NEWARK-Multifamily remains the belle of the ball for investors in the Garden State as it is across the nation, agreed experts in the “Investment Sales Forecast” panel during the RealShare New Jersey Opportunities Breakfast held here Wednesday morning. Moderator Mitchell Berkey, co-chair of the real estate group at Wolff & Samson, offered some numbers illustrating the sector’s enduring appeal: 2012 was the best year for apartment construction across the state since 2008, with 18,000 units approved last year and a projected 20,000 more getting the nod by the end of 2013. However, panelists made it clear that investment sales in New Jersey don’t begin and end with multifamily.
In terms of its mushrooming popularity, industrial constitutes the hottest property sector right now, said Kevin Welsh, SVP with CBRE. He particularly favors industrial product in the Meadowlands, followed by the port markets and then the Exit 8A submarket. Welsh noted that rents have been appreciating significantly along the 8A corridor, which usually is the last to recover.
Institutional players, while remaining strong in multifamily, have also become more active with industrial buys, Welsh said. The lure of the Turnpike corridors is one factor, but so is the capital-intensive nature of office, traditionally an institutional mainstay.
Not all panelists were equally bullish on the industrial sector. Jose Cruz, senior managing director at HFF, noted that multifamily is “on everyone’s radar,” and industrial and retail haven’t offered quite as many buying opportunities as we might like to see. He noted that HFF lately has been valuating more office product.
At Newmark Grubb Knight Frank, many of the recent valuations have focused on mid-level, semi-stabilized office product, said panelist Steven Schultz, an executive managing director with the firm. “It’ll be interesting to see who makes that first bid,” Schultz said.
Panelists agreed that the question of which submarkets are most attractive depends on the asset type. For office, it’s the Hudson County waterfront or the Metropark corridor in Edison and Woodbridge, said Joseph Garibaldi, managing director with Jones Lang LaSalle. Cruz likes Princeton, especially since the perception of having a limitless supply of land on which to build isn’t borne out by the reality.
Asked how economic and political factors affect investor appetite, Cruz sounded a similar theme to the panelists in the opening “Leader’s Forum” session. He noted that until job growth accelerates, the appeal of office would lag. Garibaldi cited an image problem brought on by governmental policies: “We suffered for 20 years with the perception as a very expensive place to do business, a very expensive place to live.”
Gary Gabriel, EVP with Cushman & Wakefield of New Jersey, observed that tenants in New Jersey are “attached to their real estate,” aside from the office sector, where the options to look elsewhere are more plentiful. He said that while the Christie administration marks a vast improvement over its predecessors, “the problems are deep.”
On the subject of office space, the conference’s concluding panel focused on “The Needs of the Modern Office User.” Panelist Brenda Nyce-Taylor, principal and design director with architectural firm Gensler, said her firm hears repeatedly that corporate tenants are “pushing for a culture of collaboration” in their space. Jeff Heller, principal and managing director with Avison Young, took up the theme, noting that it’s trickling down from the creative and tech sectors “through the more classically structured corporations.” The idea is that this collaborative environment translates into better productivity and an improved bottom line, Heller said.