By Joshua Burd
Commercial real estate investors across five New Jersey counties took a cautious approach during the coronavirus outbreak, as transaction volume fell through the first half of the year.
That’s according to a report by NAI DiLeo-Bram & Co., which tracked sales activity in Morris, Essex, Somerset, Union and Middlesex counties. The Piscataway-based firm noted that 75 percent of all trades in the industrial, office and retail sectors occurred before April, as many buyers took a wait-and-see approach after Gov. Phil Murphy’s statewide stay-at-home order in late March.
Consequently, total transaction volume in those counties through July was down 15.5 percent year over year.
“Given how little activity occurred during the stay-at-home order … it is likely that the second half of the year will see more volume, but investors will continue to be cautious and take their time evaluating the new market conditions,” said David Simon, NAI DiLeo-Bram’s chief operating officer.
The firm noted that there were a handful of large, high-profile trades in the first half, including Crow Holdings Industrial’s $164 million sale of a 926,392-square-foot warehouse in Franklin. The report also cited KBS’ disposition of Park Avenue at Morris County, a 1.1 million-square-foot office park in Florham Park, which commanded $311 million and accounted for 48 percent of office sales volume through July in the five counties.
Those deals masked the fact that the quantity of trades saw a much sharper decline from the first half of 2019, falling nearly 56 percent.
“Even though the dollar volume wasn’t terribly off from the first half of 2019, the total number of trades was quite low in comparison,” Simon said. “This means that several large trades drove the value year to date and without these trades occurring, the volume during the first half of 2020 would have been dramatically lower.”
NAI DiLeo-Bram tracked 28 trades in industrial and 22 in office during the first two quarters, along with 10 retail sales. The report said retail sales volume is off the five-year average by 56 percent, as Simon noted the sector has been adversely impacted by high unemployment.
“There will be opportunities for investors who are willing and financially able to ride out this storm,” Simon said.