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North Jersey investment sales booming in 2014, researchers say

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JPMorgan Chase acquired the Curling Club Apartments in Hoboken for $125 million.
JPMorgan Chase acquired the Curling Club Apartments in Hoboken for $125 million. - (HFF)

The pace of commercial real estate sales has surged in northern New Jersey in recent months, thanks largely to a spillover of high-powered investors from New York City.

That's according to experts at Massey Knakal Realty Services, a New York-based brokerage firm — and they believe that pace is going to continue.
 
Here's why: New Jersey's economy is slowly but surely improving, thanks to job growth and high-profile incentive programs. And Adrian Mercado, Massey Knakal's vice president of research, said the "supply-demand imbalance" in Manhattan is causing buyers to look for alternatives nearby.
 
"It's especially driving institutional and foreign investors, who are looking to park money here, to move out to the boroughs in New York and to northern New Jersey," Mercado said. "I think you're going to see more activity of this nature happen, so we have a strong outlook for the rest of 2014."
 
Based on activity through the first half of the year in Bergen, Essex, Hudson, Middlesex, Passaic and Union counties, Massey Knakal projects North Jersey will finish 2014 with 1,324 transactions totaling $4.85 billion in value. That would represent upticks of 44 percent in transaction volume and 17 percent in dollar volume from 2013.
 
Meantime, pricing in the region has jumped to $175 per square foot in the first half of 2014, a 10-year high that's up 68 percent from 2013's average, the researchers found.
 
The surge in dollar volume has been driven largely by the market's two top asset classes, multifamily and industrial. For residential properties, rental rates and demand continue to rise as tenants drift over from Manhattan, catching the eyes of institutional investors.
 
Leading the way was JPMorgan Chase, Mercado said. The banking giant in June paid $125 million to acquire the Curling Club Apartments, a 240-unit complex in Hoboken's uptown section.
 
"The JPMorgan sale is a good example — as you see the fundamentals improve regionally, it's a great market for institutional investors to enter into," Mercado said. "So I think that has a big play in the kind of resurgence in the area, especially multifamily-wise."
 
Multifamily transactions in North Jersey totaled nearly $799 million in the first half of the year, according to Massey Knakal. That topped all other commercial asset classes.
 
That was almost to be expected, experts said, as was the strength in the warehouse and distribution sector. Industrial property sales in the first half totaled $745 million, according to the firm's report.
 
But North Jersey's retail sector provided a more unexpected source of growth, according to Massey Knakal. The market recorded 201 retail transactions in the first half to account for nearly $315 million in dollar volume, which would represent a slight uptick from 2013 if the pace continues through the rest of the year.
 
"It is interesting to note that it did see an increase," said Tanner Cain, a research associate who oversees North Jersey for the firm, referring to the retail sector. "We weren't even sure if we were going to see an increase, but even that small uptick from 2013 to 2014 was a positive sign, we thought."
 
Cain noted that the "standout metric" was the increase in pricing for North Jersey retail properties. The number jumped to $272 per square foot, a 10-year high, which he said speaks to how improvements in unemployment are boosting consumer spending.
 
Massey Knakal also reported that North Jersey's office sector had 96 transactions through the first half, representing $344 million in dollar volume. If those totals are annualized, transactional volume and dollar volume will have increased by 64 percent and 27 percent, respectively, compared to 2013's overall totals.

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Joshua Burd

Joshua Burd

Josh Burd covers real estate, economic development and sports and entertainment. Before joining NJBIZ in 2011, he spent four years as a metro reporter in Central Jersey. His email is joshb@njbiz.com and he is @JoshBurdNJ on Twitter.

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