By Joshua Burd
Middlesex and Union counties emerged as key focal points for commercial real estate investors in the first half of 2023, accounting for some $700 million in sales through midyear.
A new report by NAI DiLeo-Bram & Co. said as much, noting that most of the transactions involved industrial property. That was especially true in Union County, which saw two dozen such deals for a combined value of more than $270 million.
For the seven counties included in NAIDB’s report, the largest deal of the first half was Onyx Equities and Machine Investment Group’s $187.5 million acquisition of Merck & Co.’s 1.9 million-square-foot campus in Kenilworth. That helped push Union County past its five-year average volume.
“Transactions are still being completed, especially among industrial assets, despite increasing interest rates,” said David A. Simon, NAIDB’s chief operating officer. “In terms of the office sector, there were three transactions above the ($20 million) mark during the first half of 2023. Meanwhile, the retail sector remained relatively static and the volume was comparable to 2021. Last year, retail had a boost from a number of larger property trades that, in turn, elevated the overall volume.”
The NAIDB 2023 Summer Capital Markets Snapshot focuses on the seven counties that the firm tracks — Morris, Essex, Union, Middlesex, Somerset, Mercer and Hunterdon. Overall, across that geographic cohort, there were 111 total trades and $1.386 billion in total sales volume during the first half of the year, marking an increase in the number of transactions but a decrease in total volume from the same period in 2022.
The report found that industrial property continues to trade at record-high prices per square foot, noting that prices have increased 34 percent year over year to an average of $265 per square foot. For industrial buildings larger than 100,000 square feet, the average price is $220 per square foot, equating to a 42 percent increase year over year.
Office deals, meantime, accounted for 22 percent of the transaction volume for the first half, according to a news release. Investors completed 33 deals in the asset class during that period, which was up from 2022, while the aggregate value of $306 million and price per square foot of $223 were both down year over year.
NAIDB found that the retail sector represented 16 percent of the sales volume within the seven-county region during H1, dropping year over year from $444 million to $220 million, the news release said. This aligns with volume seen in 2021 and is in part attributed to the fact that last year’s volume rose due to a few larger property trades over $40 million each.
