Perspectives: Real estate activity

at least for the immediate future. For the first quarter, the market shed approximately 235,000 square feet of office space as vacancies continued to trend upward to 17.6%, up 1.6 percentage points from pre-pandemic levels, according to Newmark’s 1Q21 Southern New Jersey Market Report. The brokerage reported no new construction activity in a market that features a total inventory of approximately 16.8 million square feet of office space. As such, direct asking rents softened from $20.88 to $20.65 per square foot, quarter over quarter.

For certain, the pandemic allowed companies and workforces to put remote working capabilities to the test. This vital shift to an increasingly digital environment has not only prevented the economy from stagnating entirely but is also rearranging the workplace and influencing office space decisions. The return to an in-person working environment continues to puzzle industry and company leaders. Will a company need more space or less space? Will the remote work option be a standard feature in a post-pandemic world or was it just a temporary solution? Will the open office model continue to remain popular or will companies choose a more private office model? The pandemic ushered in these types of questions for small, medium and large businesses to work through.

While the COVID landscape displayed the workforce’s appreciation for flexibility in terms of in-person or remote working options, it also reinforced that office space needs are not going away anytime soon. “Office space will be reconfigured but there will always be a need for it,” Vineland Construction CEO Anne Koons told Invest:.

As such, the sublease activity and the further adoption of remote working options are closely being monitored and considered. “You might not be leasing a whole building like you used to but it is starting to come back. I think that over the long term, big companies are going to return to the office because you lose something by having everyone work remotely. There’s going to be some kind of a happy medium where part of your work is going to be remote and a part in the office,” Koons said.

Approximately 880,000 square feet of sublease volume became available in 1Q21, garnering interest from potential tenants that could drive transaction volumes in the latter part of the year and into 2022, Newmark reported. “Market participants indicated that some tenants with space requirements are showing interest in available subleases. Time will tell if this interest translates into a sustained wave of transaction activity, defraying the high volume of sublease space on the market,” Newmark wrote in its 1Q21 report.

Rick Schwartz

Principal & Managing Partner – Veritas Real Estate Offices might need 80% of existing space and may incorporate some flex (or hotel-like) seating options. Some people may try to downsize, particularly CFOs who focus solely on financial results with less emphasis on culture, collaboration and talent acquisition/ management. However, I don’t see the office going away; it will be more of a reconfiguration. One of the biggest challenges is companies that are unable to make a decision on what they want to do, some of which is due to corporate guidelines and mandates, as we make it a priority to take care of existing tenants’ needs and balance that with offering what we have as available.

Daniel Silvestri

President – InterState Commercial Real Estate The COVID pandemic threw a wrench in the retail sector but the service side of retail has actually fared pretty well. There weren’t many issues from our perspective. We have very little vacancy on the service retail side of our portfolio. Leasing activity is increasing; we have activity every day on any vacancies we have. A lot of our properties are very well located, which is a major differentiator between retail and other real estate sectors. For instance, in the office market, the tenant doesn’t really care what side of Route 73 or Fellowship Road they’re on. On the retail side, it’s all about being as close as possible to Main & Main. Because we hold well-located properties, our properties are constantly in demand and occupied.

Industrial The industrial market has been the darling of the commercial real estate sector not only for South Jersey but for the entire Garden State. 2021 is poised to be a record-breaking year for the industrial sector surpassing an already strong 2020 performance according to industry leaders.

Amid shelter-in-place mandates and calls to practice social distancing measures, COVID-19 triggered an unprecedented boom in e-commerce, transforming an already growing consumer preference from convenient to essential, bolstering demand for industrial space in the process. U.S consumers maximized e-commerce capabilities in record numbers in 2020. It is estimated that e-commerce sales contributed an additional $105 billion in online revenue in 2020 while accelerating