Commercial Real Estate Developers Ever-Adapting to the State's Changing Market
COMMERCIAL REAL ESTATE DEVELOPERS EVER-ADAPTING
TO THE STATE’S CHANGING MARKET
—Speakers Offered Views on NJ’s Changing Landscape for Developers at
IOREBA’s 21st Annual “Developer’s Night”—
PARSIPPANY, N.J. (April 22, 2013)—Over 300 guests including members of the Industrial and Office Brokers Association of the New York Metropolitan Area (IOREBA), and real estate professionals recently gathered at the Marriott at Glenpointe Hotel in Teaneck, NJ for the organization’s 21st annual networking and educational program, “Developer’s Night.”
The evening’s agenda focused on the ever-evolving office and industrial landscape for developers in NJ’s commercial real estate market. “I’d like to welcome this year’s panel of some of New Jersey’s most impressive executives who will lend their expertise about the state of the market in commercial real estate development in our state,” said IOREBA’s 2012-2013president and senior vice presidentof NAI/James E. Hanson, W. Joshua Levering, SIOR, as he addressed the guests.
Panelists remarked that New Jersey’s suburban office market is aging, noting that approximately 75 percent of the state’s office buildings were built between the mid 70s and early 90s. “Owners are doing a lot of things to keep tenants—from upgrading carpet and giving interiors a fresh coat of paint—but oftentimes this isn’t enough to fix these older office buildings,” noted Todd M. Anderson, executive vice president and principal of The Hampshire Companies. He added that with the changing marketplace and continued vacancy in the office sector, owners and developers are migrating into markets where they see opportunity, like data centers and self-storage buildings.
Adaptive re-use also was a big message of the evening. Jeffrey M. Schotz, executive vice president of leasing and marketing of SJP Properties noted that his company “will most likely do re-uses of buildings that are not worth further investments.” He also said the focus is turning to 24/7 areas like Hoboken where residents and businesses want to be. Furthermore, Jeff Milanaik, principal, CrownPoint Group urged the audience to “think like owners and reposition.”
Michael Allen Seeve, president and principal, Mountain Development Corp., noted that with the great deal of vacancy in the state’s suburban office campus, his company is focused on “buying surplus.” Seeve is the current president of the NJ Chapter of NAIOP, the state’s leading trade association for the commercial real estate development industry, and he also sits on the NJ Department of Community Affairs Uniform Construction Code Advisory Board. He further said, “There has been much progress on the regulatory side from Trenton down to the local municipalities. We are moving in the right direction, but there is still work to be done.” He added that New Jersey’s ports remain integral to the state.
On the industrial/distribution side of the market, panelists agreed there a seemingly lack of modern buildings available, or being developed, in the market, especially north of Exit 7. Gary Gabriel, executive vice president of Cushman & Wakefield’s Metropolitan Area Capital Markets Group, commented, “Many industrial buildings are priced higher per-square-foot than office buildings. Based on high demand and somewhat limited supply, many investors cannot acquire these industrial buildings with the location and amenities sought by quality tenants in today’s market. In addition, many older buildings are simply priced too high. Based on current market activity and demand, many developers will build-to-suit when and where possible.” Gabriel also commented, “the re-pricing to market value of many older office and industrial buildings hasn’t really happened yet, but as that occurs, we do see demand by investors and developers seeking those value-added opportunities.”
Switching the topic to the state’s incentive programs, David Simson, vice chairman and chief operating officer of Newmark Grubb Knight Frank and the moderator of the panel noted, “The government has done a good job with the incentives programs, but big companies continue to leave the state. Although it’s its agreed that these programs are necessary, we certainly need to review the reality of these programs going forward.”
“Over 100 bills are reviewed a month in Trenton on the regulatory side. There is a positive message from Lieutenant Governor Kim Guadagno and New Jersey definitely has an attitude that is more open for business,” said Milanaik. He added several factors are affecting the development sector in New Jersey and “owners are continuing to diversify their product and reposition buildings.”
Levering summed up the evening, “New Jersey is a premiere location within the New York—Philadelphia—Connecticut quad. The state has a good highway and mass transit infrastructure, ports and International airports, and most notably a great education system with an unmatched talented labor pool. New Jersey has an extremely pro-business administration, and developers remain confident that with continued leadership and support for the commercial real estate industry, and particularly with the retention of our outstanding tenant base, the state’s economy will continue to drive forward”.
“In this post-recession marketplace, owners and developers remain positive and are ever-adapting to the changes of New Jersey’s commercial real estate marketplace,” said Levering in his closing remarks. “We have incredible talent and depth within our development community. This is one of IOREBA’s largest events and the discussion tonight was spot-on, as the state of the commercial real estate marketplace has so many changing factors. Discussing adaptive re-use, migrating companies, new product attributes and the overall capital markets sector, was enjoyed by all in attendance,” he added.
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With roots dating back to 1927, IOREBA is one of the nation's largest regional commercial real estate groups, growing to more than 300 members conducting business in New Jersey, New York, Pennsylvania and Connecticut. The organization is continually expanding its offerings, designing more useful programs, and teaming with co-hosts for several events to improve the networking environment. For more information about IOREBA, visitwww.ioreba.comor contact Ann Violette at firstname.lastname@example.org.
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