The local commercial real estate market continued its steady climb in the first quarter of 2013, free from dramatic headlines about natural disasters and government crises that marked the end of 2012, Wolf Commercial Real Estate said in its latest quarterly analysis of Southern New Jersey commercial real estate. Movement in the federal jobs and housing markets fueled consumer and investor activity locally, helping the market sustain several positive trends.
“The Dow Jones reached an all-time high, the federal and New Jersey unemployment rates fell slightly, home values and retail sales increased, and interest rates remained near historic lows,” said Jason Wolf, founder and principal of WCRE. “We saw several positive trends indicating improving growth, but we are still in a weak labor market, and more robust job growth is needed to lower the overall vacancy figures in our region.” Overall vacancy in the medical market for Class A and B product is still hovering in the range of 18-19 percent, but the market has stabilized, and average rental rates continue to improve.
WCRE’s research into Southern New Jersey commercial real estate includes snapshots of the medical and retail markets, and details on the major deals being consummated or planned.
According to the WCRE office report, there were approximately 300,000 sf in new lease and renewals transactions in the Southern New Jersey commercial real estate market during the first quarter, with new lease transactions comprising almost 43 percent of the transactions. This is only a four percent increase from the first quarter of 2012, but Wolf said that better figures were on the horizon. “There are more than 200,000 sf of new deals and renewals awaiting signature in April alone, so we expect substantial gains in the next quarter,” he said.
Office market highlights from the Southern New Jersey commercial real estate report:
— Average rents for Class A & B product remained at or above the improved level they reached last year, continuing to show strong support in the range of $10-$14.00/sf NNN with an overall market average of $11.00/sf NNN for the deals completed during the quarter.
— Positive absorption for the first quarter was in the range of 130,000+/-sf of new deals and/or expansions. This is a gain of 8.5 percent compared to the first quarter of 2012, which WCRE attributes to pent up demand from last year, reflecting that much of the uncertainty of the fourth quarter is behind us.
— Healthcare, computer services, insurance, defense contracting, consulting, engineering, and financial companies all were very active in Southern New Jersey during the first quarter.
— Demand for high quality investment properties is high, while supply remains low, intensifying competition for these properties.
Retail market highlights from the Southern New Jersey commercial real estate report include:
— Area retailers reported that first quarter sales figures exceeded those from the holiday shopping season of the previous quarter, an excellent sign for the economy.
— Overall retail space vacancy is still hovering in the 17-18% range, but the market has stabilized, and community and lifestyle shopping centers have very little vacancy, while neighborhood and strip shopping centers have more vacancy and less growth in rental rates.
— Average rents for upscale lifestyle centers continue to show strong support in the range of $30-$40.00/sf NNN, and average rents for neighborhood and strip shopping centers remain in the range of $15-$23/sf NNN.
— As with medical properties, demand for high quality retail investment properties is outpacing supply, driving prices up further and CAP rates down.
The full report, including details about several key deals, is available upon request.
WCRE is a full-service commercial real estate brokerage and advisory firm specializing in office, retail, industrial and investment properties in Southern New Jersey and the Philadelphia region. We provide a complete range of real estate services to commercial property owners, companies, and investors seeking the highest quality of service, proven expertise, and a total commitment to client-focused relationships. Through our intensive focus on our clients’ business goals, our commitment to the community, and our highly personal approach to client service, WCRE is creating a new culture and a higher standard. We go well beyond helping with property transactions and serve as a strategic partner invested in your long term growth and success.
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