MARKET REPORT. 2nd Quarter 2018 MARKET REPORT 2Q18. Established in 1932 Local Expertise Global Reach

Transcription

1 1 MARKET REPORT 2nd Quarter 2018 B B T H E B L AU & B E RG MARKET REPORT 2Q18 C O M PA N Y Established in 1932 Local Expertise Global Reach B B

2 2 Market Trends 2Q18 Northern & Central New Jersey INDUSTRIAL TRENDS RETAIL TRENDS Market fundamentals continued to trend positively, exceeding expectations. The vacancy rate dropped to 3.5% from last quarter s 3.9% and the average asking base rent increased by 6% to $7.90 PSF NNN and by 11% year over year. Interchange 8A of the NJ Turnpike has consistently out performed the rest of the state with its over 1MSF absorption each quarter for the last several years due to the rapid growth of e-commerce and demand for big box distribution centers. Currently there are only two facilities available over half a million square feet and one is 18 clear located in Wayne and the other is located at 8A. The construction pipeline remains strong due to the lack of available space. Over 4MSF of new high cube space was delivered to the market this quarter, with an additional 8MSF under construction (of which half is already preleased). Some of the top leasing transactions that helped propel positive net absorption by 4.5MSF included Clutter.com s lease of 450,000 SF at Exit 8A and FREEZE s 318,000 SF. Toys R Us vacated their Flanders 1.3MSF location, however it is speculated to be under contract with a user/investor known as the Saadia Group which should not affect the vacancy rate in Morris County. Saadia also purchased 473 Ridge Road and leased it back to the Seller, FREEZE, this quarter. The Port Authority of NY/NJ experienced a boom in activity. Total TEU volume was up in June year over year to 6.8 %. The total rail lifts also improved by 15%. MARKET REPORT 2Q18 The amount of vacant sublease space in the Northern New Jersey Retail market has trended down over the past quarter. At the end of the 3Q2017, there was 284,448 SF of vacant sublease space. Currently, there are 277,244 SF vacant in the market, according to Costar reports. OFFICE TRENDS The office market received a stimulus from the EDA, and state incentives, which has helped increase leasing velocity to New Jersey (i.e. Integra Life Sciences Corporation and Teva Pharmaceuticals). In the Short Hills submarket at 830 Morris Turnpike, we witnessed a 27% decrease in its availability due to over 23KSF of newly completed deals within the quarter. ECONOMIC TRENDS The US economic outlook remains healthy, according to most economic indicators. The NJ unemployment rate dropped to 4.3%. According to the Bureau of Economic Analysis, the GDP increased at a annual rate of 4.1% in the second quarter, due to positive contributions from personal consumption expenditures, exports, nonresidential fixed investments, federal government spending, and state and local government spending. Established in 1932 Local Expertise Global Reach B B

3 3 Market Trends 2Q18 Northern & Central New Jersey US GDP GROWTH RATE GDP represents the total dollar value of all goods and services produced over a specific time period REAL GDP AND REAL VALUE ADDED BY SECTOR Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Mar-15 Jul-15 Nov-15 Mar-16 Jul-16 Nov-16 Mar-17 Jul-17 Nov-17 Mar-18 Jul-18 SOURCE: Tradingeconomics.com U.S. Bureau of Economic Analysis Unemployment Rate U.S. and New Jersey s unemployment rate maintained a steady rate with very little fluctuation over the course of the second quarter. Sources: Bureau of Labor Statistics U.S. Bureau of Economic Analysis U.S. Department of Commerce April May June NJ 4.5% 4.4% 4.3% U.S. 3.9% 3.8% 4.0%

4 MARKET TRENDS INDUSTRIAL

5 5 ±830 MSF INDUSTRIAL SPACE AVERAGE LEASE RATE $7.90 PSF NNN INDUSTRIAL OUTLOOK Northern & Central NJ The avid appetite for industrial, high-cube, distribution centers will continue to attract institutional investors, despite the impending rise of interest rates. Demand for space is expected to tighten despite the newly-imposed tariffs. It will continue on its strong pace pushing new speculative development toward historic levels. ±3.5% ±4.5 MSF ±4.2 MSF VACANCY RATE NET ABSORPTION 2Q DELIVERIES AVERAGE SALE PRICE $110 PSF based on >20KSF AVERAGE CAP RATE RANGE 4.5% % NJ UNEMPLOYMENT RATE 4.3% Expect vacancy rates to remain low and rental rates to trend higher. ±8.1 MSF UNDER CONSTRUCTION HYPER- SUPPLY RECESSION EXPANSION RECOVERY Sources: CoStar and Internal Research

6 6 Quick Stats 2Q18 Northern & Central New Jersey Industrial HISTORICAL VACANCY & LEASE RATES HISTORICAL NET ABSORPTION Q2016 2Q2016 3Q2016 4Q2016 1Q2017 2Q2017 3Q2017 4Q2017 1Q2018 2Q % 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 2Q2018 1Q2018 4Q2017 3Q2017 2Q2017 1Q2017 4Q2016 3Q2016 2Q2016 1Q ,000,0002,000,0003,000,0004,000,0005,000,0006,000,0007,000,0008,000,000 Lease Rates Vacancy Rates Sources: CoStar and Internal Research MARKET REPORT 2Q18 Established in 1932 Local Expertise Global Reach B B

7 7 Quick Stats 2Q18 Northern & Central New Jersey Industrial Industrial Market Vacancy Rate (%) Average Asking Lease Rate (PSF) Average Asking Sale Price (PSF) Net Absorption (SF) ± Bergen County 4.4 $9.25 $ ,398 Passaic County 4.6 $7.69 $ ,875 Essex County 2.2 $8.71 $ ,000 MARKET REPORT 2Q18 Morris County 5.5 $7.54 $ ,143 Hudson County 4.5 $8.18 $ (377,524) Union County 4.3 $7.04 $ ,571 Middlesex County 2.4 $7.87 $ ,253,507 Somerset County 2.4 $7.75 $ ,761 Sub Market West Essex 3.2 $8.77 $ ,600 Meadowlands 3.0 $9.18 $ ,425,667 Port/Airport 3.6 $8.27 $ ,000 Exit $8.35 $ ,200 Exit $8.44 $ ,333 Exit 8A 1.3 $6.55 $ ,406,700 Exit 7A 3.7 $5.09 $ ,050 OVERALL 3.50 $7.90 $ ,352,170 Sources: CoStar and Internal Research based upon 10,000 + SF 12 + single-story facilities Established in 1932 Local Expertise Global Reach B B

8 8 New Development 2Q18 Northern & Central New Jersey Industrial Big Box Markets Average Rental Rate (PSF) Exit 16-18: Meadowlands $13.50 Exit 13A-15: Port $12.00 Exit 16 Exit 13A-15 Exit 13 Exit 12 Exit 10 Exit 8A Exit 16w Russo & Forsgate Development 2.5M SF Exit 13: Linden $10.50 Exit 12: Carteret $10.25 Exit 10: Edison $8.50 Exit 13 Prologis TriPort Center 540K SF 110 docks AC Exit 7A Exit 6 Exit 15e Morris & Duke 870K SF 661K SF Exit 8A: Cranbury $6.75 Exit 7A: Robbinsville $5.00 Exit 6: Burlington $4.50 Exit 6 Clarion Partners 1.57M SF Exit 12 Sources: CoStar and Internal Research based upon 32 + Greek Development 4.2M SF MARKET REPORT 2Q18 Established in 1932 Local Expertise Global Reach B B

9 9 TOP INDUSTRIAL SALES Address Submarket Price (±) Buyer 200 Riser Road Meadowlands $40.5M $140 PSF Dassault Falcon 234 Moonachie Road Meadowlands $23.5M $136 PSF Liberty Property Trust TOP OF THE CHARTS 2Q18 Northern & Central NJ Industrial 350 Secaucus Road Meadowlands $11.35M $142 PSF Seagis Property Group 433 Murray Hill Parkway Meadowlands $14M $140 PSF Goodman Birtcher TOP INDUSTRIAL LEASES Building Submarket SF (±) Tenant 1065 Cranbury South River Road Exit 8A 450,000 Clutter 473 Ridge Road Exit 8A 318,000 Freeze 180 Raritan Center Parkway Exit ,000 Gordon Logistics 960 High Street Exit ,000 Metropolitan W/D TOP CONSTRUCTION PROJECTS Submarket Type-Tenancy SF (±) Completion (approx.) Exit 13a BTS-Allied Beverage 540,000 4Q18 Exit 15e BTS-Fabuwood 706,000 2Q18 Exit 15e Spec 870,000 3Q19 Exit 14 Spec 661,000 2Q19 Sources: CoStar and Internal Research

10 2Q18 NJ & NY IMPORT-EXPORT Year-to-Date Import TEUs Export TEUs Total TEUs Loads Empties Loads Empties Loads Empties Total Total Rail Lifts YTD June ,757,568 8, , ,484 2,513, ,512 3,450, ,011 YTD June ,630,943 10, , ,269 2,323, ,211 3,229, ,991 % Change 7.80% % 9.20% 3.70% 8.20% 3.30% 6.80% 15.00% Sources: CoStar, Internal Research, 10

11 MARKET TRENDS OFFICE

12 12 VACANCY RATE 20.3% OFFICE MARKET TRENDS 2Q18 Northern & Central NJ ABSORBTION SF 250,000 SF AVERAGE ASKING RATES Class A Class B Class C $28.80 PSF $22.50 PSF $18.50 PSF LEASE SIGNINGS Tenant SF Location City Area Mars Wrigley 148,460 Edison Place Newark Ralph Lauren 255, Metro Blvd Bloomfield Integra Life Sciences 166, Campus Road Brunswick Sources: CoStar and Internal Research

13 13 Office Market Trends 2Q18 Northern & Central New Jersey US Price/SF Comparison Based on Office Building Sales of 15,000 SF and Larger US Cap Rate Comparison Based on Office Building Sales of 15,000 SF and Larger $ % $ % $250 $ % $ % $ % $50 $0 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016 1Q2017 2Q2017 3Q2017 4Q2017 1Q2018 2Q % 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016 1Q2017 2Q2017 3Q2017 4Q2017 1Q2018 2Q2018 Northern NJ US Northern NJ US Sources: CoStar and Internal Research MARKET REPORT 2Q18 Established in 1932 Local Expertise Global Reach B B

14 MARKET TRENDS RETAIL

15 15 VACANCY RATE 6.5% RETAIL MARKET TRENDS 2Q18 Northern & Central NJ ABSORBTION SF 200,000 SF AVERAGE ASKING RATES General Retail Mall Power Center Shopping Center $22.10 PSF $38.00 PSF $19.00 PSF $20.00 PSF LEASE SIGNINGS Tenant SF Location City Dicks Sporting Goods 50,000 Stafford Park Ocean County Whole Foods 36, Valley Road Passaic Staples 21,000 Palisades Center Mall Clarkstown Sources: CoStar and Internal Research

16 16 Retail Market Trends 2Q18 Northern & Central New Jersey US Price/SF Comparison Based on Retail Building Sales of 15,000 SF and Larger US Cap Rate Comparison Based on Retail Building Sales of 15,000 SF and Larger $ % 9.0% $ % $ % 7.5% $ % $50 6.5% 6.0% $0 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016 1Q2017 2Q2017 3Q2017 4Q2017 1Q2018 2Q % 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016 1Q2017 2Q2017 3Q2017 4Q2017 1Q2018 2Q2018 Northern NJ US Northern NJ US Sources: CoStar and Internal Research MARKET REPORT 2Q18 Established in 1932 Local Expertise Global Reach B B

17 17 About Us Since its inception in 1932, The Blau & Berg Company has secured a leading position in the New Jersey and Tri- State commercial real estate market. Headquartered in Short Hills, New Jersey, we are an independent, full-service commercial real estate brokerage firm providing services in the industrial, retail and office spaces, including: site selection, acquisitions, dispositions, leasing, tenant representation, portfolio sales, asset repositioning, and property & construction consulting. MARKET REPORT 2Q18 Established in 1932 Local Expertise Global Reach B B

18 18 GENERAL DISCLAIMER 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. Subject to errors and omissions. The information contained in this document is proprietary to The Blau & Berg Company.