NJ Market Update - March 2024

NEW JERSEY MARKET UPDATE

MARCH 2024

Welcome to Berkadia’s ‘NJ Market Update’ newsletter, your go-to source for the latest developments, trends, and insights in the dynamic world of commercial real estate. In this newsletter, we aim to provide you with a comprehensive overview of the most significant happenings in the industry, keeping you well-informed and up to date.

Patch.com, February 20, 2024

WEST ORANGE, NJ — Officials in West Orange are seeking proposals from developers in connection with a long-running plan that could bring a film studio to the township – and possibly more to come.

The Township of West Orange issued a request for proposals (RFP) for the West Orange Downtown Redevelopment Area earlier this month. The due date is March 13; a selection date is set for April 11.

Real Estate NJ, February 8, 2024

New Jersey has taken a decisive stand in safeguarding the lives of its residents. In a proactive move, Governor Phil Murphy has recently approved legislation aimed at reinforcing the inspection, maintenance, and reserve fund regulations for residential buildings across the state. This progressive initiative comes more than two years after a tragic building collapse in Florida claimed the lives of 98 individuals, serving as a stark reminder of the importance of preemptive measures.

ROINJ, February 26, 2024

We are thrilled to continue building upon our longstanding partnership with MetLife Stadium and to play an integral role in ensuring the stadium is well-equipped to host the upcoming FIFA World Cup,” Sean Szatkowski, executive vice president, general manager, global construction firm Skanska USA Building, said. “Having begun our initial work at MetLife Stadium in 2010, this latest undertaking poses the unique and exciting challenge of making the necessary adjustments needed to meet FIFA requirements. And we now know, this will include the honor of helping prepare the stadium to host the FIFA World Cup final.”

Traded, Fevruary 26, 2024

The proposed Netflix complex, earmarked for construction adjacent to Route 35 in Eatontown and Oceanport, Monmouth County, includes 12 soundstages spanning nearly 500,000 square feet. Alongside soundstages, amenities such as a hotel, office buildings, and visitor attractions are planned. The company is expected to invest $848 million in capital for the project.

My Central Jersey, March 4, 2024

In February 2023, the Town Council approved One Westfield Place, the $440 million downtown redevelopment plan, the largest in Westfield’s history, which proposed 310,000 square feet of office space, 205 total residential units (154 of which are 55-plus age restricted), two public spaces, 27,000 square feet of street-level retail, two commuter garages and improved streetscapes.

A month later in March 2023, the group filed suit against the town, alleging the town’s adoption of the redevelopment plan was “arbitrary, capricious and unreasonable” and against the “weight of evidence.”

ConnectCRE, February 23, 2024

As the busiest port on the East Coast, the Port of New York and New Jersey (PNYNJ) exceeded pre-pandemic container volume levels, handling 7.8 million TEUs in 2023, a 4.4% increase from 2019, according to Cushman & Wakefield’s 2023 year-end Port of New York and New Jersey (PNYNJ) industrial review.

The port has undergone a $220 million project to enhance port capacity, including the redesign and rebuilding of Port Newark’s northern entrance. The report notes a 240 basis point increase in the vacancy rate of the Port Region, reaching 5.3%, primarily due to new product deliveries. Leasing activity surged in the fourth quarter, surpassing 1.0 million square feet for the first time since 2021.

New Jersey

101.5, March 5, 2024

New Jersey residents suffer every year with the highest property tax burden in the United States, and we are not in any danger of giving up that dubious distinction. In total, more than $33 billion were collected in property tax last year, which is an increase of over a billion dollars. The average property tax bill in New Jersey is now $9,803. On average, individual property tax bills went up 3.2% in 2023.

New Jersey 101.5, March 7, 2024

Not many major corporations like to set up shop here because of the unfriendly business climate. Go to a city like Fort Worth Texas, or Miami Florida, and walk down one of the main streets and you’ll see building after building with the headquarters of major corporations. You certainly won’t see many of those here in New Jersey.

Not that it isn’t a great place to live and work. The people are great. They’re highly educated and willing to work. But the state government insists on maintaining building and maintaining a bureaucracy and state government machine that requires so much money.

ROINJ, February 27, 2024

Gov. Phil Murphy, during his budget address later Tuesday, will propose creating a tax on the highest-revenue companies in the state to serve as a continual source of funding for New Jersey Transit.

The tax, the 2.5% Corporate Transit Fee, will be placed on companies with a net annual profit of greater than $10 million.

It is not technically a renewal of the 2.5% Corporate Business Tax surcharge — which was allowed to sunset, after one extension, on Dec. 31 of last year. But the CTF essentially will do the same thing: Tax the business community to make up for a shortfall in the budget.

NJ.com, February 23, 2024

Last month, the Fort Monmouth Economic Revitalization Authority board — the governing body overseeing the redevelopment of the site — approved a plan outlining how Netflix could use the site. The company’s proposal includes 12 soundstages totaling nearly 500,000 square feet, along with production and office buildings, a cafeteria, retail shops and studio trailer parks, according to the board’s meeting minutes.

The facility is also slated to include a helipad, theater, hotel, visitors attractions and swimming tanks for film production involving water.

MARCH FEATURE

Vacancy

Northern New Jersey Multi-Family VACANCY

VACANCY RATE

In 2023, the Northern New Jersey Multifamily Market was defined by a historic influx of new supply that helped push the vacancy rate 130 basis points higher to 5.2%. The supply impact to local occupancy was much greater than at the national level, where vacancies edged up by 90 basis points to settle around 7.7% at year-end.

Digging deeper, vacancies for higher-end 4 & 5 Star properties are the highest in the metro and also come in above the national average. Since 2021, developers have catered to their more affluent clientele, as 4 & 5 Star properties comprised 83% of the 15,800 units completed over this period. While the largest urban cores, such as Greater Newark and Lower Essex County, are seeing much of growth in luxury units, Northeast Morris County will see the largest transformation in its inventory profile. The small, suburban enclave currently has just 1,100 units categorized as 4 & 5 Star, but its pipeline totals 2,300 upscale units.

Source: CoStar

VACANCY BY BEDROOM

NEW JERSEY Investment Sales

Berkadia New Jersey Investment Sales, led by Nat Gambuzza, provides a depth of advisory and transaction services for income generating properties that is unparalleled in the industry. Their clients include private investors, partnerships, lenders and institutions of various net worth. The team has specialized expertise and excels in the most complex transactions, including portfolio sales, distressed property sales, note sales and time-sensitive 1031 tax exchange transactions. Prior to joining Berkadia in 2022, the team worked at two otherwise national real estate investment services firms

Nat Gambuzza

Senior Managing Director

973.809.1755

nat.gambuzza@berkadia.com

Brian Antognini

Senior Transaction Manager

862.309.5618

brian.antognini@berkadia.com

NEW JERSEY

Mortgage Banking

Spencer Beriont

Senior Director

908.328.4494

spencer.beriont@berkadia.com

Nick Balancia Associate Director

908.642.1905

nick.balancia@berkadia.com

Josh Lipsey

Senior Director

201.577.1909

josh.lipsey@berkadia.com

Trevor Fiebel

Senior Director

908.285.6921

trevor.fiebel@berkadia.com

Tim Blashford Director

201.396.6253

tim.blashford@berkadia.com

Mike O’Reilly

Senior Financial Analyst

862.309.5619

mike.o’reilly@berkadia.com