Sunday, November 17, 2013

November 2013 Crossroads of Capital and Optimism

Yes, we are at all-time levels in the equity markets and occupancy at the class A industrial parks are at record highs. The last time this happened we had a breakdown and the bubble burst. This time its different. The Federal Reserve still has tools in the toolbox despite what the news reports. The trump card yet to be used would be to not have banks garner interest in overnight deposits which rewarded banks for doing nothing with free money. I don't think they will have to use this weapon but its there and rarely talked about. The rents for flex and industrial are creeping up in lockstep with interest rates. we are a true defining moment, with the healthcare.gov in total chaos at this point, the jacked up health care insurance premiums that are being sent out for 2014 renewal could be the catalyst that sends us back down from multiple years of positive economic movement. A gallon of gas is $2.95, gold is where? what inflation? Office space is changing, class C suburban space has been in deflation for as long as I can remember. Any deal is a good deal for this type. The taxes and cam part of the rent is more than the net rent which isn't the way its supposed to be. Class A at the rail stations is in good shape but not like the industrial market. The recovery may have peaked, we will know in the next 6-9 months after the event. Interest rates will dictate where we go from here. Yes the 1% got richer but the middle class is still struggling and we are going to need more stimulus. Not in the form of Fed action but fiscal action from the folks we elected. The Fed has taken the ball as far down the field as it can. Its time for fiscal NOT monetary policy changes that will induce job creation from the private sector. I am optimistic that we will now go through a flat leveling off period for a number of years just in time for inflation to rear its head in 2016. In the meantime, taxes and cam will rise as net rents stay exactly where they are. Special thanks to the NJ SIOR for electing me their President for 2014, I look forward to serving the finest CRE brokers NJ has to offer. Chris Galiano, SIOR Managing Director-NAI DiLeo-Bram & Co. cgaliano@naidileobram.com 732-985-3000

Thursday, June 27, 2013

New Jersey Poised for more Growth

A little eery out there ala 2008, with industrial occupancies in the heart of the Edison, NJ market close to 98%, most folks in the business are watching closely the next few months ,if we are able to sustain the rebound and recovery from the Great Recession. Supply of properties for sale is extremely low and rents are rising in most local markets. Will interest rates remain low? Probably... The Industrial market and the ecommerce transformation of the last 5 years has put product in the warehouse and off the retail shelve. The office markets continue to hobble along with absolutely no catalyst for growth. The dawning of the tele-comute worker and mobile cloud-based sales force has allowed the major companies to downsize their real estate footprint. The trend will continue to be along the lines of less is better as it comes to office space. Companies in search of warehouse are looking 20% more of what they really need today because of the fear of not having enough space.