The State of Commercial Real Estate in New Jersey BY LINDSEY GETZ Photo Courtesy of Arts Council of Princeton.
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OVID-19 has been one of the most significant issues to impact the commercial real estate market in decades—arguably more than the global financial crisis of 2007. However, to date, the market has held stronger than many initially believed and industry insiders have a positive outlook for 2021 and beyond. “When the pandemic first hit, there was fear and uncertainty surrounding what the future would hold,” said Adrian Kroll, founding partner of Kroll Commercial Realty in East Brunswick. He said phone calls slowed, and some clients were nervous about staying in deals—there’s no question those early months of the pandemic were stressful. “We’ve never been through anything like this before,” said Kroll. “The initial reaction was fear of what would happen. There was so much uncertainty for what the future held. But it never got as bad as a lot of us feared.” By the summer, Kroll said a lot of concern started to lift, and ever since, things have been trending in a more positive direction. People have learned to live with the pandemic and businesses have proven to be resilient at shifting and accommodating to new requirements or mandates. Now, with the rollout of the vaccine, there is even more positive sentiment.
“Widespread distribution may take several months, but the vaccines should help bring the return of many in-person and indoor activities by early summer. Commercial real estate stands to benefit immensely,” said Jason M. Wolf, managing principal of Wolf Commercial Real Estate in Marlton. “Retail stores should start to see larger volumes of foot traffic, hollowed-out office buildings will begin to fill back up with workers, and the hospitality industry will likely see a rebound of vacation-starved travelers. Business travel, however, will take longer to return.”
Looking at the Different Sectors of the Commercial Industry Mandated closures and decreased occupancy requirements hit some areas of the market harder than others. Retail and hospitality have faced the most hardship with so many people staying home or shopping online while, according to Wolf, big-box stores and pharmacies are among the most active lessees. “Eroding occupancy rates and reduced rent collections have pressured rent growth,” said Wolf. “Non-essential retailers, in particular, are seeking rent concessions or deferrals. Essential services and durable good-oriented retailers have shown resilience while small retailers with limited e-commerce capabilities have struggled.”
“The vaccine has given some hope and people are really looking forward to getting back to their normal lives,” Kroll said. “People are very eager to start seeing the impact of the vaccine take effect.”
Some segments of the market fared well over the course of the pandemic while others saw high demand and even growth in 2020. According to Steve Richel, principal/broker of record for Richel Commercial Brokerage LLC in Red Bank, the industrial sector is hot, and rent is trending upward.
With two vaccines being rolled out and other companies close to the finish line, the long-term picture for the industry is looking brighter.
According to Wolf, the industrial market has been one of the most resilient sectors of the economy throughout the entire pandemic.
8 | NEW JERSEY REALTOR® | March/April 2021
