This month’s Topics:

I. Commercial Real Estate- Industrial, Office, & Retail

II. Coming Soon- NJ COMMERCIAL REAL ESTATE ALLIANCE (www.njcrea.com)

I hope this email finds you enjoying your summer; I know it goes by quickly for all of us. I wanted to take this opportunity to briefly discuss the latest information as I am seeing things today with respect to each market sector, Industrial, Office and Retail markets. I am also going to share with you some of my general thoughts of where the commercial real estate arena is today and where we are heading. Lastly, I am going to introduce you to something I have been working on putting together with some friends for the past year and a half with the creation of NJ Commercial Real Estate Alliance (www.njcrea.com).

Industrial

The industrial marketplace in northern NJ is a robust market in general given our location; we are located within a 5 hour driving radius of about 40% of the country’s population. This country has converted from a manufacturing base to a service based industry, however, this demands warehousing that differentiates from long ago because we now need to simply receive our goods from outside sources and store them temporarily before shipping to retail oriented locations. NJ’s ports will continue to grow to help improve delivery of these goods that we consumers demand. The industrial market has been affected by current economic times, and numerous properties have come back on line today, offering great opportunities for companies looking to relocate, downsize or the like; these firms have great options available to them that they should begin tapping into. Supply on the rise and weaker demand to fill these vacancies is the reason these unique opportunities exist today and as far as I can foresee, in the near future.

Office

The office market must be broken down into two sectors; general office space and medical office space. Office product in NJ has been chugging along steadily over the past 25 years with virtually no peaks and troughs. Rental rates have been further depressed due to companies trying to figure out ways to operate at lower costs. Technology today has enabled companies to operate in less traditional office space for a number of reasons such as: employees working from home and the move towards a more paperless environment coupled with the redesigning of more efficient office configurations. I think it is a great time to be an office tenant today with so many options at your disposal to select from. My job representing the office tenant base today is very exiting given the leverage I have negotiating such great alternatives on behalf of my clients.

Medical Office space differs from general office space mainly due to higher parking requirements demanded by municipalities coupled with the additional construction costs to build out these facilities. The increasing age of our Baby Boomer Population will result in a steady increase in demand for this type of space as well as companies in the Healthcare Industry as a whole that will be servicing the doctors and general population who will come to rely on these goods and services offered by this sector. I think the only reason activity in this sector has been desolate over the past several months is simply because the psychological affects in people’s minds has caused them to freeze up thinking there is too much uncertainty with the direction of the world economy and where we are heading. I think that once the mindset changes, this sector is going to improve at a much faster pace than any other sector with the exception of government related sectors. I don’t want to get into politics too much because it goes beyond the scope of this message; the bottom line is no matter what new regulations are imposed, I strongly feel the demographics will speak for themselves in terms of demand for medical office space as well as space serving the healthcare industry as a whole.

Retail

The retail market has been hit the hardest during this economic contraction; all you have to do is drive up and own Route 4 or 17 in Paramus, one of the most sought out retail corridors in the country to see the devastating effects on our local economy. Consumer spending is down; pricing was pushing the $50 psf range two years ago. Today, you can probably convince a savvy landlord to do a deal in the mid to late $20’s psf, a large difference from only a short time ago. Although things look grim today, retailers should take advantage of a unique opportunity to secure space in the best retail corridors in the country at reasonable costs that will not remain forever!

Summary

I have noticed over the past couple weeks, phone activity has improved and people seem to be coming out of their shells to get back to work. Traditionally, August is the slowest month of the year next to the holiday time in December for the Commercial Real Estate Arena, however, positive news in the economy is what leads me to believe that activity is going to further improve after Labor Day. The stock market is on the rebound, and although it recovers much slower than it crashes, this slow and steady improvement is indicative to what will happen in the commercial real estate arena. Banks have virtually been frozen, sellers and landlords have had unrealistic expectations of pricing and this is getting people to scratch their heads and think what can I do now to improve things and move forward? For the first time, some of my clients are coming to terms with reality that their properties are not worth what they were two years ago and if they want anything to happen, they must adapt to current economic times or they will be left high and dry with little or no activity on their available property. Banks will eventually loosen up and have to get back into the business of lending, deals will have to get done and they will. The main difference with this next chapter is that perceived winners in a transaction will simply be the Tenant and/or the Buyer and NOT the Seller or Landlord, which is how things have been for many years!

Coming Soon- NJ COMERCIAL REAL ETATE ALLIANCE (www.njcrea.com).

I have been working to form an alliance with a team of highly respected firms that touch upon the Commercial Real Estate World in some facet. The idea of the group is to create a think tank approach to addressing the unknowns of a turbulent economy with talented and experienced individuals from highly respected firms. The types of areas that we include are Accounting, Appraising, Architecture, Banking, Brokerage, Business Incentives, Capital, Construction Management, Engineering, General Contracting, Insurance, Legal and Title. If you go to the site today, you will find it under construction although I thought I would begin this month with a preview to what is to come.

The NJ Commercial Real Estate Alliance will be unveiled shortly and is comprised of individuals and companies you know of and it will be a one-stop-shop to servicing all portions of a commercial real estate venture. You will find all my monthly news articles archived for future reference, you may comment on my blog entries, and you will also be able to tap into the latest industry news. Best of all, you can communicate with any member directly to address anything you would like based upon the category you are questioning. You can reach out to a team of highly trained professionals that you will need to help you through a tough situation and you can utilize as few or as many of us as you wish, individually, or collectively.

Stay tuned for upcoming information regarding the NJ Commercial Real Estate Alliance and enjoy the rest of your summer. Feel free to contact me at This e-mail address is being protected from spambots. You need JavaScript enabled to view it or call me to discuss any material from this month’s e-newsletter or any other commercial real estate matter you would like to discuss. Thank you for your time!!!

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