This may not be the time to take the plunge into real estate. After five years of watching property prices soar as much as 20 percent annually, we have now hit the ceiling hard and are feeling the sharp downward rebound. While owners, sellers, leasing agents, and speculators have much to complain about, none of them have taken quite the blow developers of new industrial and commercial properties have.

Though buyers pull back, construction firms, and those who acquire and refurbish buildings still must stagger along with a full load of operating costs. To enumerate the problems and possible solutions, the New Jersey chapter of the National Association of Industrial and Office Properties will host a seminar on Thursday, September 11, at 5:30 p.m. at the Woodbridge Hilton. Cost $155. Visit www.njnaip.org or call 732-729-9900.

Michael Seeve, president of Mountain Development Corporation in Clifton, moderates a panel of speakers, including James Hughes, dean of Rutgers University’s Bloustein School of Planning and Public Policy; Senator Raymond Lesniak, chair of the Economic Growth Committee; and Star-Ledger columnist Paul Mulshine.

From his earliest recollections, Seeve has been in New Jersey real estate development. Born in Westchester County, New York, Seeve moved to Upper Montclair as a child when his father took a job as a clerk at the Mountain Development Corporation, shortly after it opened in 1979. Seeve earned a bachelor’s in history from Penn and then returned to New Jersey in l992 to follow in his father’s footsteps at Mountain Development. Today, as the Mountain Development’s president, he oversees its 5 million square feet of commercial properties, most of which are located in New Jersey.

While not overly pessimistic, Seeve readily admits that commercial developers are getting hit from all sides. “There are still many great reasons for positioning your business in New Jersey,” says Seeve. “We’ve got prime transportation. Our ports are utterly awesome. The labor force is plentiful, exceptionally skilled, and can provide anything; and, of course, we offer the enviable life style. These will see us through the many tough things that have hit developers all at once.”

Financial pullback. Securitized loans, long a mainstay of real estate funding, have dissipated with the latest round of foreclosures and falling prices. In the not-so-distant-heyday of mortgage resales major Wall Street brokers were snapping up large mortgage loan bundles from giant mortgage companies. These would get repackaged as securitized loans and doled out to clients. In theory, the mortgage companies took a percentage to service these loans. But alas, the loans went unserviced, and mortgage companies fell on legal hard times.

Now home and commercial mortgages have lost their appeal to the very brokers who once could not get enough. And banks are not prepared to take up this slack. “We are going to face less funding until we see a full economic recovery,” says Seeve.

Over regulation. Client: How much money will this building cost and when will it be finished? Developer: I can’t tell you. I’m from New Jersey.

This old real estate joke is becoming tragically more accurate, notes Seeve, as the plethora of state and local regulations snarl the construction process. “Most of these come from environmental concerns and the state DEP,” he says. Additional inspections and zoning strictures mean increased fees and longer times between work segments. It’s difficult to sell a property when you can’t specify a closing date.

One newly re-regulated example is brownfield construction. “Until recently, renovating a brownfield engendered a whole lot of good will in the area involved, but no longer,” Seeve says. The 2006 landfill explosion that devastated an empty school house triggered a wealth of new gas emission inspections that cut into both time and profits. COAH, New Jersey’s Council on Affordable Housing, has just increased fees by 2.5 percent of each project’s value. As wetlands and beach fronts become more threatened, so do the inspections and regulations governing them.

The offices of SmartGrowth, the Pinelands and Highlands commissions, and the state Master Plan have within the past two years published new, additional construction regulations. For builders, this translates into more time, fewer available spaces, and often added legal fees just to figure out the viability of a given site.

More cost, fewer buyers. Everything in the construction field moves by truck. Not only has the price of truck fuel tripled in the last eight years, but federally mandated hazard monitors and route tracers have tacked on another trucking cost that gets passed onto the customer. “You’d be amazed at how many building materials are petroleum based: PVC pipe, roofing, solid insulation, driveway asphalt.” says Seeve. All these items have followed the same price rises as witnessed at the gas pump.

With buildings costing more and the economic slump’s epicenter sitting squarely over the real estate industry, buyers are in scarce supply. New businesses are hesitant to launch, old ones are reluctant to expand. Offices go empty. While there are definitely advantages to a new building, such as energy savings and high technology adaptability, businesses are generally staying put.

Hope on the horizon. Everybody is pulling for the real estate and development industries. We need their product, and their strength indicates our own overall economic health. “One of the great benefits for developers in New Jersey is our alliance with some of its major industries,” says Seeve. “We have the large pharmaceutical companies and biotech firms that need and demand large, new facilities. And we must be on hand to accommodate them.”

The state government, realizing the builders’ needs, has begun to talk. State agencies and real estate professional groups are discussing ways to shorten the inspection process by authorizing some of the involved engineers to provide oversight. If an engineer on the job site can perform an inspection and sign off on it as each part of the process is completed, it would save weeks of waiting time. “New York and Connecticut already have such licensing programs, and they work well.” says Seeve. Still, there remains the fear that an engineer inspecting his own work, or that of a friendly coworker in the engineering trailer, may make things a little too familiar.

Finally, Seeve notes some aid coming from the unlikely corner of the gas pump. “These high fuel costs may just stem the tide of businesses leaving New Jersey,” he says. New Jersey not only has lower fuel prices than all surrounding states, it boasts a much more efficient distribution hub.

There is no doubt that we are rebounding hard from the high real estate prices of just 18 months ago. “For Sale” and “Leasing Available” signs abound in every business center and industrial park. But as Seeve points out, the product is still sound, and the Garden State location remains ideal.

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