Hot Summer 2017

New Jersey industrial real estate continues to sizzle along this summer with an unprecedented speculative construction pipeline emerging. E commerce is just 10% of all retail in the USA , so there's room for continued growth through companies like Blue Apron, Amazon /Whole Foods shipping perishables and other food product. The last mile for that choice piece of fresh fish , a just picked fruit and vegetable is the last battleground . Confidence will have to be earned by the provider of this service. If you go the route of Blue Apron, you still have to mix the sauce and do the work to prepare a meal, but at some point you'll will see in NJ fresh meals delivered through Whole Foods. We are also seeing a resurgence in Biotech and Pharma. There is a growing demand for medications to be manufactured in the NJ/NY region. We continue to represent companies who need to establish a presence in NJ and look forward to a 3rd and 4th quarter that will most likely increase the occupancy rate even higher than the 93% that it stands now. Also, Asian-based manufacturing companies are looking to reside in NJ and compete directly with the US-based companies. Christopher Galiano, SIOR cgaliano@naidb.com 732-985-3000

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

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.

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

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.

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.

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