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Cushman & Wakefield Releases Year-End 2014 Northern New Jersey Property Sales Reports

02/12/2015
Published By: Cushman & Wakefield

Cushman & Wakefield is pleased to announce the release of their exclusive year-end 2014 New Jersey Property Sales Reports. These unique, industry-leading reports provide a comprehensive study of the investment sales market by product type in the northern New Jersey area (Bergen, Essex, Hudson, Middlesex, Passaic, and Union counties).

The region saw yet another year of impressive growth, finishing 2014 with 1,630 transactions, an increase of 77% from last year. Dollar volume reached $5.7B, the highest total since 2006, an increase of over 200% from 2009’s recession-driven lows, and 37% higher than last year’s sum. Pricing in the northern part of the state rose substantially, averaging $174 PSF over the year, a 10-year high and 67% greater than 2013’s average. Cap rates climbed to 7.1% this year, up from 6.7% in 2013. The fourth quarter bookended 2014 with an optimistic outlook as quarterly dollar volume for the multifamily, industrial, and retail sectors all surpassed their quarterly averages for the year by an average of 10%.

“The northern New Jersey investment sales market saw pronounced growth in 2014, driven primarily by strengthening economic fundamentals, tax incentives like “Grow NJ” and investor interest in alternative markets as tenants and residents search for affordable work and living accommodations outside of New York City. As a result northern New Jersey saw its highest dollar totals since 2006, finishing the year with $5.7B in total sales activity,” stated Adrian Mercado, Vice President, Research. “We expect northern New Jersey to maintain, if not increase its number of properties sold across core product types and dollar volume to increase as investors seek institutional grade product,” added Mercado.

The highlights from each report include the following:

MULTIFAMILY
The multifamily sector in northern New Jersey followed 2013’s record marks with higher figures in 2014, as transactional volume rose by 23% in a fourth consecutive year of steady increases. Dollar volume increased 22% to $1.4B on the year, representing a new 10-year high and an increase of nearly 300% from 2009’s total. The average price per square foot has risen 16% this year, to $152, while cap rates have compressed, down 19 bps to 6.7% since last year. Sales activity surged in 4Q14, with 61% of 2H14’s dollar volume coming in the last quarter of the year. Four multifamily deals topped $100M in 2014, all in Hudson and Bergen counties, including JPMorgan Chase’s acquisition of The Curling Club Apartments in Hoboken for $125M.

RETAIL

Retail dollar volume in the region has kept pace with the prior two years. Activity was up from 273 transactions in 2013 to 370 in 2014, an increase of 36% year-over-year, while dollar volume saw a marginal increase to $620M. The average price per square foot for retail properties in 2014 rose to $270 PSF, a 10-year high, and the average cap rate increased by 80 bps to 7.4%. The sector finished 2014 with the strongest quarter of the year, with 30% of total dollar volume coming in 4Q14. Two of the largest retail projects currently underway are the long-awaited American Dream Meadowlands, a 5 million square foot entertainment/retail mega-complex slated for completion in 2016, and the first phase of Hudson Lights, which will feature 200,000 SF of retail space at the foot of the George Washington Bridge in Fort Lee.

OFFICE

Northern New Jersey’s office market saw a significant jump in 2014, as several large transactions in the third quarter proved to be weighty drivers of volume. The office sector had 171 transactions on the year, representing $1.3B. Transactional volume increased by 46% and dollar volume rose by 142% compared to 2013’s annual totals. Year-over-year, vacancies remained stable on the strength of both high demand and new deliveries, rental rates climbed slightly, and cap rates fell by 48 bps to 7.4%. 2014’s spike in dollar volume can be attributed to a pair of office tower sales that resulted in 3Q14’s dollar volume accounting for 58% of the year’s total: JPMorgan Chase’s acquisition of the Newport Office Center 5 in Jersey City for $315M and Vision Properties LLC’s purchase of Metropolitan Center in East Rutherford for $109M.

INDUSTRIAL

The industrial sector in New Jersey’s northern counties continued a 5-year upwards trend, as transactions finished 48% higher than 2013’s total. Dollar volume in 2014 was $1.5B, down 13% from last year’s record high of $1.7B but still the second-highest yearly total since 2007. Price per square foot averaged $85 over the year, an 18% increase, while the average cap rate rose 20 bps to 7.1%. Many developers have begun speculative projects, especially along the New Jersey Turnpike and near the New York and New Jersey ports, where nearly all of the year’s top lease transactions occurred. ProLogis delivered two speculative industrial properties totaling 2.5M SF to the port region, and The Morris Cos. and Duke Realty Corp. each have 600K+ SF speculative projects set to come on line in 1Q15.

“The industrial sector reported 48% more transactions in 2014 over the prior year.  The strength of this asset class is attributed to New Jersey’s location, major road networks, labor force and proximity to ports.  As a result, the amount of new construction increased in 2014 and demand for industrial properties continues to be strong,” said David Simon, Executive Managing Director. “The office sector has been appealing to many opportunistic investors who are seeking higher yields and may be tired of competing for multifamily or industrial properties trading at lower cap rates,” added Simon.

To obtain a copy of these reports, please contact Adrian Mercado at Adrian.mercado@cushwake.com

For press inquiries, contact Shannon Krause at Shannon.krause@cushwake.com

Release Date02/12/2015 - 21:30

Source

Cushman & Wakefield Capital Markets Group New York

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