A Commercial Real Estate Outlook at NAOIP NJ
- Feb 5, 2020
The New Jersey Chapter of the Commercial Real Estate Development Association (“NAOIP NJ”) held its highly anticipated annual meeting in January, where attendees received insights on the commercial real estate marketplace for 2020. Alexander Heil who is the chief economist for the Port Authority of New York and New Jersey, as part of its Commercial Real Estate Outlook program, covered topics such as job and wage growth, inflationary impacts, tariff regulations, CEO confidence levels, and the impact of government spending on the regional economy. In his closing remarks, Alexander does not foresee a recession in the immediate future, but possibly some form of economic slowdown, as a result of government spending cutbacks.
After Heils’ remarks, Tom Bergeron of ROI-NJ lead a panel of experts including Christopher Paladino from DEVCO, Andrew Merin from Cushman and Wakefield, and Ed Russo from Russo Development. The panel discussed New Jersey’s current lack of incentive programs. The legislature and Governor are still in negotiations concerning these incentives, leaving the NJ Economic Development Association’s hands tied until these programs are finalized and implemented, which is thought to be April 2020 at the earliest by members of the panel. The larger concern, however, is the potential reputational harm to New Jersey as being a good place to do business. The panel discussed the office market, retail space, and the excess supply of multi-family and apartment buildings coming into the market.
The panel noted that the strongest performing real estate market in 2019 was industrial properties. The sector has seen historically low vacancy rates, with some areas below 3%, along with rents approaching record highs of up to $20 per square foot in prime spaces, with the average rent in the space being nearly $9 per square foot. This all helps to drive up land and market values. As such, the overall consensus at NAOIP NJ is that it’s certainly a good time to consider investing in this space.
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