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“But ultimately ... for the bus market, for the PATH market, which are relatively close in, all told I think
you might end up seeing a stronger recovery back to those activities once things settle and people get a little bit more comfortable with commuting.”
Gus Milano, Hartz Mountain Industries’ president and chief operating officer, said suburban apartments were largely unaffected and may have even benefited
from how residents and workers shifted during the crisis. It was “a completely different story” from urban submarkets such as Jersey City, Weehawken and Hoboken, where occupancy rate percentages fell from the high 90s to around the mid-80s, even in top-tier buildings and neighborhoods.
“That’s all bounced back now — we’re at just about the mid-90s
across the board on the waterfront,” said Milano, whose firm is based in Secaucus. Net effective rents have yet to rebound, he added, but believes that’s coming soon.
“I think concessions are starting
to roll back and our effective rents will start to
increase,” he
said. “People
are recognizing
that they need
to come back to
the office and
they’re starting
to make that
move ... I think
the waterfront market will be pretty well stabilized and back to where it was by the end of the year.”
Milano, who currently serves
as NAIOP New Jersey’s chapter president, is also encouraged by a hospitality industry that is “bouncing
back much faster than any of us expected.”
“And what we’re seeing in our New York hotels is pretty shocking,” he said “There’s a dearth of international tourists and business travel, but the regional travel and the tourist travel is picking up and there’s much more movement in New York City now.”
Even so, Kisia struck a note of caution about how the continuation of remote work would impact office usage and commuting patterns. Citing data from the federal Bureau of Labor Statistics and private studies, he
said employees in the information, financial services and professional and business services sectors have shown to work remotely more
frequently without sacrificing as much productivity. That could loom large for the New York metropolitan area.
“When we think about our region specifically, the fact that we have
a higher proportion in these three industries probably means that, all else equal ... we might have a higher remote work factor long-term than the rest of the country,” Kisia said. While the prospect is speculative for now, he said, it merits “a lot more study to get a better handle on what it means” for the local economy.
It’s not the only source of uncertainty. While many companies are set to bring their teams back to the office, hesitancy by employees and the
prospect of some colleagues being unvaccinated still play a role, according to Jonathan Kushner
of Kushner Real Estate Group. He believes that incentives, such as free rides on NJ Transit and PATH trains for the first 30 days, could help.
“Landlords could cover part of the cost and get everyone moving again,” said Kushner, president of the Jersey City-based firm. “I think people
need some sort of public-private incentive to get people going because companies are in a gray area.”
He added: “Right now no one knows whether to stay home or not stay home. If you give them a reason to leave, they’ll just start leaving again and (do so) habitually.” RE
CONSTRUCTION CONUNDRUM
The rising cost of lumber has been well-documented and felt firsthand by developers, but Jonathan Kushner says that only tells part of the story.
“Every product in the construction of a building
asset classes such as industrial
and multifamily. The rising costs have left developers with a weighty decision about if and when to proceed with their projects, not to mention the prospect of delays.
“Materials are harder to get,” Kushner said. “The home renovation business has never been stronger, so a lot of the materials that we would buy for small renovations like at a Home Depot or at a Lowe’s, they’re almost impossible to get.
“You have to wait for bathtubs. There was never a wait for bathtubs. You could always walk into a Home Depot and get a bath tub.”
As he and other panelists noted, the soaring costs are easier to absorb in the industrial sector, where rents continue to grow to record levels. The choice is not so
easy for apartment projects, but Kushner still sees the merits of moving forward in those cases.
“We’re not going to be able to get 30 percent more rent than we were a year ago, but we believe in the growth of the state,” Kushner said, referencing a garden apartment community in central New Jersey.
For his part, Hartz Mountain Industries’ Gus Milano said his firm has temporarily halted
some shovel-ready projects on the Hudson waterfront “until
the market stabilizes and we get some clarity as to how we move forward.” But the company is also forging ahead with a suburban project in its portfolio, thanks in part to a payment in lieu of taxes agreement with the municipality.
“It still pencils to proceed, notwithstanding the cost increases,” Milano said.
Jonathan Kushner
from a year ago.
is up,” said Kushner, president of Kushner Real Estate Group, noting that costs have risen as much as 35 percent
It was another key topic at NAIOP New Jersey’s recent Mid-Year Economic & Markets Outlook, one that looms large over thriving
Gus Milano
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JIM MCGUCKIN l REGIONAL MANAGER l 250 PEHLE AVE #501, SADDLE BROOK, NJ 07663 l PHONE: (201) 742-6150
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