Over the course of the pandemic, the commercial real estate market has experienced its highs and lows. However, in recent times, it has rebounded vigorously and now exceeds pre-pandemic levels. To gain insights into what lies ahead for New Jersey's commercial real estate market in 2022, we sat down with Cushman & Wakefield's powerhouse New Jersey Capital Markets team, known for their exceptional expertise and experience.
A Winning Team
When it comes to success, the composition of the team plays a crucial role. Cushman & Wakefield's New Jersey Capital Markets team is described as generational, collaborative, and broad-based. They prioritize mentorship and training, which has been key to their continued success over the years. The team comprises six partners ranging from 70 to 30 years old, each specializing in different asset classes. By leveraging their individual expertise and relationships while utilizing the global platform at Cushman & Wakefield, they consistently provide best-in-market services to a diverse range of clients.
Multifamily Market Boom
The multifamily asset class has seen a significant surge in interest throughout the pandemic. 2021 saw record-high volumes in this market segment. Low interest rates and high property values made multifamily properties attractive to investors. The suburbs experienced a resurgence, leading to increased demand for residential properties, particularly new constructions with modern amenities and convenient access to public transit. Investor demand was so intense that properties were often sold before even hitting the market. In 2022, the focus is on interest rates. As rates rise, more properties are being put on the market. However, the team believes that the influx of capital from the upcoming summer closings will bring price stability and visibility for the rest of the year.
Shifting Office Market Dynamics
The pandemic and the rise of remote work have had a profound impact on the office market. In 2021, there was a significant flight to quality, with investors seeking top-tier spaces and amenities. Class A buildings saw strong transaction activity, and rental rates remained firm for the best-in-market products. As the residential market underwent a drastic change due to the pandemic, investors started giving more attention to properties in the suburbs. The team noticed increased movement with Class A assets located near residential communities, especially in affluent markets. Corporations recognized that employees are more likely to return to the office if it's close to their homes. In 2021 alone, the team handled all three office sales over $200 million in New Jersey and four out of the five sales over $100 million. In 2022, they anticipate closing between $3.5 to 4 billion in sales, setting new records.
The Industrial Market's Thriving Momentum
The industrial market in the tri-state area has experienced significant growth in recent years. Since the pandemic began, rents have risen rapidly as the available space decreased. This tight market condition has given sellers and investors the confidence to set higher prices, and properties with vacancies or near-term lease rollovers have been in high demand. Despite rising interest rates, the industrial market is off to a strong start in 2022. Investors remain confident that tenant demand will drive rent growth and offset any potential impact from higher rates. With a vacancy rate of less than 2 percent, the team expects to see continued rent growth as a wide range of occupiers expand. Due to the region's high population density and limited opportunities for new inventory, the tri-state area is predicted to remain a top choice for industrial investment in the country.
In conclusion, the New Jersey commercial real estate market is set for an eventful year in 2022. With a powerhouse team at the helm, the market is expected to thrive across various asset classes. From the booming multifamily market to the shifting dynamics of the office sector and the thriving industrial market, there are opportunities aplenty. As the year unfolds, industry players will navigate the market with a strong sense of optimism, knowing that New Jersey remains an attractive investment destination.
Andrew Merin
Brian Whitmer
David Bernhaut
Frank DiTommaso
Gary Gabriel
Kyle Schmidt
1 Meadowlands Plaza
East Rutherford, NJ 07073
201-935-4000
