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.
Saturday, November 24, 2012
Politics Are Over, Holidays are Here! Taxes are in Focus
Some Year so far in 2013! Q1 was fast and furious and so far no quarter has been able to match it. Holidays have begun, Election is over.
If the CRE is to hold onto and sustain the recovery, it will depend on Congress not just Bernanke and the Fed holding rates down. They have done all the heavy lifting till now. Now all we need is cooperation and avoid the fiscal cliff in order for construction to start to take hold with confidence.
Amazon is poised to have a record year. New Jersey will most likely land 1.2 million square feet of distribution space in 2013 in 2 areas of the state, 1 being Newark, the other down near Exit 7A on the Turnpike.
We will know more on the results of Black Friday weekend as a barometer for the season next week.
Chris
Monday, September 26, 2011
Fall Back to Spring Ahead
OK, as indicated in previous comments , we are going to need to fall back in order to spring ahead. Lower rates going lower to paper over the Fed's wrong moves of earlier years.
Bargains are perceived when they fall 30% + off previous highs. Volume on the sales side is absolutely pathetic. Blame the banks, who blame the gov't and the new regs. Everyone is afraid of their shadow. No body wants to dive in the pool until other folks do. Confidence is the key ingredient lacking in the recipe for economic growth. Healthcare costs unknown, implied tax rates unknown, LT that is. Companies don't hire for short term, they temp it out. Bldg. lease prices are falling in concert with sales comps. The towns are getting flooded with tax appeal requests and the engines that drive retired pension benefits etc., are from real estate taxes. We are all working 2x as hard for 1/2 as much since the regular deal volume has slowed. America is learning to live with less as evidenced by all the furniture companies sales being hit super hard. Prices must reflect the real economy, denial phase of the cycle is probably where we are at. People will work for less. The education, healthcare costs must be driven down. I think the jobs our kids will have in 20 years from now don't exist today. Preparing students for 2032 world is going to involve speaking at least 1 or 2 foreign languages. BRIC nations (Brazil, Russia, India and China )and Korea as well
will be dominant real estate forces as their engines only get stronger and their middle class grows. Eyes are on Europe this September, when Greek 1 year bonds pay 60%, default is a matter of weeks. Stay tuned. Germany has probably realized they have to carry Greece on its back in order to protect their country's currency.
Bargains are perceived when they fall 30% + off previous highs. Volume on the sales side is absolutely pathetic. Blame the banks, who blame the gov't and the new regs. Everyone is afraid of their shadow. No body wants to dive in the pool until other folks do. Confidence is the key ingredient lacking in the recipe for economic growth. Healthcare costs unknown, implied tax rates unknown, LT that is. Companies don't hire for short term, they temp it out. Bldg. lease prices are falling in concert with sales comps. The towns are getting flooded with tax appeal requests and the engines that drive retired pension benefits etc., are from real estate taxes. We are all working 2x as hard for 1/2 as much since the regular deal volume has slowed. America is learning to live with less as evidenced by all the furniture companies sales being hit super hard. Prices must reflect the real economy, denial phase of the cycle is probably where we are at. People will work for less. The education, healthcare costs must be driven down. I think the jobs our kids will have in 20 years from now don't exist today. Preparing students for 2032 world is going to involve speaking at least 1 or 2 foreign languages. BRIC nations (Brazil, Russia, India and China )and Korea as well
will be dominant real estate forces as their engines only get stronger and their middle class grows. Eyes are on Europe this September, when Greek 1 year bonds pay 60%, default is a matter of weeks. Stay tuned. Germany has probably realized they have to carry Greece on its back in order to protect their country's currency.
Sunday, March 27, 2011
2011 Q1 Summary
Bid and ask of commercial real estate coming in. Sellers are getting more in tune to the changing
playing conditions. Its not enough to have 2 parties agree to a sales contract. Sellers and Buyers better 1st check with the bank to see what their position is before the fees start coming on the due diligence. Absorption among some of the better geographically positioned properties are being leased all be it at 20% discounts. Many , many things must happen in order for this recovery to maintain an upward bias. Interest rates, oil prices, unemployment, political unrest and I mean London yesterday not the Middle East could derail the positive outlook. If any one of these issues gets more negative , all bets are off. Lets not forget inflation. Right NOW, things we NEED are inflating, ie.. food and energy and things we WANT are deflating. I think the gold/silver metal inflation edge is a combination of Asian countries looking to diversify out of the dollar into hard metal assets and ETF speculators have pushed up these prices 10-15% more than normal. Meaning that margin calls could wipe out a year to date gain in a matter of days. Watching the stock value of Prologis and First Industrial to get a read on how the debt will be managed as it matures. Follow the institutional money into these if you see highers highs and lower lows but be cautious if these can't hold. They both are at a crossroads of indecision as far the markets preceiving their value. It may be better to own the stock equity of real estate investment trusts vs. the actual real estate in the short to medium term. Resaon being , they are more liquid in a time of any crisis.
playing conditions. Its not enough to have 2 parties agree to a sales contract. Sellers and Buyers better 1st check with the bank to see what their position is before the fees start coming on the due diligence. Absorption among some of the better geographically positioned properties are being leased all be it at 20% discounts. Many , many things must happen in order for this recovery to maintain an upward bias. Interest rates, oil prices, unemployment, political unrest and I mean London yesterday not the Middle East could derail the positive outlook. If any one of these issues gets more negative , all bets are off. Lets not forget inflation. Right NOW, things we NEED are inflating, ie.. food and energy and things we WANT are deflating. I think the gold/silver metal inflation edge is a combination of Asian countries looking to diversify out of the dollar into hard metal assets and ETF speculators have pushed up these prices 10-15% more than normal. Meaning that margin calls could wipe out a year to date gain in a matter of days. Watching the stock value of Prologis and First Industrial to get a read on how the debt will be managed as it matures. Follow the institutional money into these if you see highers highs and lower lows but be cautious if these can't hold. They both are at a crossroads of indecision as far the markets preceiving their value. It may be better to own the stock equity of real estate investment trusts vs. the actual real estate in the short to medium term. Resaon being , they are more liquid in a time of any crisis.
Monday, August 2, 2010
August , NJ Commercial Real Estate Mkt. Bring it On !
Starting out the month with companies looking long and hard at their current lease and seeking remedies to cut overhead. Real Estate Taxes have quietly edged up to levels whereby most tenants are asking, "how did they the taxes rise so fast". 3% per year on average has been the norm over the past five years. Biggest indecision is because of the lack of clarity of the tax code upon us. Companies hoarding cash in anticipation of getting hit hard in 2011. Price reductions will accelerate as the askers try to meet the bidders to make a meeting of the minds by year end.
Chris Galiano-SIOR , NAI DiLeoBram & Co.
cgaliano@naidileobram.com
Chris Galiano-SIOR , NAI DiLeoBram & Co.
cgaliano@naidileobram.com
Sunday, July 11, 2010
Mid-Summer and its Heating Up!
Whenever one thinks of commercial real estate these days, you have to wonder about the
slowdown in retail, the unemployed and lack of demand for more office space (hitting a 17.5% vacancy this week, a high) and the seriousness of the "extend and pretend" loans on the books.
What the banks are doing is basically putting off a problem and hoping time heals it. A rolling loan gathers no moss. Many properties have 120% LTV or better but so long as the interest is paid, who cares. The banks don't want to show the loss, the borrower doesn't want to lose the property and the debt is getting serviced. We are in a new norm and THIS is what is propping up the entire economy. If the banks called in all these loans, look out 30% decrease in values would occur in just 1 year from the oversupply. Low interest rates are here to stay until we see unemployment ever break through 9%. There's a lot of pent up demand to purchase property, its starting to kick in and since we have a mid-term election in 6 months this should help maintain the level of activity.
slowdown in retail, the unemployed and lack of demand for more office space (hitting a 17.5% vacancy this week, a high) and the seriousness of the "extend and pretend" loans on the books.
What the banks are doing is basically putting off a problem and hoping time heals it. A rolling loan gathers no moss. Many properties have 120% LTV or better but so long as the interest is paid, who cares. The banks don't want to show the loss, the borrower doesn't want to lose the property and the debt is getting serviced. We are in a new norm and THIS is what is propping up the entire economy. If the banks called in all these loans, look out 30% decrease in values would occur in just 1 year from the oversupply. Low interest rates are here to stay until we see unemployment ever break through 9%. There's a lot of pent up demand to purchase property, its starting to kick in and since we have a mid-term election in 6 months this should help maintain the level of activity.
Friday, March 5, 2010
Leasing/Buying/Renewing
New Jersey Commercial real Estate
The last 6-12 months has been a very activewith our office helping existing customers recognize the value in saving money in the market by negotiating existing leases. Very , very few buyers of property over $5,000,0000. We have had a recent flock of leasing on some of our vacant spaces, notably the 150,000 sf across from Walmart in Edison.
As we get through 2010, everyone is eager to see what the FED and the banks due about this extend and pretend situation. From what we know, there are billions of dollars in commercial loans upside down and due to mature over the next 24 months. Note sales are just starting to creep into the fold, we will have a very interesting year like we have never seen before, due to the continuance of a frozen credit market.
Christopher Galiano, SIOR
NAI DiLeoBram & Co.
cgaliano@naidileobram.com
The last 6-12 months has been a very activewith our office helping existing customers recognize the value in saving money in the market by negotiating existing leases. Very , very few buyers of property over $5,000,0000. We have had a recent flock of leasing on some of our vacant spaces, notably the 150,000 sf across from Walmart in Edison.
As we get through 2010, everyone is eager to see what the FED and the banks due about this extend and pretend situation. From what we know, there are billions of dollars in commercial loans upside down and due to mature over the next 24 months. Note sales are just starting to creep into the fold, we will have a very interesting year like we have never seen before, due to the continuance of a frozen credit market.
Christopher Galiano, SIOR
NAI DiLeoBram & Co.
cgaliano@naidileobram.com
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