Key Take Aways from Northern New Jersey’s August, 2021 Meeting
• Joe Mele (Dresdner Robin) noted that his firm’s three NJ offices are operating in a hybrid manner, with people splitting time between office and home. Several projects in development: a potential renovation in Maywood, Washington Township; more Bergen County work (attributed to DR/Hanson working relationship); a high-rise residential project with ground floor retail and a multilevel garage (waiting for Oradell planning meeting); and a renovation proposal in the 99-acre park in Cortlandt Manor for a soccer field and reuse of buildings in its former quarry/turned lake.
• Bill Hanson (James E Hanson) declared that the industrial market is on fire. The Marcal industrial site is trading at $300/SF buildable; the Mondelez Fairlawn site (formerly Nabisco) is down to two bidders and will likely become mixed use, although Joe Mele thinks it could go warehouse. A 200K SF property in Newark priced at $14/SF in November ’20 is now $18.25/SF. While multifamily is still hot, the office market is treading water.
• Paul Hacker (Axis Insurance) reported that insurance carriers are increasing their premiums and deductibles, likely due to concerns over the COVID variants. He stressed that businesses examine the liability of unvaccinated employees in their offices. Axis had mandated that their non-vaccinated employees work from home. Mike Smith added that businesses have the legal right to ask employees if they are vaccinated and to control the workspace. He recently closed the office requiring all staff work at home since more than half of Axis employees are not vaccinated.
• Howard Davis (Davis Environmental Law) noted increased attention to legal and regulatory landscape affecting real estate, especially changes in wetlands and climate encroachment. NJ DEP is re-vamping regulations pertaining to emerging contaminants and the effects of climate change in the state. Eric Grille added that the strength of contracts and terms for industrial/commercial sites have increased. It behooves both buyers and sellers to be aware of environmental conditions and requirements and to set strong contractual conditions upfront.
• Guest Paul Abramson (SolarKal), which advises and brokers commercial solar energy primarily in the NE, reported that the NJ Board of Energy is reducing its Trex incentive program as of August 27th and replacing it with a less lucrative program. The difference between the two programs is more than $1M over 15 years.
• Guest Matt Greely (Silverman Building) summarized the status of two mixed use properties in Jersey City: 170 Erie Street has been converted from a parking garage to a 50-unit apartment building to open in 6 months; and the former MGM Marin building at 330 Marin Blvd. will be converted to a 40-story office tower.
• Speaker Gregg Manzione of Nationwide Consulting Co. provided an overview of NJ Real Estate Tax Appeals and recent court cases/latest trends. Highlights:
o Date for filing tax appeal is April 1st for most counties; a missed date bumps the appeal forward to the next year. For Chapter 91 income/expense filings, property owners must respond to certified requests.
o Fee Simple vs. Leased Fees can be determined by comparing assessed and current market value; assessed value reflects 10% of proven market value.
o Pollution levels of property can generate a tax cut relative to # of years and cost for site clean-up. Customers can take a lump sum for discounted rates.
o Review of recent Tax Court Cases: 1) old bank branch vs. town request for raising tax (ruled in favor or bank); 2) Apartment building with 1031 exchanged assessed at $8M – lowered to $6 to $6.5M; 3) office case ruled for tenant based on improvement allowance of $20K/SF
o New Jersey has the highest property taxes in the US
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