FIRST QUARTER REPORT: BULLISH TONE STARTING TO REAPPEAR IN SOUTHERN NEW JERSEY CRE MARKET
FIRST QUARTER REPORT: BULLISH TONE STARTING TO REAPPEAR IN
SOUTHERN NEW JERSEY CRE MARKET
WCRE Research Finds Positive Trends and Signals of Cautious but Steady Growth¬†
April 8, 2013 ‚Äď Voorhees, NJ ‚Äď The local CRE market continued its steady climb in the first quarter, free ¬†from the 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. Movement in ¬†the federal jobs and housing markets fueled consumer an investor activity locally, helping the market sustain several positive trends. ¬†
‚ÄúThe 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,‚ÄĚ said Jason Wolf, ¬†founder and principal of WCRE. ‚ÄúWe 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.‚ÄĚ Overall vacancy in the office 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‚Äôs research includes snapshots of the office 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 Southern New Jersey 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. ‚ÄúThere 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,‚ÄĚ he said.
Office market highlights from the 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.Ôā∑ 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 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 office 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. 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‚Äô 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.
Learn more about WCRE online at¬†www.wolfcre.com,¬†on Twitter @WCRE1, and on Facebook at Wolf
Commercial Real Estate, LLC.