Page 36 - RE-NJ

34 JANUARY 2023
SPECIAL ADVERTISING SECTION
MARKET FORECAST
TM
HEATH ABRAMSOHN
VICE PRESIDENT & REGIONAL DIRECTOR, NJ/PA DEVELOPMENT
Coming off a strong industrial real estate cycle, 2022 was a transitional year for the market. Occupier demand continued to
be strong. However, it has softened compared to previous years. Interest rate increases ultimately impacted asset valuations which were previously at a peak, causing a disconnect between buyers and sellers. We expect interest rate impacts to continue into 2023, stabilizing in the second half. Ultimately, buyers and sellers will
be aligned with market valuation and, although occupier demand will be strong, lease absorption timing will increase compared
to the past two years. Demand for goods will likely be impacted
by economic conditions, which will slow imports and ultimately occupier decisions. Despite longer lease periods, rents will continue to grow but not with the same continued growth rates previously seen. Functionality, design and a flight to quality will continue to become more important to occupiers and investors in 2023.
(973) 448-3596 habramsohn@rockefellergroup.com
www.rockefellergroup.com
92 Headquarters Plaza North Tower, 9th Floor Morristown, NJ 07960
MITCHELL S. BERKEY
CHAIR, REAL ESTATE, DEVELOPMENT & LAND USE GROUP
The glass is half-full, from our perspective, as the CSG Real Estate team is cautiously optimistic heading into 2023. While we’re coming off a record year, there’s no denying uncertainty is the enemy of transactions. We’ve all felt the impact of rising interest rates on deal underwriting and execution. That being said, the Garden State continues to boast strong fundamentals, many equity sources have significant dry powder and lenders are willing to lend — albeit at higher rates. In speaking with clients and industry friends, we see
a desire to shift from neutral to drive before end of Q1 2023. With industrial, multifamily and mixed-use leading the way, and grocery- anchored retail and select office product gaining interest, we’re expecting pent-up demand to show itself by winter’s end. Once interest rates stabilize and sellers adapt to pricing reality, that pent-up demand will translate into renewed deal and development activity.
(973) 530-2085 mberkey@csglaw.com
www.csglaw.com
One Boland Drive West Orange, NJ 07052
ROBERT S. BURNEY, ESQ.
BUSINESS AND FINANCIAL SERVICES GROUP CHAIR
In mid-2022, the sharp rise in interest rates chilled what had been a white hot year for transactional real estate.
With the decreased spread between interest rates and the cap rates on industrial properties, the transactional outlook will unlikely improve significantly in the first half of 2023. Purchases and sales will probably remain sluggish and mortgage refinances will occur only when necessary. Moreover, inflation, high sovereign debt levels and energy shortages threaten the economies of Europe, which could adversely affect the leasing of logistical space by European companies.
The rate of inflation may decline if ongoing supply chain issues are resolved and the divided Congress is unable to enact inflationary spending bills. This could cause the Federal Reserve to reconsider the tightening of monetary policy.
On the positive side, rental rates for industrial space should continue to increase.
(908) 233-6800 rburney@lindabury.com
www.lindabury.com 53 Cardinal Drive Westfield, NJ 07090
ANTONINA CARUSO
DIRECTOR OF BUSINESS DEVELOPMENT
JRM Construction Management This past year has been a momentous time in our industry as we emerge
from the pandemic and adapt to new ways of collaborating.
In some of the largest commercial markets, landlords will need to add new, unique amenities to their buildings and revitalize aging assets as the flight to quality trend continues.
We also expect to see increased ground-up residential and mixed-use development to accommodate the needs of hybrid and remote workers and solve the current housing shortage.
In addition, the warehouse and distribution sectors will thrive significantly as online shopping increases. Simultaneously, the need for retail spaces within residential areas will increase as hybrid work allows people to spend more time shopping in their own neighborhoods. For businesses to support new technologies, we predict a continuing boom in data center construction.
In 2023, JRM will continue focusing on these emerging sectors and our core markets — corporate, retail, hospitality, health care and core and shell.
(646) 372-6651 acaruso@jrmcm.com
www.jrmcm.com 390 Veterans Blvd. Carlstadt, NJ 07072