Marlton, NJ — Commercial real estate brokerage WCRE reported in its latest quarterly analysis that the Southern New Jersey market is in largely good shape, with moderate gains in leasing activity and strong fundamentals. The firm believes the market may be poised to take off as benefits of the new tax law begin to reverberate in personal and corporate checkbooks.
“Our market appears to have picked up steam, with a healthy pace of business growth and continuing new investment,” said Jason Wolf, founder and managing principal of WCRE. “Despite corrections ending a long winning streak in the financial markets, the benefits of the new tax law should shore up commercial real estate, especially industrial and office demand.
”There were approximately 272,550 s/f of new leases and renewals executed in the three counties surveyed (Burlington, Camden and Gloucester), which was a gain of 23% over the previous quarter. Leasing picked up, and the sales market stayed active, with about 1.63 million s/f on the market or under agreement and an additional 320,691 s/f trading hands. The sales figure is a 36% increase over the previous quarter.New leasing activity accounted for approximately 77.2% percent of all deals. Overall, net absorption for the quarter was in the range of approximately 105,250 s/f. Both of these figures represent large increases over the fourth quarter.
Other office market highlights from the report:
• Overall vacancy in the market is now approximately 11.2%, which is more than a full point higher than the previous quarter. This may be attributed to large blocks of space returning to the market.
• Average rents for class A & B product continue to show strong support in the range of $10.00-$14.50/sf NNN or $20.00-$24.50/sf gross for the deals completed during the quarter. These averages have stayed within this range for most of this year.
• Vacancy in Camden County improved steadily last year, but jumped nearly a point to 12.5% for the quarter.
• Burlington County vacancy was at 9.9%, which was also higher than the fourth quarter.
WCRE has expanded into southeastern Pennsylvania, and the firm's quarterly reports now include a section on transactions, rates, and news from Philadelphia and the suburbs. Highlights from the first quarter in Pennsylvania include:
• Having closed out 2017 with a strong fourth quarter, Philadelphia's office market began the year seeing increasing employment and new construction, both of which bode well for continued strength. The outlook for this sector is good.
• The Philadelphia retail sector performed well in 2017, seeing gains over the previous year in both retail sales volume and employment. Analysts expect this trend to continue even as national retail figures have trended downward in recent years. Amid declining rents, leasing activity picked up.
• The Philadelphia industrial market continues its hot streak, and the outlook is positive. Vacancy rates for flex and industrial properties in Philadelphia are well below the regional and national averages, and this is expected to continue. In 2017 this sector saw positive absorption in the range of 4.9 million s/f.
WCRE also reports on the Southern New Jersey and Philadelphia retail market. The first quarter saw a continuation of the unfortunate trend of legacy brands such as Toys R Us and Sears closing stores and/or filing for bankruptcy protection. However, there was good development news in the region, with several healthcare, entertainment, and retail projects receiving approval. Other highlights from the retail section of the report include:
• Retail vacancy in Camden County stood at 8.4%, with average rents in the range of $13.75/sf NNN.
• Retail vacancy in Burlington County stood at 10.4%, with average rents in the range of $14.24/sf NNN.
• Retail vacancy in Gloucester County stood at 7.0%, with average rents in the range of $14.83/sf NNN.
The full report is available upon request.