Page 12 - 2021 Spotlight NJ's Top Law Firms

10 MARCH 2021
PLAYING THE LONG GAME
Institutional buyers, able to see past short-term uncertainty, still finding value in New Jersey
After treading lightly for much
of the past year, institutional investors appear poised to accelerate their commercial real estate spending in 2021. New Jersey and other suburban markets could benefit in the near term as buyers await the return of New York City — especially in an apartment sector that is regaining its footing after stumbling during the pandemic.
A group of industry executives said as much recently during an annual program hosted by the Urban Land Institute of Northern New Jersey, noting that they planned to deploy both debt and equity capital in the year ahead. Sourcing deals is not nearly as simple, they said, citing the intense competition for industrial assets and unease about office and retail property.
For multifamily assets, however, there are opportunities for savvy, long-term investors who can see past any recent uncertainty.
“(With) the bid-ask spread in multifamily deals that are constructed — core, core-plus and value-add
— it’s difficult to transact on,” said Alex Cocoziello, a principal with Advance Realty Investors, speaking during ULI’s virtual Emerging Trends program in mid-January. “So if you have land for development, it’s difficult to bet against New York City coming back within your typical five- year, seven-year hold period.”
Cocoziello added that “all of us are very familiar with the effect and, really, the social fabric of New York City, so with the vaccine rollout coming in 2021, right now seems to be a great time to take advantage of
land development in transit-oriented corridors” such as Harrison, the Hudson waterfront, Montclair and Morristown.
Erin Beitz, vice president of asset management with Carmel Partners, said the investment advisory firm is “definitely expecting more activity” this year after an uptick in late 2020. Much of last year’s activity came from “continuing to tie up and close on land for future development, she said, adding that the company is “very bullish on the need for housing in major gateway markets.”
In the immediate future, however, she said she expects to see many of those opportunities come from “second-tier gateway markets and just outside” major cities on both coasts.
“We are well aware of what’s happening in San Francisco and New
York City in our portfolio and market- wide,” said Beitz, who oversees Carmel’s East Coast portfolio. “It is difficult to make deals work unless there is a premium for knowing that you’re going to have to go through
the short-term pain to get back to the market fundamentals that we all think we will revert to on a long-term norm.
“So I think that we’re staying in metro areas, of course, (and) looking at more emerging areas and things with suburban connectivity into the urban core.”
Multifamily investors and lenders are also grappling with the prospect of limited rent growth and continued concessions to tenants, at least for the first half of 2021, but the panelists predicted a substantial rebound in 2022. Cocoziello noted that Advance had seen “a noticeable uptick” in
By Joshua Burd
After treading lightly for much of the past year, institutional investors appear poised to accelerate their commercial real estate spending in 2021. New Jersey and other suburban markets could benefit in the near term as buyers await the return of New York City.