Middle Market Digest – The Northeast

Here is a roundup of the latest leases, sales and other transactions in the Northeast middle markets.

This week by the numbers

NEWARK, NJ—Based on better than expected first quarter performance, CBRE Hotels’ Americas Research has enhanced its outlook for 2018.  According to STR, U.S. hotels enjoyed a 3.5 percent increase in revenue per available room during the first quarter of 2018, exceeding the 2.5 percent RevPAR gain expected by CBRE for the period.  Accordingly, CBRE now is forecasting a 2.8 percent annual increase in RevPAR for U.S. hotels in 2018, a 0.3 percentage point enhancement over the 2.5 percent mark published in CBRE’s March 2018 Hotel Horizons® report.

In Newark, the hotel industry also had a very strong first quarter. During the first quarter, Newark enjoyed a RevPAR gain of 9.9 percent. Three-quarters of that growth came from an increase in occupancy.

“Newark’s strong Q1 performance, along with a softening of the supply pipeline for 2018, resulted in our 2018 RevPAR forecast being revised upwards from our prior forecast of a 0.2 percent decline to 3.6 percent growth,” said Mark VanStekelenburg, CBRE Hotels.

One factor that influenced the increase in RevPAR growth was the unusual weather in the Northeast during the first quarter. Because of the numerous late winter storms, the hotel industry in Newark benefited greatly.

Additionally, New York City had a terrific first quarter, which also benefited the surrounding suburbs, including Newark.

In Newark, CBRE is forecasting a 75 percent occupancy rate for 2018, which is a 1.4 percent increase from the previous year. In 2019, CBRE predicts the occupancy rate will drop slightly to 74.8 percent.

Deal Tracker Daily

WARMINSTER, PA—Corvest Realty and Balashine Properties of Blue Bell, PA, formed a joint venture, to acquire County Line Commerce Center, a 427,421 square foot property in Warminster, PA, for $11.2 million. David Dolan and Michael Margolis of Newmark Knight Frank were the sole brokers in the transaction. David Jacobs of Ackman Ziff arranged financing for the acquisition and for future capital and tenant improvements. Corvest and Balashine created the purchasing entity, CLCC Balacor, along with Millbrook Properties of Chicago, IL. The new owners plan to spend $12 million for property upgrades including, among other things, a new amenity center, common area renovations, tenant improvements and exterior modifications. The 427,421-square-foot property is currently 36% occupied and 277,681 square feet of office space is available for lease. The property was formerly the headquarters of Fisher and Porter which was purchased by ABB several years ago. ABB still occupies a portion of the property. Preferred Properties bought the property in a sale-leaseback transaction with ABB in 2003 and made major upgrades to the property.

MONTCLAIR, NJ—The Montclarion at Bay Street Station, a 40-unit apartment building in downtown Montclair, has been awarded LEED Silver certification from the US Green Building Council for achievement in green homebuilding and design. Located at 125 Bloomfield Avenue, the five-story building achieved the recognition by implementing practical and measurable strategies and solutions aimed at achieving high performance in: sustainable site development, water savings, energy efficiency, and indoor environmental quality.

ROCHELLE PARK, NJ—Cushman & Wakefield has arranged the sale of 395 West Passaic Street, a four-story boutique office building totalling 107,969 square feet in Rochelle Park, NJ. Ramaa Management purchased the asset from Garrison Investment Group and Onyx Equities. Andrew Schwartz from Cushman & Wakefield’s investment sales team in East Rutherford, NJ, led the assignment, with David Bernhaut, Andrew Merin, Gary Gabriel, Brian Whitmer, and Andrew MacDonald. Assisting were David DeMatteis and Mark Zaziski from the leasing team. The Cushman & Wakefield team marketed the property in conjunction with Ten-X, an online transaction platform for commercial real estate, also leveraging Cushman & Wakefield’s proprietary investor database. This hybrid approach resulted in robust interest from experienced investors and office building owners throughout Northern New Jersey and New York. 395 West Passaic Street was 80% leased to eight tenants at the time of sale. Situated on 3.1 acres and located at the crossroads of Routes 17, 4 and the Garden State Parkway in one of the most densely populated and affluent areas in the state, it offers easy access to New York City, and proximity to an educated workforce and executive housing. The property features a unique white metal façade and covered parking, and is visible from the Garden State Parkway, which boasts a daily traffic count of more than 150,000. The transaction was Ramaa Management’s second office acquisition in about a year in this market, having also acquired Park 80 East in Saddle Brook in May 2017, according to Danny Barot, principal and managing member.

BETHLEHEM, PA—Holliday Fenoglio Fowler arranged a $30 million-plus sale of a 71-building/383-bed, scattered-site student housing portfolio at Lehigh University in Bethlehem, PA. The HFF team marketed the property exclusively on behalf of Campus Apartments.  A private investment vehicle managed by Hong Kong-based Beacon Assets purchased the property free and clear of existing debt. The 71 properties within the portfolio have prime ‘walk to campus’ locations and incredible access to nightlife and retail.  The portfolio achieved close to 99 percent occupancy during the last two academic years amidst strong year-over-year rent growth.  Lehigh University has an enrollment of more than 7,000 with growth of 25 percent expected during the next seven years. The HFF investment advisory team representing the seller included senior managing director Jose Cruz, senior directors Michael Oliver and Carl Fiebig, managing director Kevin O’Hearn and senior director Steve Simonelli with support from senior managing director Doug Opalka and director Ryan McBride.

BRIDGEWATER, NJ—Denholtz Associates has signed leases and amendments with seven companies for 34,545 square feet of flex industrial space at the Bridgewater Business Park, 1W-5W Chimney Rock Road, 7W-10W Chimney Rock Road and 24E-30E Kearney Street in Bridgewater, NJ. Shaolin Kung Fu & Tai Chi signed a lease for 6,000 square feet to house a training facility and Medeo Fencing School renewed its lease for the school’s current 9,005 square feet of space. Industrial Rubber Company, a tenant since 2000, renewed its lease for 8,000 square feet at 7W Chimney Rock Road, and Bridgewater Marbleworks, another longtime tenant, expanded into the balance of 3W taking an additional 3,300 square feet. Additionally, three companies signed renewals of their existing leases: K&S Hydraulics, renewing for 4,000 square feet; Hillside Corvette renewing for 2,840 square feet; and 4M Connect renewing for 1,400 square feet.

Money Moves

HACKENSACK, NJ—Meridian Capital Group arranged $19 million in financing to refinance a multifamily community in Hackensack, NJ. The seven-year loan, provided by a balance sheet lender, features a rate of 3.625% and was negotiated by Judah Hammer, left, Meridian vice president, and Zev Karpel, senior vice president, who are based in the company’s New York City headquarters. Located on Acadia Road in Hackensack, NJ, Summit Gardens consists of 14 two-story, garden-style buildings containing 135 one- and two-bedroom apartments. Units feature amenities including fully-equipped kitchens, hardwood floors, dishwashers, and heat and hot water included in the monthly rent. The community also boasts benefits such as lush landscaping, onsite laundry, and 24-hour maintenance in an advantageous location surrounded by shops, restaurants, schools, and employment opportunities.

Executive Moves

SADDLE BROOK, NJ—CBRE named Jeffrey Hipschman, senior managing director of the company’s New Jersey market, to the additional role of Industrial & Logistics Divisional Lead for the Northeast. With these responsibilities, Hipschman will help further expand and integrate CBRE’s industry-leading logistics services across the region.  In addition to his Industrial & Logistics role, Hipschman is responsible for the management of all CBRE business lines across New Jersey, as well as all operating and support units, including office and industrial brokerage, asset services, project management, investment properties, research, marketing, legal and finance.