The Princeton corporate real estate market in 2017 shifted aggressively into Companies buying buildings again to house their employees. Yes, companies that can predict their future growth, either due to the nature of their industry or to the ongoing strengthening of technology, are purchasing rather than leasing. These companies are either in the medical field or are small to medium-sized businesses. Some of the factors that are causing this are:
1. Companies saved money over the last decade by cutting costs. This ultimately caused a stock piling of cash reserves which, as the economy strengthened, became less important and forced a long-term deployment of cash to create an internal rate of return for the company or medical owner.
2. Companies are using technology to foster “work at home” programs, therefore enabling a long-term stable office need.
3. Belief that interest rates will not stay this low forever, regardless of the Fed saying they will increase interest rates in the near future.
To date there have been 17 office buildings that sold in the greater Princeton area to companies that will occupy all or part of the building, equaling 183,900 square feet of office building sales. The largest sold to Cenlar Bank at 72,000 SF. The investor market had four sales for 278,500 square feet, including 103 Carnegie Center, 101 Morgan Lane, and 3 Independence Way.
This increase in sale activity will continue for the next 6 to 12 months as REITS reposition their asset holdings mostly to apartments and industrial spaces, the aging Baby Boomer population will continue to exit their real estate holding, and the economy continues to strengthen while pricing stays moderate in Princeton versus the north and New York regions.
NAI Fennelly, Gerard J. Fennelly, president. 200 Whitehead Road, Suite 222, Hamilton. 609-520-0061. Fax 609-434-3113. E-mail fennelly@fennelly.com. www.fennelly.com.
