When 2009’s story is written, it will show nearly a year of stagnation capped by some fourth-quarter movement showing an initial positive upswing in the economy.
“An uncertain economy brings new industries and new opportunities,” said NAI Fennelly President Jerry Fennelly, noting commercial real estate transactions started to close again in September –– good news for everyone.
“The first half of the year saw a negative GDP, and was a result of too much consumer debt,” he said. “Those numbers are starting to rebound, and the stock market is showing a positive, upward response. This is giving people the confidence to move forward and close real estate transactions.”
Fennelly cites three Hamilton closings that are kick-starting the area’s momentum: flex/warehouse buildings on Crossroads Drive, East State Street and Sixth Street for a total of 95,000 square feet of properties transferred at 15-20 percent lower values then a year ago. He also sees encouraging movement in office sector sales and leasing activity. There’s also a rise in industrial leasing happening along the turnpike, from exits 7A to 8A.
“Office-sector leasing is picking up, though the lease rates may be less,” Fennelly added. “There are two significant transactions in West Windsor and Plainsboro leading the way, Otsuka and GSK Pharmacuticals with total square feet leased of 78,000 square feet leased.”
Because rents are slightly lower than predicted, Fennelly says it’s an opportunistic time for tenants with leases coming due from 6 to 18 months to renegotiate. Due to owners being more aggressive in their leasing strategies, now’s the time to open the conversation.
"Everyone’s looking to lower expenses, especially fixed operating costs," Fennelly noted. "Every major company in the US has attacked its fixed operating costs, lowering or eliminating fixed costs and bringing profit to the topline."
Fennelly points out that central New Jersey is unique, boasting several universities that drive business and bring a highly educated workforce to the area. He also cites the impact two local hospitals’ building projects will have on the area, including construction jobs and new positions for physicians and ancillary personnel.
"We’re seeing our local hospitals not only invest a billion dollars into new facilities, but also develop flagship medical specialties, like neurosurgery or pediatric specialties so they can provide services to local residents and remain competitive on a regional basis."
Fennelly predicts employment will start to improve, which will further boost real estate transactions. He says New Jersey continues to be affordable for companies seeking lower costs without losing employees.
Fennelly Associates assists companies with their specific commercial real estate strategies on a local, national and global basis. NAI Fennelly can be reached at 609-520-0061 or Fennelly@Fennelly.com.
Gerard Fennelly, President, NAI Fennelly. 3525 Quakerbridge Road, Suite 908, Hamilton. 609-520-0061. Fax: 609-631-9208. www.fennelly.com.