There are growing opportunities in the commercial real estate market, and NAI Fennelly is poised to take advantage of them to best serve clients.
“When it looks the worst, then it is already getting better,” said NAI Fennelly President Jerry Fennelly. “Over the last 90 days, rents have started to come down in about 20 percent of cases. Deals are being made. Transactions are being closed.”
The past two years have been difficult for corporations, resulting in weak growth and aggressive contraction. Fennelly notes that corporations have been able to reduce overhead and stockpile cash. This new confidence-builder has enabled companies to make decisions in the industrial and medical markets and consolidate offices in Princeton. Fennelly sees selective expansion in the economy as businesses, which saved money by attrition and lowering expenses, begin to expand.
“Rents have been soft in lower office products,” he added. “But demand moves to high-quality first, and will trickle down.”
On the investment side, Fennelly sees some stagnation. Banks are not foreclosing rapidly despite the increasing credit failures, making the situation more complex. Values aren’t being challenged because the owner may not be in a position to pay the mortgage, yet the bank isn’t foreclosing.
“The market has become divided between those who are healthy and those who are not,” Fennelly stated. “Until the banks take a more aggressive approach, then the correction on the ownership side is going to remain slow. It’s an interesting survival strategy. There will be many more stories to tell before this correction is complete.”
One area of great strength is the medical market. The growth and relocation of area hospitals has encouraged doctors to position their offices accordingly.
“The medical market has a life of its own,” Fennelly explained. “There’s always a demand for medical care, and doctors want to be in close proximity to the hospitals. Right now there’s a 30,000 square foot Class A office/medical building under construction in Plainsboro Town Village, which will be about a mile from the new hospital. The new Plainsboro Town Village has 20 office/medical tenants in Phase I, and the need for additional capacity is timed for delivery in six months, coinciding with the completion of the University Medical Center campus.
Despite his hectic schedule in this hectic economy, Fennelly continues to embrace community service. This December he’ll wrap up “50 Good Deeds for My 50th Birthday.” He’s done a myriad of good deeds but is quite proud of his recent drive to collect items for the military: He filled and sent 17 boxes of personal care items to a neighbor who is serving in Afghanistan.
“We have to stop and take a minute to do for others,” he said. “That’s true in any economy.”
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. 609-520-0061 Fax: 609-631-9208 www.fennelly.com