Key Take Aways from Northern New Jersey’s September, 2021 Meeting
- Tony Ianuale (Dresdner Robin) addressed key points of the September 8th RPN economic roundtable report given by Ron Severino and Hugh Kelley. US GDP growth is ahead of potential; 2021 projections are 4.0% to 6.8%, followed by another 3.5% to 4.1% in 2022. Cumulative population growth for the NY/NJ area in the last ten years has been steady, with NYC increasing by 7.7% and Philadelphia by 5.1%.
- Green infrastructure improvements are key to Dresdner Robin work in Philadelphia where water and sewage systems are being upgraded. Avi Lebovic, who has worked closely with Philadelphia’s complex system, will be instrumental in public sector work in NJ, particularly in Passaic, Bergen and Hudson counties.
- Bill Hanson (NAI James E Hanson) described the industrial market as still very active, noting a recent closure on a 5-acre property in Kearney for $23.5M. Short-term truck parking in Northern NJ draws more than $25K per acre per month compared with $3 to $5K per acre elsewhere. It is normal to get $200/SF for industrial space in the region.
- Greg James (NAI James E Hanson) noted price discovery for multifamily and industrial is significant. While multifamily was down in occupancy along the Gold Coast in late 2020, it is back up to the low 90s with concessions gone. There is not much trading in the office market; some properties like Prudential’s two buildings in Roseland to be knocked down and repurposed. Retail is still a concern; mall space is being repurposed nationally and locally with more restaurant and entertainment venues.
- According to Paul Fiorilla (Yardi Systems), the rental and single-family markets are “on fire” nationally, with rent growth up 10% YOY and most of the top 30 metro markets up 20%. Monthly rents are up $112/month (3.3%) in central NJ and up $82/month (3.1%) in northern NJ. Demand for single family housing everywhere is outstripping supply and is being driven by institutional pressures.
- Paul Hacker (Axis Insurance) stated that cyber security and other liabilities continue to drive higher premiums given the continued uptick in ransomware and other cyber activity. All carriers now require multi-factor authentication, end-point protection setups, and employee training to detect and prevent future attacks. Mike Smith is giving frequent cyber security talks to companies.
- Itay Ron (Faropoint) described a divergence in cap rates between marketed and non-marketed deals. Recent closings included a $90M portfolio that Blackwell bought in South Jersey plus another closing worth $80M; both are trading at historic lows. Three smaller deals valued at $25M closed last week in South Jersey (Bellmore, Somerset and Pennsauken); two more deals will close next week.
- Paul Abramson (SolarKal) noted that although TREC values and incentives have dropped slightly, government friendly value/incentives are still available. Federal incentives are intact, and the State of NJ has some of the best incentives for solar energy in the US.
- Guest Speaker Stuart Brodsky (NYU Schack Institute of Real Estate & Center for Sustainable Built Environment) provided an informative overview of Environmental, Social & Governance (ESG) of asset and investor management within the real estate industry. Some highlights:
- Historic and current applications: 1914 Ford Motor Company increase to $5 for an 8-hour day helped create a robust working class; current Walmart college funding for employees and Hewlett Packard goal of equal gender parity in leadership by 2030 are changing the business landscape.
- Real Estate investment alignment with UN’s 17 Sustainable Development Goals to grow and sustain business assets globally – from $22.8T in 2016, to $30.6T in 2018, to a projected $140.5T by 2025.
- NJ’s Mack-Calli has incorporated ten UN SDGs in environmental, social and governance areas to generate lower carbon emissions in transportation, energy efficiency and governance areas.
- Recommended starting points for RE investors and firms – free government programs like ENERGY STAR (EPA) and Better Buildings (DOE)
Recent Comments