MORRISTOWN, NJ-The last two quarters of strong positive absorption set the stage for a lively leasing market in 2014, Avison-Young says in a market forecast exclusively released to GlobeSt.com
Tenants are poisedt to gain substantial leverage via the Economic Opportunity Act of 2013 (EO13) and additional blocks of space becoming available.
2014 market forecast for all three real estate market sectors in the state is positive, although the office market outlook remains the most dicey. GlobeSt.com obtained an exclusive first look at the forecast.
A-Y calculated a slight dip in the office vacancy rate for 2013, down from 21.2% to 20.8%. The positive motion the real estate company predicts for this year will come as:
- more “visionary” developers devise re-use proposals for the state's abundance of older suburban buildings, and
- the real estate community masters ways to leverage the re-tooled state tax-incentive program (the Economic Opportunity Act).
In the retail sector, where A-Y notes that the vacancy rate tightened across all property types in 2013, shopping centers had the most improved occupancy levels. A-Y forecasts that the worldwide attention that will likely accrue to the American Dream Meadowlands project next to MetLife Stadium where the Super Bowl will be played next week will provide the regional retail market with a boost.
The 2.8 million-square-foot American Dream shopping and entertainment complex has been under construction for a decade.
The industrial market vacancy rate is at five-year lows, A-Y notes – and it predicts robust demand for warehouse space will continue through 2014.
A-Y advises investors in the forecast that capitalization rate compression is the trend for industrial property, and that retail cap' rates are also somewhat reduced. The company said institutional investors are expected to remain active with established product and value-fund operators will also continue to find opportunities.
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