Key Take Aways from Northern New Jersey’s August 2023 Meeting
• NJ Transit released their largest RFPs in decades. (Charles Heydt – Dresdner Robin)
• Doing a lot of work with the Port Authority, which has had more building and construction opportunities than NJ Transit in the past. (Charles Heydt – Dresdner Robin)
• Building a 160-unit apartment building in Rochelle Park, hoping to TCO in March and already have several pre-leases. (Lucas Grunberger – Tulfra Real Estate)
• They do half their business with government and half with private and both are maintaining but there is more opportunity on the public side. (Tony Ianuale – Dresdner Robin)
• Construction activity has slowed a bit. (Tony Ianuale – Dresdner Robin)
• Started a construction management group at Dresdner Robin about 6 months ago. (Tony Ianuale – Dresdner Robin)
• Lots of public work coming in, especially in regards to environmental needs. (John Tregidgo – Dresdner Robin)
• On the private side there is a bit of movement on due diligence, especially in Hudson County. Had been slow in the beginning of the year. (John Tregidgo – Dresdner Robin)
• Not a lot of new regulation from the state. EPA has vapor standards coming out, but not a substantial impact on development. (John Tregidgo – Dresdner Robin)
• They use Oxford Economics for data and over the past few weeks they’ve layered real estate specific drivers on top of their data. (Mateusz Wnek – CoStar Group)
• Business is not the same as it was a year ago. They remain busy, but it’s tougher. (Bill Hanson – NAI James E. Hanson Inc)
• Recently hearing about price reduction on industrial, mostly on new construction. (Bill Hanson – NAI James E. Hanson Inc)
• Pricing has not changed all that much, but people will not reach for deals anymore. (Bill Hanson – NAI James E. Hanson Inc)
• Amount of sublet space in the industrial market is at a 10 year high and vacancy has ticked up (but is still low). (Bill Hanson – NAI James E. Hanson Inc)
• Unless something big changes, not expecting a terrible down market. (Bill Hanson – NAI James E. Hanson Inc)
• Multi-Family development is echoing the industrial market. There is a lot of activity and interest, but pricing is coming down from peaks. (Jonathan Kristofich – NAI James E Hanson Inc.)
• Meeting a lot more younger people with 15 years experience going out on their own and looking at being in business for another 30 years. (Jonathan Kristofich – NAI James E Hanson Inc.)
• Lots of clients with industrial properties getting larger assessments but some clients are getting refunds on lowered assessments. (Gregg Manzione – Nationwide Consulting Company, Inc.)
• Because housing prices were high last year, there’s an artificial bubble where things are slightly over assessed. But it’s a political hot potato. (Gregg Manzione – Nationwide Consulting Company, Inc.)
• Worked on a portfolio of properties for an estate and found prices vary a lot from property to property, especially in regards to losing or changing tenants. (Gregg Manzione – Nationwide Consulting Company, Inc.)
• Cap rates don’t reflect where financing is. (Gregory James – NAI James E. Hanson Inc)
• Investors can get risk free returns of over 5%. (Gregory James – NAI James E. Hanson Inc)
• It’s an incredibly choppy lending market, but sees some signs of light. (James Jacobus – Kelley Drye & Warren LLP )
• There is a lot of liquidity in the market. But everyone is currently sitting on the sidelines. (Jason Bogart – Accordia Realty Ventures)
• Business is very cyclical, and one distinguishing feature of this cycle is how difficult it is to get anything accomplished. Process of development in New Jersey is absurd, frustrating and expensive. (Joe Romano – Accordia Realty Ventures)
• Some people are objecting to zoning uses even when the zoning was already established before the project. (Joe Romano – Accordia Realty Ventures)
• Some opposition movements to projects are backed by Go Fund Me. (Charles Heydt – Dresdner Robin)
• Some towns are getting more professionals sitting on the board, which might help. Educated board members are easier to work with. (Jonathan Kristofich – NAI James E Hanson Inc., Charles Heydt – Dresdner Robin)
• Companies are realizing that work from home can be as much as 30% lower production. Zoom just required employees to come back to the office. (Joe Romano – Accordia Realty Ventures)
• Rents in office have increased significantly over the past 5 years. Companies want better space in a better building. (Joe Romano – Accordia Realty Ventures)
• Project in Harrison with a successful hotel, struggling retail and apartments that are doing well, with another phase to go up. (Richard Miller – The Pegasus Group)
• Lakeland Bank is in the process of a merger with Provident Bank, but having issues with the SEC after the bank failures. (Steve Novak – Lakeland Bank)
• They will be a $25 billion bank and the second largest in New Jersey. (Steve Novak – Lakeland Bank)
• The commercial real estate team at Lakeland has been one of the highest performing groups because they are relationship focused. (Doug Cosgrove – Lakeland Bank)
• Lakeland has remained strong in areas like liquidity and asset capital. (Doug Cosgrove – Lakeland Bank)
• At some point, he suspects rates are going to start coming back around. (Steve Novak – Lakeland Bank)
• The inverted yield curve is a cause for concern. (Steve Novak – Lakeland Bank)
• Prices have gone up significantly, so hopefully people aren’t upside down and as loans mature, the increase in prices and rents will offset the increase in interest rates. (Bill Hanson – NAI James E. Hanson Inc)
• There might be a tick up on the top line revenue side, but when your debt doubles it will likely create some situations where it creates a problem. (Steve Novak – Lakeland Bank)
• Guarantees will likely come back into favor. (Steve Novak – Lakeland Bank)
• Lots of banks have moved to the sideline, depending on the asset class. (Steve Novak – Lakeland Bank)
• Office is the biggest concern with banks looking at deals. (Steve Novak – Lakeland Bank)
• There are lots of conversions from shopping to entertainment and it’s hard to underwrite a project like that. (Steve Novak – Lakeland Bank)
• In regards to clients with stressed properties, Lakeland is often able to work with the customer if they have a good relationship. (Steve Novak – Lakeland Bank)
• It’s an important time to know your customer and know your bank so you know who you’re working with and who can help you get through the tough times. (Steve Novak – Lakeland Bank)
• Net Interest Margin (NIM) is a big problem with banks right now. (Steve Novak – Lakeland Bank)
• Some banks aren’t lending because they can’t make enough money. (Steve Novak – Lakeland Bank)
• Because of Silicon Valley and Signature Banks, the regulators have been more strict, so banks have become more restrictive on who they work with and on what kinds of deals. (Steve Novak – Lakeland Bank)
• Hoping that interest rates will normalize soon, but if it takes a few years it will cause big problems for some banks Majority of banks in our country can’t operate under these conditions in perpetuity.. (Steve Novak – Lakeland Bank)
• People aren’t selling their houses because they’d have to move to a much higher interest rate. (Steve Novak – Lakeland Bank)
• There is an interesting dynamic in the industrial market with some businesses betting that rates come down in a few years while rents stay high. (Jason Bogart – Accordia Realty Ventures)
• There is a disagreement over whether industrial rental rates will hold up. (Steve Novak – Lakeland Bank, Joe Romano – Accordia Realty Ventures, Bill Hanson – NAI James E. Hanson Inc)
• Can’t oversupply industrial in New Jersey because of the small supply of land. (Bill Hanson – NAI James E. Hanson Inc)
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