New Jersey

Pharmaceutical Sector Dominates Suburban New Jersey Relocation Activity

by Jaime Lackey June 29, 2016

By many measures, 2015 was Northern New Jersey’s best year for its office market in quite some time. Tenants leased 11.7 million square feet, the strongest annual activity since 2003. Business confidence improved and companies showed a growing willingness to invest in their workforce and workplace. The number of larger leases dropped off a bit in 2015, though, as many of the largest space searches were fulfilled and fewer quality space options remained in some of the most sought after areas. Tenants have no shortage of options in much of Morris County and Newark, but steady leasing in Metropark and Jersey City’s waterfront has pushed availability below 15 percent. Smaller and mid-sized tenants can still find space in these locations, but there are far fewer big blocks of quality space remaining. There were fewer larger leases in 2015, but tenants were very mobile: relocations outnumbered renewals by two to one with 12 firms opting to move and six renewing. An analysis of larger leases (deals over 40,000 square feet) signed since 2009 shows that larger tenants renewed slightly less than 50 percent of the time (81 firms moved and 75 renewed). From a supply perspective, market conditions have been ideal …

June 29, 2016

Market Reports New Jersey Northeast Northeast Market Reports Retail

How New Jersey Retail Gains After Losing A&P

by Jaime Lackey May 12, 2016

The dissolution of The Great Atlantic & Pacific Tea Company, better known as A&P, after 156 years in business was not a complete shock — they had, after all, applied for bankruptcy protection once before already this decade. However, the company and its many legacy brands occupied 296 stores in the United States and Canada at the time of liquidation, which meant a seismic shift was bound to occur in those real estate markets. In Northern and Central New Jersey, the resulting repositioning of A&P’s highly-coveted retail properties is proving to be an unexpected positive for a variety of reasons. For one, A&P occupied space in many of their shopping centers for decades, meaning they were paying less than market rent. Landlords are now able to negotiate new deals at higher rents, resulting in an important market correction. This is also an opportunity to reassess the makeup of centers and figure out not only what categories are missing but also what use groups will best drive traffic and stabilize the centers. Owners are able to repurpose the anchor spaces to accommodate smaller users. For example, on Route 35 in Middletown, the former Pathmark has been subdivided into a TJ Maxx …

May 12, 2016

Industrial Market Reports New Jersey Northeast Northeast Market Reports

E-Commerce, Traditional Sectors Create Momentum for N.J. Industrial Market

by Jaime Lackey May 4, 2016

The continued emergence of the e-commerce sector, and continued healthy deal volume among New Jersey’s “traditional” industrial tenants are generating significant momentum for the state’s industrial market. This includes the food, retail and consumer products industries. Strengthening fundamentals have reinforced this theme consistently over the past 24 months, or longer. During 2015, robust demand for modern warehouse space fueled the markets along the New Jersey Turnpike, pushing the state’s warehouse and distribution vacancy to a 15-year low (6.4 percent). This marks a significant five-year drop from a peak of 11.2 percent at the close of 2010. Additionally, the state’s industrial net absorption reached an all-time annual high (12.5 million square feet). Of this, 84 percent occurred within warehouse/distribution product. Big-box demand continues unabated. Currently, we are tracking multiple 1 million-square-foot requirements — the most we’ve seen in many years. Additionally, and importantly, the heightened focus on last-mile delivery is drawing tenants to small and mid-size infill sites. These range from close-in locations providing immediate access to New York City and Philadelphia, to densely populated hubs all along the New Jersey Turnpike. As vacancy rates approach all-time lows and available inventory tightens, an increasing number of deals involve Class B assets. …

May 4, 2016

Market Reports New Jersey Northeast Northeast Market Reports Retail

New Jersey Retail Market Sees Continued Strength

by Jaime Lackey February 17, 2016

Despite a bump in big-box inventory in the wake of the A&P bankruptcy, the New Jersey retail real estate market continues to gain strength. Leasing activity remains robust, with strong suburban markets augmented by heightened urban activity. The inventory of properties for sale remains tight, while new development is highlighted by large-scale projects. This year’s major headline has been A&P’s bankruptcy. The sell-off of the grocer’s stores is ongoing, with Stop & Shop and Acme key bidders. Still, the stores remaining unsold are forcing landlords to think outside the box and/or redevelop their shopping centers, providing the opportunity to improve tenant mix and increase lease rates. Meanwhile, these immediate opportunities could slow down nearby projects in the works, including developments that could have come out of the ground in 2016 or 2017. Hot markets include Paramus, a perennial favorite. Also in the north, the redevelopment of Wayne Town Center has attracted Costco, Nordstrom Rack, Saks Off 5th, Dick’s Sporting Goods, and ULTA. In Bridgewater, Whole Foods signed a lease at Bridgewater Crossing, and negotiations are progressing with several major off-price and full-price specialty retailers. In Union County, Clark Commons opened with Whole Foods, LA Fitness, Home Goods, Michaels, Petco, ULTA, …

February 17, 2016

Market Reports Multifamily New Jersey Northeast Northeast Market Reports

Northern New Jersey Multifamily Continues Momentum, Driven by Employment Growth

by Jaime Lackey February 10, 2016

New Jersey and New York City employers have been expanding their ranks this year, allowing New Jersey residents to recognize new opportunities as economic growth in both areas continues to pick up steam. In Northern New Jersey, employment growth continues to follow a positive course as companies in New York City are attracted to the region’s lower operating costs and highly educated workforce. This year, companies are on track to add 29,000 employees, representing a year-over-year expansion of 1.4 percent. This will be the largest gain in jobs created since 2000. Job creation has been highest in the leisure and hospitality industry, as well as education and health services sectors, where 12,200 new jobs were created in the first half of the year. Newly employed professionals in search of affordable housing are opting for rentals in Northern New Jersey, where average rents can be half the cost of the greater New York City area. As a result of this growing demand for Northern New Jersey rentals, developers have expanded the pipeline of multifamily projects to more than 12,000 apartments with completions scheduled through 2017. Developers are on track to deliver over 7,900 apartments this year, representing the widest pipeline and …

February 10, 2016

Industrial Market Reports New Jersey Northeast Northeast Market Reports

Data Infrastructure Positions Newark to Emerge as a Tech Sector Hub

by Jaime Lackey February 10, 2016

For Newark, New Jersey, the well-documented trend toward urbanism and the emergence of creative solutions that position older properties to serve modern needs are creating strong momentum. At a time when leasing activity is ticking upward across the city’s diverse tenant base, it also is becoming clear that Newark’s superior data capacity positions the city to become a hub for tech start-ups and, ultimately, a national hub for the tech sector. For Millennials, Old is “In” According to new Pew Research Center analysis of U.S. Census Bureau data, it is estimated that about 53.5 million millennials (adults aged 18 to 34) are part of the U.S. workforce today. Companies run by or interested in attracting millennials — whether focused on technology or any other sector — are gravitating to 24/7 downtown or urban locations. And they are seeking smart, collaborative work spaces. The result? Old is “in” — at least when it comes to tenant preferences for office space. At The Berger Organization, we are stripping antiquated fit-outs and tapping into the popularity of exposed ductwork, open floor plans and loft-inspired architectural elements. The resulting environments speak to modern desires and individual company cultures, while paying homage to their urban …

February 10, 2016

Industrial Market Reports New Jersey Northeast Northeast Market Reports

New Jersey Industrial Market Improves to Pre-recession Level

by Jaime Lackey February 3, 2016

With an increasing number of tenants seeking to relocate to New Jersey from parts of New York City, including Brooklyn and the Bronx, the Garden State’s industrial market is at its healthiest since first-quarter 2008. The amount of vacant space has now reached pre-recession levels, decreasing from 7.5 percent to 7.2 percent during the third quarter of 2015. Moreover, the vacancy rate experienced its best year-over-year improvement since the first quarter of 2014. Strong markets include central New Jersey submarkets Exit 8A, Exit 9/Brunswick, and Route 287 West, while the Meadowlands area remains the strongest submarket in northern New Jersey, followed by Exit 14/Newark near the port, and the Route 46/23/3 submarket. While transactions by large tenants, such as Amazon, dominated activity during the first half of the year, industrial buildings were filled up by smaller and mid-sized tenants during the third quarter of 2015. Retailers/wholesalers led the way, which is not surprising considering the continually growing e-commerce sector and recent increases in consumer spending. Supporting the recent economic resurgence of the sector, tenants in the manufacturing industry were also very active during the quarter, though many of their leases were small in size. Transportation companies also took space, enhancing …

February 3, 2016

Market Reports New Jersey Northeast Northeast Market Reports Retail

North Jersey Retail Rising

by Jaime Lackey June 24, 2015

For the first time in a long time in Central and Northern New Jersey, we can stop talking about the light at the end of the tunnel. The market has emerged into full sunshine, and the lingering aftereffects of the recession are now fully in the rearview mirror. The current strength of the market and robust activity in terms of new commercial development is something we have not seen for some time. Not only are there more opportunities for developers to get financing, but with rates at low ebb as well, developers are moving to take advantage. At the same time, banks and financial institutions are motivated and aggressively looking to make deals. The result is a perfect storm of sorts: the money is there, developers are willing and ready, and retailers are looking for quality space. That dynamic is good news not only for Central and Northern New Jersey, but also for all of the metropolitan New York City market. It is noteworthy that very few of the big box retail spaces that became available in the wake of high-profile closings and bankruptcies from brands like Linens ’N Things and Borders are still available. Slowly but surely, the inventory …

June 24, 2015

Market Reports Multifamily New Jersey Northeast Northeast Market Reports

Multifamily Market Momentum Continues in Northern New Jersey

by Jaime Lackey June 11, 2015

Momentum in Northern New Jersey’s multifamily market continues unabated, with investors aggressively pursuing opportunities, and developers actively launching projects along the Hudson River Gold Coast and west along transit lines. Heading into the heart of 2015, we are seeing demand drive up sales volume and values, and push cap rates down to historically low levels. Current investment velocity follows a strong 2014 capital markets performance. Last year, $1.3 billion in multifamily sales (including transactions of $10 million or more) marked the highest volume since 2007, and compares to approximately $900 million annually in both 2012 and 2013. For context, the market saw only $169 million in annual trades during the depth of the recession in 2009. The “buy” side today is dominated by institutional advisors, particularly for Class A apartment communities. Additionally, we are seeing privately held firms and raised funds making big splashes with value-add and Class B product. Northern New Jersey’s active sellers include developers and private owners looking to take advantage of valuations that have appreciated to historically high levels, as well as institutions that are cycling assets at the end of their traditionally long-term investment horizons. Additionally, multifamily cap rates have dropped consistently in Northern New …

June 11, 2015

Industrial Market Reports New Jersey Northeast Northeast Market Reports

New Jersey: Balancing the Demand and Supply Equation for Industrial Investors and Users

by Jaime Lackey April 29, 2015

The New Jersey industrial market is experiencing a renaissance of sorts with robust leasing activity in both Northern and Central regions of the state, increasing asking rents and more than 4.5 million square feet of industrial space delivered in 2014. All of these factors point to an even stronger 2015 as developers take advantage of improving market conditions. As we continue to see users and investors competing for the same properties, which in turn creates bidding contests resulting in higher sale prices, we pause and ask, “Can users compete with investors in this environment? And furthermore, should they?” To answer these questions, we need to look back at how we arrived at the current conditions. Towards the fourth quarter of 2013, asking rents and vacancy rates seemed to reach equilibrium. For each quarter after, asking rents steadily increased and vacancy dropped as demand rose. In the fourth quarter of 2014, vacancy in Central New Jersey fell to 7.2 percent, and asking rents rose from $5.35 to $5.42 per square foot with increasing demand along the New Jersey Turnpike corridor. Throughout the year, positive absorption totaled more than 2 million square feet in this region, making it the sixth year in …

April 29, 2015

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