Northern New Jersey November 2020 – Key Takeaways

• While NJ multifamily is doing well, this sector has taken a big hit in gateway markets – specifically NYC, Silicon Valley, Chicago, San Francisco, LA due to the pandemic.  NYC in particular has taken a big hit in several markets, especially hospitality and leisure with overall jobs down 12% (same in Nevada).
• At the other end of the scale, secondary markets like Salt Lake City and Phoenix are down only a couple of percentage points.
• The Federal Government is moving toward privatization of Freddie Mac and Fannie Mae before the Biden administration begins; this action, which could disrupt the housing/finance system, has the support of Treasury Secretary Mnuchin.
• Employment figures in NYC and other big metros with diverse markets are holding steady in core businesses like finance and media but have lost a very large percentage of leisure and hospitality jobs – 40% in NYC compared to the national average of 22.8%.
• Nationally, industrial rents have declined by 7%; hospitality in general is down 30%; in some markets, both hospitality and leisure have plummeted.
• New construction work and billings reported by engineering/architectural firm Gilsanz Murray Steficek is occurring at 20% below last year’s level.
• Residential condo/apartment development, especially in Jersey City and Bayonne, is hot right now and not in danger of slowing down.  There is still an influx of people leaving NYC and purchasing properties in northern NJ.
• There’s a high demand for 80K-200K SF industrial space, priced 30% higher than pre-COVID.  Small to medium industrial properties 50K-100K SF are also hot, with demand outpacing supply, especially to accommodate food products and ultimately the COVID vaccine that require cold storage; small warehouse space demand for adult-use marijuana product is also soon to come online.
• Although more COVID safety protocols are in place, there is still a reluctance to return to office environments, at least until late spring/early summer once vaccines are available.  In NYC, less than 10% of office workers have returned; the rest are working remotely to avoid commute on public transportation.