly reduced income, a number of small retailers are declaring bankruptcy and permanently closing stores to save money. “The underlying question that permeates the retail investment industry, as an investor or a lender, is how much of the income is durable? In other words, which retailers are going to survive?” asks James Koury, senior managing director of investments at the Boston office of Institutional Property Advisors (IPA). “A vaccine would be a game-changer, but we can’t know if it will …

August 7, 2020

Market Reports New Jersey Northeast Northeast Market Reports Office

Will Social Distancing Lower Demand for Office Space in Northeast?

by Alex Patton June 9, 2020

The outbreak of the COVID-19 virus has led to an economic crisis that is forcing office users across the region to make tough choices to continue their operations. While New York has been the epicenter of the virus, reporting nearly a third of the more than 1 million confirmed cases in the entire country, companies across the region have been forced to furlough employees and reassess their short-term needs for space. The nature of traditional office work was already changing before the virus, as mobile technology has allowed more flexible collaboration from home and co-working offices. Lessons learned from the virus, including the need for social distancing, will carry into whatever market conditions follow. Some companies may desire larger office spaces to allow wider distances between employees, while other may forgo physical space in favor of the mobile model. As a result of the health crisis, office brokers are working to help their landlord and tenant clients find common ground as they tentatively move forward with leasing agreements. Northeast Real Estate Business recently caught up with three veteran brokers to gain their insights into how the virus has impacted their office markets. Below are edited responses from Joshua Levering, senior …

June 9, 2020

Market Reports Northeast Northeast Market Reports Retail

Retailers, Landlords Adjust to Pandemic

by Alex Patton June 2, 2020

The impact of COVID-19 has forced retailers, restaurants and service providers in the Northeast to improve their digital channels and adapt social distancing policies to continue serving customers. With retailers struggling to pay rent, landlords could find mutual benefit in reaching a compromise with existing tenants before temporary closures become permanent. Unfortunately, for many small businesses the virus has activated a Darwinian battle of the fittest among retailers with primarily physical channels. Meanwhile, e-commerce giants like Amazon are thriving in market conditions tailored to their already digital-focused business plans. Grocery stores and pharmacies have also found themselves to be arguably the most essential of services during the outbreak, as many have struggled to keep fresh food, toilet paper and other supplies on their shelves. But even after medical professionals and politicians give the “all clear” to reopen the economy completely, it is still unclear when consumers will feel comfortable returning to their favorite stores and restaurants. Northeast Real Estate Business recently caught up with three real estate professionals to gain their insights into how the virus has impacted their local markets. Below are edited responses from Ronald Dickerman, president and founder of Madison International Realty, which provides equity capital to …

June 2, 2020

New Jersey Northeast Northeast Market Reports Office

Office Developers Renovate, Repurpose Outdated Assets in Northern New Jersey

by Alex Patton April 28, 2020

From start-ups seeking flex space to major corporations that are expanding or relocating an entire office, finding a modern office space in the northern New Jersey commercial market is always a challenge. Barbara Gross, Sheldon Gross Realty Overall, it’s a very mature environment, with many older structures and corporate parks lining the highways, and with limited new development. As an example of the resultant complexities, let’s look back to the 1980s and ’90s, when the Route 280 corridor (primarily in western Essex County) was bustling. Office parks had few vacancies, and rental rates were among the highest in the state. Until relatively recently, only a few companies owned the majority of these buildings, thereby “controlling” who went where and at what rental rate. But over time, these owners have been selling the individual buildings in parks to a variety of new owners, resulting in a more competitive marketplace. It’s refreshing to see the new owners investing in renovations and adding new amenities. However, responding to a younger generation coming to or returning home to New Jersey and demanding greener, 24/7 communities, developers are demolishing some of those older office buildings and parks. Projects are before planning boards now that would …

April 28, 2020

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