By Tom Consiglio, Resource Realty Of Northern New Jersey
The unofficial close of summer – and the run up to year end – marks a dynamic period for commercial real estate leasing and sales across Northern New Jersey as well as New York State’s Orange and Rockland Counties. While certain sectors like industrial/warehouse and retail-anchored mixed-use properties have demonstrated a level of enduring resilience that has fed steady activity, other property sectors – many of which are reinventing themselves – have maintained a more tempered yet steady pace.
These trends are reflected in Resource Realty of Northern New Jersey’s (RRNNJ) latest leasing and sales transaction activity over the course of a recent eight-week period. During this time, the firm arranged the sale of a standalone single-story warehouse property spanning a 5.5-acre parcel as well as a series of light-industrial/distribution center leases across Essex, Morris and Bergen counties. In addition, RRNNJ completed nearly 30,000 s/f in office leases, including one new headquarters location on behalf of a high-profile professional services firm, and finalized a ground-floor retail lease in a newly developed class A suburban-downtown office center at the Morris/Essex County boundary.
Streamlining Supply Chains: E-commerce Boosts Warehouse Demand
The industrial real estate market in Northern New Jersey and Orange/Rockland County continues to be a robust pocket. Strong demand from e-commerce giants, logistics companies and manufacturers has fueled steady leasing activity and building sales, from existing class B and class C assets to newly constructed and under-development spec facilities. The ongoing e-commerce boom, fed by exponential growth in recent years, has led to a persistent need for storing and distributing products efficiently as well as managing inventory to minimize delivery times and costs.
Secondary to supply-chain optimization advantages is the area’s favorable geographic position and transportation infrastructure. As a pillar within the Northeast Corridor, the region provides easy and direct access to major U.S. markets and population centers, including New York City. Furthermore, an extensive highway network inclusive of the Interstate 95 corridor offers seamless connectivity to other parts of the country while New York and New Jersey port facilities provide access to international trade routes. Rounding out this network is an extensive rail and air-cargo services infrastructure, offering two more channels through which goods can be moved.
One interesting trend that took hold in 2024 and is expected to extend into 2025 is the industrial/warehouse acquisition movement where end-user tenants are now wearing owner/landlord “hats.” In addition to creating a level of stability and certainty, ownership has its advantages when it comes to property-value appreciation, tax benefits, control and flexibility and generation of rental income and/or capital gains.
Retailers and Landlords Continue Re-Positioning for Success
The Northern New Jersey retail market has been characterized by a dynamic interplay of factors – all of which are a response to ever-evolving consumer preferences borne of the pandemic. While traditional brick-and-mortar stores continue to face competition from online retailers, demand is sustained for unique retail spaces that offer immersive experiences and a sense of community. This trend is evident in the increasing popularity of adaptive and mixed-use developments that combine ground-floor retail with residential and small-office components. Given the current era, retailers and landlords are effectively and creatively positioning themselves for success in this evolving landscape, with positive indications pointing toward the industry’s ability to adapt and thrive.
Business and Medical: The New Office Dynamic
The North Jersey office market has been undergoing – and continues to experience – a significant transformation of its own. In a quest to find its footing, office-property owners are mirroring the adaptations made by retailers during the pandemic. With remote work becoming even more entrenched due to work-life balance aspirations across the modern-workforce spectrum, businesses are reassessing their office space needs and exploring more flexible and adaptable solutions.
While hybrid work models continue to prevail, businesses are focusing on their collaboration cultures to prioritize productivity and amenities that attract and retain today’s Gen Z workforce. Outdoor spaces, fitness centers, on-site cafes and on-premises retailers are just a few examples of today’s “standard” office-center amenities designed to entice employees and draw them into the office.
On the office-leasing-activity front, healthcare users are aggressively expanding their footprint – and patient reach – by offering more convenient access within traditional office settings. Driven by the expansion of healthcare services and the growing demand for outpatient care, medical users are feeding steady growth in an era that emphasizes preventive, wellness and community-based care services. Modern, efficient medical uses range from stand-alone outpatient and surgical facilities to hospital-network and private-ownership medical practices.
This trend is benefiting the North Jersey office market in several ways. In addition to the steady income stream medical offices offer landlords, their presence is a catalyst for attracting other businesses and amenities to the area, from coffee shops to lifestyle services. Additionally, the transformation of vacant or underutilized office spaces into medical facilities is an effective repositioning strategy for revitalizing older buildings. The other trend is to replace the office assets with multifamily units or distribution facilities.
Conclusion: Northern NJ/NY State Markets will Continue to Adapt
In this season of change and as we approach the final months of the year, the commercial real estate market across Northern New Jersey and New York State’s Orange and Rockland Counties is poised for strong and steady performance. Industrial/warehouse will remain the current commercial-property darling while retail-anchored mixed-use and experiential-focused properties will maintain their favorable investment-appeal uptick. Office space will continue to moderate with activity as tenants shift to class A accommodations to attract and retain their employee base. Overall, the market continues to demonstrate a dynamic nature, reflecting the benefits of the region’s diverse economic and demographic trends.
Tom Consiglio is principal of Resource Realty of Northern New Jersey.
Opmerkingen