Key Take Aways from Northern New Jersey’s May, 2021 Meeting
Guest Speaker, Joe Molloy with Anchin provided a presentation on the Employee Retention Credit & Potential Tax Reform Under Biden:
- Employee Retention Act: ERC vs. PPP, qualifications, credit and employment test for ERC in 2020 vs 2021, how to calculate ERC for 2020 vs 2021
- ·Potential Tax Reform under Biden:
- 39.6% increase on long term capital gains and dividends effect on business
- How changes on 1031 Exchanges, such as deferrals in gains more than $500K, could impact the real estate market
- Proposed changes to estate tax, business loss limitations, social security tax over $400K
- Joe Mele (Dresdner Robin) reported an uptick in smaller warehousing sites in Hackettstown and other mid-NJ areas. He and Charles Hecht discussed two pending state bills. Update of NJ Municipal Land Use Law (aka Warehouse Sprawls Act) stipulates that warehouse projects planned for one municipality must be approved by adjacent municipalities re: land use, truck routes, traffic impact, etc. Bill #1571 ties prevailing union wage requirements to incentives in redevelopment areas, affecting new zoning for PILOTs, tax breaks and other incentives. Both bills, opposed by the APA, are currently stalled.
- Constantine Siversky of Emtec Engineering reported good warehouse projects in LI, NJ and PA and plans to open a new location in Newark. Emtec is looking for young mechanical and electrical engineers to join the team. A flexible work schedule with 2 to 3 days in the office will continue, with one day per month for entire team to meet. Note: pay scales in NYC construction are dropping due to the slowdown.
- Bill Hanson (NAI James Hanson) noted that healthcare office deals are very busy, and industrial is still high, adding that Zuckerberg’s Industrial Park in Saddlebrook is on the market. He expressed concern over potential changes in the warehouse market if pending NJ bills go through as well as overall concern over potential Federal tax changes.
- Gregg Manzione of Nationwide Consulting agreed that industrial and housing properties are in high demand. Industrial land is so valuable that one client may demolish a profitable industrial space and spend millions to clean it up and sell for a profit. High demand for housing has made towns more aggressive on tax appeals and raising assessments.
- Axis Insurance’s Paul Hacker noted that the markets for E&O, D&O, HLI, and cyber are all hard hit. Premium limits and deductibles are increasing; some carriers are not writing new business. Cyber breaches continue to increase.
- According to Yardi Systems’ Paul Fiorilla, April rents for multifamily nationally have seen the biggest increase since 2015. Central New Jersey rents are up 4.4% YOY with occupancy up 70 basis points. Northern NJ occupancy is down 1-1/2% YOY and rents down 2%. Demand continues to shift to the suburbs with demand decreasing for expensive high rise NJ waterfront properties.
- Michael Mostoff, Ten-X, reported on extraordinary activity in the retail and hotel markets over last several months with office becoming popular again. Their April auction sold more than $100M in 37 individual assets – the largest sale more than $20M.
- Joe Smerdon of GS Wilcox Insurance noted that it is a great time to refinance multifamily and industrial properties, especially Class A properties with rates at 110 to 150 basis points over Treasury.
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