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Market Report 3rd Quarter 2016
830 Morris Turnpike, 2nd Floor, Short Hills, NJ 07078
The information contained herein has been obtained from sources considered to be reliable, but no guarantee of its accuracy is made by this company. In addition, no representation
is made respecting zoning condition of title, dimensions, or any matters of a legal or environmental nature. Such matters should be referred to legal counsel for determination.
Terms and conditions are subject to change without prior notice. Subject to errors and omissions.
Established in 1932
Local Expertise | Global ReachMARKET TRENDS3Q16 | Northern & Central NJ
830 Morris Turnpike, 2nd Floor, Short Hills, New Jersey 07078 | Phone: 973-379-6644 | Fax: 973-379-1616 | www.blauberg.comThe information contained herein has been obtained from sources considered to be reliable, but no guarantee of its accuracy is made by this company. In addition, no representation is made respecting zoning, condition of title, dimensions, or any matters of a legal or environmental nature. Such matters should be referred to legal counsel for
determination. Subject to errors and omissions. The information contained in this document is proprietary to The Blau & Berg Company. Sources: CoStar, Internal Research, US Bureau of Economic Analysis
UNEMPLOYMENT
RATEJuly Aug Sept
NJ 5.2 4.9 5.1
U.S. 4.9 4.9 5.0
Leasing Rates
Sale Prices
Net Absorption
Vacancy Levels
Construction Activity
INDUSTRIAL MARKET TRENDS
-1.5625
0
1.5625
3.125
4.6875
6.25
Oct
2013
Jan
2014
Apr
2014
Jul
2014
Oct
2014
Jan
2015
Apr
2015
Jul
2015
Oct
2015
Jan
2016
Apr
2016
Jul
2016
US GDP GROWTH RATE
Economy
• Despite global economic, political and financial uncertainty, unemployment has remained buoyed
hovering around the 5% mark. Trade, Transportation, Utilities and Construction employment grew,
contributing to healthy consumer spending and confidence. The US Manufacturing sector
rebounded according to the Institute of Supply Management (51.5 PMI).
Retail
• Ecommerce growth due to online sales has at a price for retailers operating only bricks and mortar.
Online sales have increased over 16% year over year while total retail sales increased only 2.3% in
that same period. Several closings such as Walmart (150 locations), Sears (78 Kmarts/Sears)
and Macy’s (+/-100 locations) are feeling the pressure from online shopping. Changing consumer
habits have pushed retailers to downsize. There is little doubt that online shopping has enormous
potential however that does not translate to lack of a physical presence – it may just mean a demand
for smaller spaces. “‘Click and collect’ is vital to retailers’ online survival. It can protect margins
from the huge cost of online orders by eliminating the last mile to someone's door," said Michelle
Grant, Head of Retailing for Euromonitor International.
Office
• The New Jersey Office market absorbed an unexpected amount of SF this quarter. Strong demand
and higher rates continue in the Hudson Waterfront area. The Short Hills market also continues to
see additional absorption and a strategic option for companies looking for excellent facilities
offering amenities convenient to executive housing with good school systems in place.
• Close to eighty percent of the state’s office facilities were built in the 1980’s with amenities that are
either obsolete or inadequate to today’s tenant requirements. The revitalization of some of those
facilities (new HVAC, better parking ratio’s) and/or the demolition of some of those facilities will
help keep the vacancy rate down.
Industrial
• Demand has propelled to dizzying heights as quality space has dissipated, helping this market to be
one of the strongest we've seen in the past thirty years. Key indicators of this strong market have
been e-commerce and the food industry. The vacancy rate is 5.4%, as demand continues to outpace
supply aided by a disciplined speculative development approach despite having over 5.6MSF under
construction -half of which was under construction at the height of the last cycle in 2007.
• Amazon expanded its presence by 600,000 SF and is in talks to assume another 1MSF which would
make their total portfolio in NJ +/-7MSF. Exit 8A continues its strong demand as rents have
reached the mid $5 PSF NNN range and the area has a 3.8% vacancy.
MARKET TRENDS3Q16 | Northern & Central NJ | Retail & Office
RETAIL MARKET TRENDS OFFICE MARKET TRENDS
VACANCY RATE
6.1%
ABSORPTION
-435,000 SF
AVERAGE ASKING RATES
General Retail $20.00 PSF
Mall $38.00 PSF
Power Center $20.75 PSF
Shopping Center $19.25 PSF
LEASE SIGNINGS
Floor & Décor 72,000 SF American Dream Meadowlands
Food Emporium 43,000 SF Plainsboro Plaza
Petco 15,200 SF Crossroads at Eatontown
VACANCY RATE
20%
ABSORPTION
850,000 SF
AVERAGE ASKING RATES
Class A $29.00 PSF
Class B $22.50 PSF
Class C $18.50 PSF
LEASE SIGNINGS
Ernst & Young 168,000 SF 121 River Street
Allergan 431,495 SF 5 Giralda Farms
iCIMS 350,000 SF Bell Works - Office
830 Morris Turnpike, 2nd Floor, Short Hills, New Jersey 07078 | Phone: 973-379-6644 | Fax: 973-379-1616 | www.blauberg.comThe information contained herein has been obtained from sources considered to be reliable, but no guarantee of its accuracy is made by this company. In addition, no representation is made respecting zoning, condition of title, dimensions, or any matters of a legal or environmental nature. Such matters should be referred to legal counsel for
determination. Subject to errors and omissions. The information contained in this document is proprietary to The Blau & Berg Company. Sources: CoStar & Internal Research
Established in 1932
Local Expertise | Global Reach
0.0%
2.5%
5.0%
7.5%
10.0%
12.5%
2008 2010 2012 1Q2014 3Q2014 1Q2015 3Q2015 1Q2016 3Q2016
General Retail Mall Power Center
Shopping Center Specialty Center Total Retail
VACANCY RATES BY BUILDING TYPE
6.0%
7.0%
8.0%
9.0%
1Q2013 3Q2013 1Q2014 3Q2014 1Q2015 3Q2015 1Q2016
Northern New Jersey US
U.S. CAP RATE COMPARISON
Based on Office Building Sales of 15,000 SF and Larger
830 Morris Turnpike, 2nd Floor, Short Hills, New Jersey 07078 | Phone: 973-379-6644 | Fax: 973-379-1616 | www.blauberg.comThe information contained herein has been obtained from sources considered to be reliable, but no guarantee of its accuracy is made by this company. In addition, no representation is made respecting zoning, condition of title, dimensions, or any matters of a legal or environmental nature. Such matters should be referred to legal counsel for
determination. Subject to errors and omissions. The information contained in this document is proprietary to The Blau & Berg Company. Sources: CoStar & Internal Research
Established in 1932
Local Expertise | Global Reach
830 Morris Turnpike, 2nd Floor, Short Hills, New Jersey 07078 | Phone: 973-379-6644 | Fax: 973-379-1616 | www.blauberg.comThe information contained herein has been obtained from sources considered to be reliable, but no guarantee of its accuracy is made by this company. In addition, no representation is made respecting zoning, condition of title, dimensions, or any matters of a legal or environmental nature. Such matters should be referred to legal counsel for
determination. Subject to errors and omissions. The information contained in this document is proprietary to The Blau & Berg Company.
Industrial Space: ±810 MSF
Vacancy Rate: ±5.4 %
Net Absorption: ±4.3 MSF
Deliveries: ±1.1 MSF
Under Construction: ±5.6 MSF
MARKET OVERVIEW
$6.44 PSF
Average Lease Rate
$93.93 PSF
Average Sale Price
4.75 % - 6.3%
Average Cap Rate Range
5.1%
NJ Unemployment Rate
Recession
Recovery
Expansion
NJ
INDUSTRIAL CYCLE
Hyper Supply
OUTLOOK
Industrial rents continued to rise amidst record breaking
low vacancy rates along the NJ Turnpike, and into the
tertiary markets as demand from e-commerce, last mile
delivery services and food related companies continue to
absorb SF despite an increase in new speculative
development.
This demand for space should continue strong through the
4Q16 and well into the new year.
Expect cap rates for Class A distribution centers to
compress into the mid to low 4% range in the upcoming
quarters.
DASHBOARD
MARKET TRENDS3Q16 | Northern & Central NJ | Industrial
QUICK STATS3Q16 | Northern & Central NJ | Industrial
830 Morris Turnpike, 2nd Floor, Short Hills, New Jersey 07078 | Phone: 973-379-6644 | Fax: 973-379-1616 | www.blauberg.comThe information contained herein has been obtained from sources considered to be reliable, but no guarantee of its accuracy is made by this company. In addition, no representation is made respecting zoning, condition of title, dimensions, or any matters of a legal or environmental nature. Such matters should be referred to legal counsel for
determination. Subject to errors and omissions. The information contained in this document is proprietary to The Blau & Berg Company. Sources: CoStar & Internal Research
Established in 1932
Local Expertise | Global Reach
Industrial MarketVacancy Rate
(%)
Average
Asking Lease
Rate (PSF)
Average Asking
Sale Price (PSF)
Net Absorption
(SF) ±
Bergen County 6.7 $7.76 $125.00 (79,817)
Passaic County 5.1 $7.23 $75.00 (4,067)
Essex County 4.1 $6.97 $78.00 158,462
Morris County 7.2 $6.62 $79.00 (60,400)
Hudson County 5.0 $7.13 $118.00 616,219
Union County 6.2 $6.35 $89.00 250,694
Middlesex County 3.4 $6.00 $94.00 2,561,663
Somerset County 5.4 $6.04 $72.00 (208,400)
Sub Market
West Essex 5.2 $7.21 $120.00 42,667
Meadowlands 5.9 $7.38 $130.00 399,667
Port/Airport 5.0 $6.50 $90.00 160,000
Exit 12 5.1 $6.45 $105.00 399,215
Exit 10 1.8 $5.87 $82.00 807,000
Exit 8A 3.8 $5.25 $85.00 929,667
Exit 7A 5.2 $4.46 $67.00 66,400
OVERALL 5.4% $6.44 $93.93 4,281,765
3.5
5.25
7
0.0%
2.5%
5.0%
7.5%
10.0%
2013 1Q2015 3Q2015 1Q2016 3Q2016
Lease Rates Vacancy Rates
HISTORICAL VACANCY & LEASE RATES
0 800000 1600000 2400000 3200000 4000000 4800000
2013
2014
1Q2015
2Q2015
3Q2015
4Q2015
1Q2016
2Q2016
3Q2016
HISTORICAL NET ABSORPTION
830 Morris Turnpike, 2nd Floor, Short Hills, New Jersey 07078 | Phone: 973-379-6644 | Fax: 973-379-1616 | www.blauberg.comThe information contained herein has been obtained from sources considered to be reliable, but no guarantee of its accuracy is made by this company. In addition, no representation is made respecting zoning, condition of title, dimensions, or any matters of a legal or environmental nature. Such matters should be referred to legal counsel for
determination. Subject to errors and omissions. The information contained in this document is proprietary to The Blau & Berg Company. Sources: CoStar & Internal Research
Established in 1932
Local Expertise | Global Reach
BIG BOX MARKETSAVERAGE
RENTAL RATE (PSF)
Exit 16: Russo’s proposed
232KSF | 58 docks |19.47 AC
Exit 13: Duke’s Legacy Center
1.1MSF | 260 docks
Exit 12: Prologis’ Port Reading
2.75 MSF | 315 AC | 6 Bldg
Exit 10: ePort Logistics Center
1.3MSF | 56 AC | 3 Bldg
Exit 16
Exit 13a-15
Exit 13
Exit 10
Exit 12
Exit 6: Clarion Partners
1.57MSF
Exit 6
Exit 7A
Exit 8a
MARKET TRENDS3Q16 | Northern & Central NJ | Industrial | New Development Projects & Avg Rental
TOP INDUSTRIAL LEASES
Building Submarket SF Tenant
698 Route 46 Exit 16w 616,992 Amazon
203 Windsor Center Exit 8 567,000 Aurobindo Pharma USA
6001 Bordentown Sayreville 151,290 OEG Building Material
2 S Middlesex Avenue Exit 8A 128,700 SIF Services LLC
TOP INDUSTRIAL SALES
Address Submarket Price (±) Buyer
401 Cabot Drive Exit 3A $89 PSF | 600,600 SF RREEF
38 Porete Avenue Exit 15W $148 PSF | 139,255 SF GRM
51 Commerce Drive Exit 8A $71 PSF | 222,536 SF TIAA
9 Finderne Avenue Bridgewater $44 PSF | 316,000 SFBridgewater Ventures –
Hampton Meadows
TOP UNDER CONSTRUCTION PROJECTS
Submarket Type-Tenancy SF Completion (approx)
Exit 15E Spec-RTD 189,540 4Q16
Exit 13A Spec-Elberon 90,000 4Q16
Exit 13A Spec-Prologis 495,000 2Q17
Exit 13 Spec-Duke 495,000 3Q16
TOP OF THE CHARTS3Q16 | Northern & Central NJ | Industrial
830 Morris Turnpike, 2nd Floor, Short Hills, New Jersey 07078 | Phone: 973-379-6644 | Fax: 973-379-1616 | www.blauberg.comThe information contained herein has been obtained from sources considered to be reliable, but no guarantee of its accuracy is made by this company. In addition, no representation is made respecting zoning, condition of title, dimensions, or any matters of a legal or environmental nature. Such matters should be referred to legal counsel for
determination. Subject to errors and omissions. The information contained in this document is proprietary to The Blau & Berg Company. Sources: CoStar & Internal Research
Established in 1932
Local Expertise | Global Reach
PORT INFO3Q16 | NJ/NY Import-Export
May
Year-To-Date
Import TEUs Export TEUs Total TEUsTotal Rail
LiftsLoads Empties Loads Empties Loads Empties Total
YTD Sep. 2016: 2,377,133 19,221 1,009,999 1,250,402 3,387,132 1,269,623 4,656,755 408,737
YTD Sep. 2015: 2,443,750 16,723 1,046,732 1,320,005 3,490,482 1,336,728 4,827,210 391,757
% Change -2.70% 14.90% -3.50% -5.30% -3.00% -5.00% -3.50% 4.30%
Sources: CoStar, Internal Research & www.panynj.gov
830 Morris Turnpike, 2nd Floor, Short Hills, New Jersey 07078 | Phone: 973-379-6644 | Fax: 973-379-1616 | www.blauberg.comThe information contained herein has been obtained from sources considered to be reliable, but no guarantee of its accuracy is made by this company. In addition, no representation is made respecting zoning, condition of title, dimensions, or any matters of a legal or environmental nature. Such matters should be referred to legal counsel for
determination. Subject to errors and omissions. The information contained in this document is proprietary to The Blau & Berg Company.
Written by:
Jason M. Crimmins, CCIM, SIOR
President
Edited by:
Whitney A.W. Driver-Crimmins, MA
Marketing & Public Relations
“The Blau & Berg Company has been committed to its clients’ success since 1932; creating
corporate real estate solutions through integrity, market knowledge
and cutting-edge technology along with worldwide affiliates.”
Local Expertise | Global Reach