EAST RUTHERFORD, NJ-With interest rates still at historic lows and the stock market still uncertain, investment in suburban New York real estate is coming back, according to Andrew Merin, vice chairman of Cushman & Wakefield’s Metropolitan Area Capital Markets Group.
New Jersey is particularly active, with office sales volume possibly doubling 2009 figures, and industrial sales also exceeding last year’s activity, the company reports. “Investment sales have come out of hibernation,” Merin tells GlobeSt.com.
Pension funds are once again looking to invest, a reversal of 2009 trends. Foreign buyers from Israel, the rest of the Middle East and German have returned to the market, seeking alternate investments to the shaky equity market. Even China is beginning to educate itself about the market. “America is favorably viewed now,” compared with Europe, Merin says. “If you look at Spain, Portugal or Greece, people are scared.”
The sales volume of Northern New Jersey office properties already has totaled 28 transactions for a total of $1.5 billion, and could more than double 2009 figures by year-end. Industrial sales in the entire state also are on track to exceed 2009 levels.
Throughout the Tri-State area, multifamily is the most popular sector, with investors looking for quality, Merin notes. However, the possibility of too much supply on the market looms. Office and industrial property sales are still trying to gain statistical momentum, though core properties with leases are trading.
Retail, however, has seen few offerings, and those few on the market have been in secondary markets or are B-level quality. However, Merin remains “bullish” on retail, he says. “It was the first sector to go out of favor,” he notes. “But now some retailers are using [vacancy] to go into markets they couldn’t before. PC Richard, for example, is taking stores that went under. We are seeing a bounce.”
The company’s transaction volume should nearly double last year’s production, reaching nearly $1.2 billion by the end of 2010, Merin reports. Seventeen deals were completed through September versus 20 transactions for all of 2009. “We are by no means out of [danger],” Merin says, but he does see a return to a more vital market comparable to 2002 to 2004 levels.
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