Happy Holidays!

Getting to be Christmas time!
New Gov. coming to Trenton, looking to get development going again, cause gang without real estate construction and the jobs it creates, NJ will have a 3-5 year period of stagnant doldrums. Commercial real estate nowadays is a tenant/landlord renegotiation. If you have a lease coming up for renewal, its probably a good bet you'll pay less next year. As far as sales, the volume is the lowest it has been in memory. Deals just can't get financed even IF the parties agree on price. There will be a major shift in volume if the US decides to increase the cap. gains rate which will spur a rush to exit the commercial investor property market and save sellers the increased tax for holding on. Besides rental rates on some bldgs. in Piscataway NJ are the same as they were 20 years ago.

Stay tuned for more inventory to hit the market BIG in 2010. Telling investors to BE PATIENT.
Happy Holidays!,
Chris Galiano, SIOR
Managing Director
NAI DiLeo-Bram & Co.
cgaliano@naidileobram.com

OK Now its Fall and Look out Below

With all the data for the year in for 3 quarters., looks like we are in for a serious reset of asset values, all across the board. The offers being presented by tenants are chock full of free-rent and 20-40% off peak prices. On the actual demand for bldgs. below 50,000 sf , demand is strong, tenant's who missed the 1st wave and were out there paddling , found a new set of waves coming through with sellers who want out. There are few and far sellers who want out but that number is increasing. Listing volume is way up. LOTS of space, not enough demand. The way to look at this whole thing, the Commercial Real Estate sector is there are no buyers for investments without good credit tenants or else a 50% off the price. There are pockets of leasing activity dominated by credit tenants looking to capitalize on the price reduction. The SBA programs whereby the US gov't guarantees a significant portion of a bank's loan to a borrower of commercial real estate with only 10% is the only area that has some volume. Conventional lending is as dry as the desert. The banks just do not want to make any mistakes and loaning money without being able to see over the horizon is a risk. Its a fun time to be advising businesses right now because you can draw on 1991 experiences and explain how difficult it could get yet remaining optimistic to be nimble and ready for the right deal. As always cash is king in most any market. as for now a lot of that cash is stuck at <1% treasury yields, it won't stay there for long.
Chris Galiano
Managing Director
NAI DiLeoBram & Co.
1315 Stelton Rd.
Piscataway, NJ 08854
cgaliano@naidileobram.com

No Summer Heat in Commercial RE

Looks like no 90 degree days for NJ, that also bodes for the real estate activity for sales of Office and Industrial property. The spread on the bid/ask is still far apart and the two sides are getting closer on deciding on what a property is worth. Looked at a property today that had an apprisal done recently and used comps from 2006-8 and is THAT the market to judge value? I think not,
over-levered, plentiful loans available created the bubble. Now its time to see what's left of the balloon. Our office banged out nice number of deals the past weeks, more than earlier this year, which we feel is a good sign of decisions starting to get made vs. a fire drill of touring bldgs., only to have corporate reevaluate and sit on the sidelines.

Rates are going down which should help. Forget all that nonsense of inflation, hyper-inflation for now, if Everyone is singing the same song, I want to be on the other side of that trade. There will be a time and place for a re-inflate taking place BUT NOT ANYTIME SOON. Until then deals will get done that HAVE to get done. Buyers who have missed the 1st train in 2006-7 are now stepping up. Let's just see if we have willing sellers.
Chris Galiano, SIOR
NAI DiLeo-Bram & Co.
1315 Stelton Rd.
Pisccataway, NJ 08854
cgaliano@naidileobram.com

Chris Galiano-2009 NJ Commercial RE Advisor

The role of commercial real estate brokers has changed from performing duties as a transactional type of service provider to more of a business advisor. We are now looking at how to prepare for excess space, renegotiating rental terms, viewing the market and reporting back to clients more frequently so not to miss an early trend. So far the trend has been to buckle-up and use your space as efficiently as possible and stay put unless there is a great deal and there are.

Central New Jersey is a hotbed of activity as it relates to distribution of consumer products.
1/3 of the USA lives within 5 hrs. of NY City, so we need places to store all that product that we love to buy.Whether it be soap and paper towels, olive oil or clothes.,the "big boxes" that line the NJ Turnpike are the marquis names of consumer staples alike. The real whispers out there lately are ,"how low you think they'll go". I showed property last week and the customer within 30 seconds of inspecting a mid-size warehouse in Central NJ said, "This will work but I am shopping the cheapest deal" , so its off to the races to see which of the owners wants to fill the space and discount the rent to do it.
Got to go, the market forces are at work and when the dust settles the well-located properties will rent and the other ones not may be sold or leased CHEAP.
Chris Galiano, SIOR
NAI DiLeoBram & Co,
cgaliano@naidileobram.com
732-985-3000

July 10,2009 More of The Same

Looks like July will be a repeat of June, the way this is starting out. Deals are getting done at the 10-40,000 sf mark at a somewhat decent pace all be it at least at 50% volume levels of 2008.
Rates are are still lowering as we see CPI in a NEGATIVE situation for the northeast. Much like the hotels throwing in a free massage with their room but maintaining the room rate. Owners are throwing in free rent , more of it and maintaining the face rate of late 1st quarter 2009.

THE WEIRD PART IS: You are more likely to SELL a bldg at current market for sizes 25-50,000 sf then lease it. What economy? Now there won't be $100 psf on the contract but maybe a surprising number despite the market conditions. What about AIG's bldg in NYC at $100 psf for 1,000,000 sf , NOW that's deflation! That bargain is being SCOOPED up by the foreign investors quicker they can write their check.

Many, many I mean many strip centers will soon feel the wrath of the refi illness. If you have problems on the refi , then we'll soon see supply hit the market in a big way, at decent prices..
Stay tuned for more Summer News...
Chris Galiano, SIOR
Managing Director
NAI DiLeo-Bram & Co.
cgaliano@naidileobram.com
732-985-3000

Well June and the Summer of 2009 is heating Up!

The buyers are looking, I know I had a few out today inspecting property. With few properties properly priced and a bunch of qualified buyers, we should she price action which will level off in Q3 and a surge may occur in Q4 if rates remain unchanged and there is at least somewhat of an effort to relax these suffocating credit standards for real buyers. Yes, these buyers may not be GM, did I say GM, oops I meant GE, did I say GE oops I meant Exxon, but buyers out looking, that have capital and there are tenants tired of paying , "the man" the dreaded RENT. Being cautious is rewarding the astute buyer who sits and waits and waits and waits but at some point, your lease comes up for renewal and up its either rent payments or debt payments.

Shaping up as a busy summer as everyone is TIRED of the same tired cocktail party rhetoric and complaints of a @##$ frozen market.
Prologis , AMB , Mack Cali, First Industrial, keep up the good work, these guys KNOW dealmaking!!! Also, the private equity guys are holding their own.

Enough said, there's work to do, ...
Developing..........

April-More of the Same Stagnation

Well folks, sales of industrial and office property in Central NJ of any consequence are off 80% year over year. So what is happening? The #1 question at functions and from owners and tenants, what trends do you see developing?, where are the rental rates going? What's my bldg. worth? What can I buy? See any 10% cap deals?

Let's tell the April story this way......great bldgs. are having problems, good bldgs. are surviving and 3rd tier bldgs. are doing ok just that their rental rates get hit the hardest on the downdraft. %wise, the rates being cut 20-35% are not uncommon, with some rent concessions upfront.

It will be interesting to see if the trend will continue through 2009 all the way till 2010. The bet is yes it will.... With lenders requiring 50% more equity on sales, it could actually help the rental market by forcing tenants to stay tenants. You can count on one hand deals north of $5,000,000 in the 1st quarter.
You have to admire Prologis, they are aggressively doing deals, I like that!
First Industrial, ditto! Not to mention AMB, doing their fair share....
The private local owners know the drill, retain the good tenants and listen to their story. They saw this in '91, it was actually more ugly then, but who knows if this is the 3rd inning of 9 here in 2009 Q2.

That's April, I'll have much more in the following months.
Chris Galiano
Managing Director
NAI DiLeo-Bram & Co.
(732)985-3000
cgaliano@naidileobram.com

Pivot Point before the Summer

Looks like the commercial real estate sector will solely be dependent on REFI's able to be accomplished with some sort of gov't help. If you look at the value of property and the ltv, the refi candidate doesn't have a chance. Take a look at all the debt maturing over the next 36 months, it is absolutely staggering the reit debt spread out among office, retail, office and industrial.
Some of these loans have no takers, GGP is still looking for major help, MGM is on life support and although there is cash flow among the NY REIT giants there still is a declining rental market and severe asset deflation taking place. The resetting of values will take us back 10-20 years. TIME has always been the ally of deep commercial re holdings, time is running out and patience is wearing thin with holders of massive debt as prices and rates fall. Goldman says we need 10 Trillion of spending to stop the deflationary forces, they are right and gold hangs tight to a trading range of $900-$1,000, you will start to see gold and the bond market be the barometer over the next three months as we look to these experts on the forecast of the economy. Do not look at equity pushers, they are not the analysts , the debt underwriters are. They have to know the sustainability of progress going forward. Equity pushers are just that, you heard it all already, dollar cost average, buy when there is fear, market has a bottom, all great lines but no substance like the group writing debt.

As far as the Central NJ market, a lot of inventory hit the street this week, on the office and industrial side. Oh yea, that Prologis deal is finally inked for the +/- 192,000 sf, yes the numbers are crazy but its better than VACANCY. Boy times have changed!

Christopher Galiano- Managing Director, SIOR
NAI DiLeoBram & Co.
cgaliano@naidileobram.com

March and Sales are still Frozen

We will have to wait a few more months for the banks to get their act together before the spring thaw arrives for lending to resume. Sales prices on all commercial property are slowly declining and rental rates are following. We are a reset stage in the economy. We are at point where if owners haven't reset yet they will be. Sellers are already calling their brokers and reducing prices quickly to get the sale done.

A lot of empty space at Exit 7, 7A,
8A has its canyons too
9 has some health and Exit 10 is doing relatively fine
Office sublet space is rapidly unfolding
So it looks like a little more concessions for the tenant looking to sign a 5 year deal.

Chris Galiano, SIOR
NAI DiLeo Bram & Co.
732-985-3000

NJ/NY will get a great lift from the BILL!

With bldgs. having debt coming due in 2009, the big question is "where are the banks on the idea of rolling over the debt?" Well, thanks to the TARP and other things, we will see a lowering of interest rates quoted on your garden variety commercial loans. The reason being, in order to bring about major change in the economy, the thousands of loans Must roll in order for stability in the banking system to take affect. The boys at treasury will be watching with a keen eye.

What is really happening in retail is: Weekends are jammed at the malls and on the weekdays they are dead. Same with Hotels in Vegas, jammed for the weekend and cancellations for weekday conferences happening at an alarming rate.

Rail served bldgs. will be back in play in the second half of 2009, as energy prices rise again and the flow of commerce gets transferred to the mighty rail lines which growing very nicely until September 2008..

Office space in and around the rail stops will continue to see better occupancy rates higher than the suburban areas.

New Jersey should receive significant money from the US bailout and NY state will be bailed out even more so , good news for highway and bridge builders.

Growing retailers are: 2nd hand stores, dollar stores, grocery chains, car washes, dental offices(yes they do look at strip malls).

Chris Galiano, SIOR
Managing Director
NAI DiLeo-Bram & Co.
Piscataway, NJ

cgaliano@naidileobram.com

NJ Industrial Real Estate Hanging ON!

With whispers of up to a year's free rent on a select building or two, the modern solid newer warehouses in Central NJ are mostly occupied and rent producing at good rates. The problems in the market occur in the secondary locations in which the vacancy rises in periods we are going through. There just aren't as any companies looking for space. The sales market is still waiting for the spring thaw and looks like we will have one, it's just a matter of what month this year. Yes, in 2009, there will be a slight rise in the back half of the year in sales than the front half. All most people are waiting for is the treasury dept. to decide what rules we are going to play by this year and then we can apply it to the valuing of real estate asset classes and the debt markets can begin to trade again.

All that said enjoy the Valentines/ Presidents Day LONG weekend, its just what the Dr. ordered as we await the passage of the bill of a lifetime. Enjoy it!
Chris Galiano, SIOR
Managing Director
NAI DiLeo-Bram & Co.
Piscataway, NJ
cgaliano@naidileobram.com

What's Going On?!

#1 Question from commercial real estate tenants, buyers and owners, "what's going on out there?"
There's absolutely no visibility. Its like flying a jet with instrument conditions down to the runway with not even a look at the runway lights ahead. Why? Because, no one knows with any credibility whether or not sales will be off 10,20 or 30-50% in 2009. One thing is for sure ,sales will be down.
I will add one important notable quote from the holiday party circuit. From a major industrial owner with over 100 tenants "None of my tenants aren't in any even minor default." Why is that, I asked? "Because the landlord is the LAST company to get burned in an economic pullback, if there is no premises to operate from because of failure to pay the rent, then game over, out of business, and companies will do whatever it takes to not be declared in default of their lease." That news was very encouraging.
The banks are still frozen, I think they turned DOWN the temperature in December even more. Local banks are lending to local companies with proven track records and impeccable histories other than that, stand in line and take a number for any major line of credit. Office rents have continued to slip, with even more concessions now available for a 5 Year lease. Industrial rents are slowly heading south and with sublet space being the new talk of the market which we have not seen in a long time. Stay tuned< buckle up turbulence ahead and not minor but moderate to severe.