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Commercial Real Estate Predictions
mycentraljersey.com
January 2, 2016
Original Article

Industry leaders look ahead for 2016

Looking back, 2015 was generally a good year for real estate, both residential and commercial. These leaders in New Jersey's commercial real estate field made brief predictions for the coming year:

The Berger Organization (office, hotel – Newark, NJ)

"For Newark, the trend toward urbanism and the emergence of creative solutions that position older properties to serve modern needs are creating strong momentum. It also is becoming clear that the city's superior data capacity positions it to become a hub for tech start-ups and, ultimately, the larger tech sector." Miles Berger, chairman and CEO

Cushman & Wakefield of New Jersey (office, industrial, retail, capital markets - NJ)

"In New Jersey, office market fundamentals should continue to improve in most areas, as both the national and state economies trend upward. And, with healthy projected e-commerce and bricks and- mortar retail sales, the industrial market should also remain on its positive trajectory." Andrew Judd, NJ market leader

Cushman & Wakefield Industrial (national perspective/local market focus)

"The shift underway toward online shopping will also continue to be a leading demand driver for the industrial sector. Requirements for big-box space are common among e-commerce tenants, but there is also growing demand for smaller- and mid-sized buildings. Increasing service expectations and the need to access customers are leading e-commerce companies to establish smaller infill fulfilment locations around major population centers." John Morris, logistics & industrial services lead, Americas

Cushman & Wakefield Research (national perspective/local market focus)

"Tech markets are absolutely soaring, and they continue to drive the overall office gains. But one emerging trend is the increasingly impressive performance of secondary and tertiary markets. If you look at office-using job growth in these cities, compared to the size of the labor force, it's the secondary markets that are now at the top of the list. We expect this narrative to continue as an increasing number of firms are drawn towards more affordable markets." Kevin Thorpe, chief economist

Walters Group (residential – Barnegat, NJ)

"I believe mortgage rates will increase by the end of this year. We are advising interested buyers who need construction loans or any type of financing to take advantage of current rates before they go up." Matthew Gaudet-Walters, sales representative

Levin Management (retail – NJ)

"The emerging supply/demand imbalance for Class A retail space will lead to an expanded construction pipeline in 2016. This will include stepped-up expansion of existing shopping center properties. And, for new projects, developers will focus on opportunities in established corridors and those that involve the strength of a grocery anchor." Matthew K. Harding, president

NAIOP NJ

"As the increased expectation for flexibility and adaptability in the ever-changing work landscape continues to impact workplace requirements, the commercial real estate industry needs to be ahead of the curve in order to capitalize on this opportunity for meaningful long-term growth. The conventional rules for what makes a property successful no longer apply. Michael McGuinness, CEO

Prism Capital Partners (office/industrial/retail – NJ)

"A tangible change in suburban land-planning, in which balanced downtowns are the focus, is being driven by the convenience lifestyle philosophy of the millennial generation. Tuned-in municipalities are encouraging more housing options and amenities to make their commercial corridors attractive for millennials and the businesses looking to hire them." Eugene Diaz, principal partner

Tryko Partners (multifamily, skilled nursing – Eastern Seaboard)

"Successful multifamily affordable housing properties will be increasingly reliant on productive public/private partnership. Owner/operators like Tryko Partners already are working in cooperation with the many New Jersey municipalities committed to progress. Together they are revitalizing apartment communities and, in turn, advancing quality of life for residents while improving entire neighborhoods." Uri Kahanow, director of acquisitions

Vision Real Estate Partners (office/retail/multifamily – NJ)

"Suburban commercial property repositioning and redevelopment will continue to focus on the creation of settings that blend modern office space with comprehensive lifestyle amenities. In short, our industry is raising the bar for quality-of-life at multi-tenant properties by leveraging the second-generation potential of New Jersey's aging office inventory." Sam Morreale, founder and managing partner

Case Real Estate Capital (industrial, retail, multifamily, capital markets, NJ/NY)

"In early 2016, the commercial real estate investment market will continue to experience greater liquidity, but deals may get more challenging to complete as a result of the unclear direction in this peaking cycle. Opportunities that take creativity and industry knowledge – and the ability to stomach uncertainty – are still out there. The influx of money in the investment market may be driving prices too high for the intrinsic values of given properties, and a subsequent fall-out is certainly a possibility. Market expertise and the stability of the lenders' balance sheets are the keys to offsetting that." Sanford Herrick, founder and managing principal

A.Y. Strauss

"Commercial real estate transactions in the middle market will continue to show strength – even with a minor uptick in interest rates, there will be tremendous demand. There may be short-term softening in some areas, including retail in certain corridors of New York City. The market still has considerable 1031 money needing to find a 'home' in 2016 for large-scale sales that have already occurred or which are set to close, and we will see more creative deal-structuring around 1031 exchanges, with incoming and outgoing equity partners and different tenant-in-common structures to maintain and facilitate deal-making." Aaron Y. Strauss, Esq., Managing Partner

Integrated Business Systems (real estate/accounting/small/mid-size business – NJ/NY)

"In the coming year, an increasing number of small- and mid-size companies will choose to outsource their IT functions to third-party managed services providers. Businesses are recognizing the benefits of involving a technology partner to keep their systems current and navigate complexities like network and customer data security." Michael Mullin, president

Want more in-depth information?

Is commercial real estate in the so-called 7th inning? How are economic, industry and demographic trends impacting the strategies of investors, developers and other real estate professionals? On Wednesday, Jan. 20, industry leaders will discuss how they're adapting to a changing market, including repositioning their portfolios to prosper in 2016 and beyond, at NAIOP New Jersey's Annual Meeting & Commercial Real Estate Outlook. The first major networking event of 2016, which will also feature the election of the commercial real estate development association's 2016 officers and trustees, is slated for the Short Hills Hilton.

Benjamin Breslau, international director of research with JLL, will provide an overview of how changing trends at the regional, national and global levels, and market fundamentals may impact commercial real estate in our region. Offering their views with a panel discussion will be moderator Caren Franzini of Franzini Consulting, who was the long-time CEO of the New Jersey EDA; Mitch Rudin, CEO of Mack-Cali, whose company has repositioned its portfolio with a focus on waterfront office properties and the residential sector; Jeff Milanaik, partner of Bridge Development and a former president of NAIOP New Jersey who is tackling several redevelopment projects; and Ed Russo, president and COO of Russo Development, one of the most successful niche development companies in the market.

"This continues to be a value-added and must-attend event for our industry, both in terms of the in-depth information that will be provided and the opportunity to network," said McGuinness, NAIOP New Jersey. "Our goal is to provide the hundreds of attendees with a deeper understanding of future conditions and a competitive advantage in the marketplace, as well as an opportunity to make new acquaintances and renew old ones with fellow industry professionals."

This important event will begin at 5:30 p.m. with registration and networking, followed by the program. To register, or for more information, contact NAIOP New Jersey at 732-729-9900, or visit www.naiopnj.org.