Northern New Jersey February 2021 – Key Takeaways
- Dresdner Robin’s Joe Mele reported new active projects in JC’s Journal Square area, including a hotel/multifamily project with Genova Burns (150 keys/200 units, no parking); a JC community group is pushing back on parking in favor of an extended pedestrian mall.
- Jersey City development has not slowed down as expected. Developers from Manhattan and Brooklyn see JC and the NJ Gold Coast as alternatives to NYC, with Journal Square and the PATH in need of expansion to accommodate an increase in people, according to Genova Burns’ Eugene Paolino.
- Both Joe Mele (Dresdner Robin) and Bill Hanson (NAI Hanson) reported that the logistics market is “on fire” – 94% leased nationally; strong activity in Burlington, Gloucester and Salem NJ counties; a 100K SF, $24M off-market deal in East Rutherford had 203 bidders for an older vintage building with 5% vacancy – the deal doubled from $120/SF to $240/SF.
- The residential market in NNJ is VERY HOT. Gregg Manzione (Nationwide Consulting) reported his own house sold in 3 days with a cash deal of $50K over asking price. Guest Chris Bernardo (Commercial District Services) cited high home sales in Essex County, especially in the Caldwell/Verona/Montclair area with bidding wars at 15 plus and sales closing within days.
- The residential apartment market is still strong. Greg James (NAI Hanson) reported on a new 88-unit building with a PILOT program in a Hackensack Opportunity Zone. The developer wants to sell the units vacant for $325K per door vs. $381K per door occupied. He predicts this approach will be used at other residential sites.
- Since the pandemic, residential rental rates are down 20% for multifamily along the Gold Coast where 15 to 18-month leases may include 3-6 months of free rent. In Bergen and Essex suburbs, 14 to 15-month leases are currently offered with 2 or 3 months free rent. Note: 8-10 % of renters are reported to have not paid rent in the last year due to the pandemic. Anticipated NJS laws could extend the time.
- Gregg Manzione also reported that most retailers in malls are doing OK, citing 5% vacancy rate in two 160K SF retail strip malls in Clifton and Cliffside Park, both anchored by grocery stores. Malls with second floor office space with 75% vacancy rate reflect an overall decline in office with exception of medical usage.
- The industrial market, according to Greg James, continues to reflect good price discovery with lower cap rates while the office market has weakened.
- Guest Laurence Whittam of Anchin reported an increase in cyber breach response work due to current malware/ransomware attacks on company systems.
- An uptick in the need for coaching and sourcing of people in project management, architecture and engineering as well as soft skills like time management was discussed. Split schedules for many working partly from home and partly in offices will continue.
- Post-COVID trends in real estate predicted by guest Chris Bernardo of Commercial District Services: “15-minute cities” with conveniences and local shopping within 5 blocks from home; restaurants with take-out will continue to outpace destination restaurants in cities; real estate access will revolve around local codes/ordinances re: limited outdoor gatherings/spacing.
- Mike Smith and Paul Hacker with Axis Insurance Services summarized the NJ Exec Order 192, which took effect on November 5, 2020. They provided an overview of the components, guidelines and requirements of this order, which is intended to protect New Jersey workers and companies during the COVID-19 crisis.
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