Topics and trends driving the Garden State’s commercial and residential real estate sectors were addressed recently at RealShare New Jersey. Senior executive panelists: Elie Rieder, founder and CEO of Castle Lanterra Properties; Jacklene Chesler, senior managing director/Colliers International; Brian Whitmer, senior director, capital markets/Cushman & Wakefield; and Mimi Feliciano, founder and CEO of FEM Real Estate; contributed their intellectual capital with esteemed industry leaders. The roundtable, recently held at Bell Works, in Holmdel, N.J., featured four panel discussions on themes shaping the real estate industry’s future.
New Development and Innovative Repurposing
The morning discussion entitled, “New Development and Innovative Repurposing,” featured Mimi Feliciano. The analysis painted New Jersey as the new Urban Gold Coast and highlighted how millennials are driving the need for redefined office space. According to panelists, work/play residencies must offer upscale, lifestyle meets amenities with close proximity to mass transportation to satisfy the needs of professional populations.
“We are taking the first step, the initial risk, in redevelopment with South Beach at Long Branch,” explained Feliciano. “Our 47-unit, ultra-luxurious oceanfront condominium project occupies a formerly blighted area. The new development offers easy access for people who want to be at the beach but in close proximity to Manhattan. Our residencies represent the rebirth of Long Branch – beachfront South. Our condominiums range in size from 1,380 to 3,000 square feet. We created sustainability by using glass walls to enjoy the sun views, and conserved space by designing moveable walls in the den for expandable living areas for guests.”
Industry Leaders Town Hall: A View from the Top
Elie Rieder teamed with senior executives (see below) for the discussion: “Industry Leaders Town Hall: A View from the Top.” They reflected on essential factors influencing real estate; assessed emerging markets; identified economic issues influencing growth, and forecasted the real estate marketing climate for 2017. The group agreed that New Jersey’s densification in communities is necessitating more and ongoing multi-family housing development. Since there is a slowdown in traditional money sources, financing these projects must be seen through a conservative lens due in part to the possibility of rising interest rates.
“Our family office is liquidating very substantial urban assets, as we are more bullish on buying quality suburban, garden-style communities in proximity to urban centers,” stated Rieder. “More and more, we are seeing “a flight to value”, where renters are happily moving into suburban neighborhoods and into properties with more square footage, significantly lower rents, while offering the same level of amenities and unit finishes. We expect these numbers to increase even more when the next downturn comes.
“Across the United States, key cities are experiencing slow and steady growth, plus a balanced delivery of new product, which are good and healthy signs,” Rieder added. “However, what is concerning is that many people who are acquiring both land redevelopment and value-added communities are looking at a very strong, robust growth of historical numbers and perhaps not being conservative enough on future projections where growth might be much more limited.”
Rieder concluded by acknowledging the lack of liquidity in debt markets is going to be offset by the robust growth in other key investment areas. Coupled with this, he asserted the millennials’ redefined lifestyle is contributing to a positive forecast for workforce housing.
Rieder also stressed the importance of immediately forging close ties with local governments in the municipalities where property is acquired. “I believe direct relationships with the Mayor and Council of the towns we conduct business in is vital, so we can communicate our goals with transparency. Having a synergistic relationship conveys how we appreciate the town’s workforce housing and our commitment to providing middle class families with an improved quality of life. In my professional experience, there is a lot of cooperation around workforce housing.”
Industrial Drivers and Demand
The third discussion, “Industrial Drivers and Demand,” analyzed how the industrial market is surging, and with E-commerce ballooning, companies are faced with pressure to overhaul their commercial space. Panelists explained that since New Jersey has a low inventory of developable land, companies must consider a southern migration in the Garden State for corporate relocation. Many commercial players are choosing properties on the N.J. Turnpike to accommodate the need for flex, big-box space.
Transactions: Getting the Deals Done in the Garden State
The last panel, “Transactions: Getting the Deals Done in the Garden State,” featured Jacklene Chesler from Colliers International and other leading industry professionals including Brian Whitmer of Cushman & Wakefield, who served as moderator. Panelists assessed the global financial market and how volatility on Wall Street has left investors searching for secure investment vehicles. They reviewed leasing strategies in New Jersey, who is investing, and the mechanics of implementing real estate deals.
“We are seeing an uptick of interested parties, this week alone, from NJ-based office owners, looking to sell property,” said Chesler. “They are getting a handle on valuation and the best way to position their asset to the market.”
“How do we perceive the profile of today’s investor?" inquired Whitmer. “What are their concerns; what is their lens?” The panel stressed the need for acknowledging a mix of foreign and domestic investors. The prospective buyer is selective in the deals they pursue. According to these experts, concerns about property assessments and tax implications can delay deals. These panelists agreed there is a perceived dichotomy between the worlds of taxes and property values.
“Yields are tight so tax appeals are put in place right away,” stated Chesler. “The short and long-term impact of the tax appeal can make it challenging for buyer’s to underwrite deals.” “The thorough upfront due-diligence, although expensive and time-consuming, assures better cemented deals in the long run.”
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