After four tough years, the commercial real estate market in South Jersey is beginning to rebound or "bounce from the bottom," a panel of experts said Tuesday.
But don't look for the crop of "For Lease" signs that dot highways and neighborhoods like weeds to disappear without a substantial drop in the unemployment rate, now hovering around 9 percent in New Jersey.
"Fewer people working and less business and consumer spending on goods and services translates into reduced demand for commercial real estate," said Thomas J. Heitzman, COO of Whitesell Construction, South Jersey's largest privately-owned real estate development and management company.
Whitesell's portfolio includes 9 million square feet of commercial space in Burlington, Camden and Gloucester counties and 200 tenants. About 85 percent of it is industrial property and 15 percent Class A office space.
Speaking to about 150 members of the Southern New Jersey Chamber of Commerce at The Mansions in Voorhees, Heitzman, said new commercial construction is likely to remain stalled for some time until the rash of vacancies is absorbed.
Meanwhile, rents will remain depressed and landlords will continue to dangle incentives in front of prospective tenants to close a deal.
Heitzman urged small entrepreneurs who have been working out of their home basements and garages to snag a commercial lease now before prices start to rise sometime next year.
Last year the vacancy rate for industrial space floated between 7 and 9 percent while the rate for office space was between 17 and 20 percent.
Cherry Hill has been particularly hard hit with bankruptcies and relocations, including Syms discount department store, Baker Lanes bowling alley, Executive Campus office center, Pro-Build lumberyard and the Pavilions Shopping Center on Route 70 which remains more than three-quarters vacant.
David Dolan, executive vice president of real estate development firm Jones Lang LaSalle, said the diversity of business and industry in South Jersey has insulated it from greater losses experienced elsewhere in the country. Expansions in health care and education have also mitigated losses in other areas, like the defense industry.
Developers are hoping long delayed plans to develop a technology center dedicated to aviation research in Pomona will move forward, creating a ripple effect in real estate and a number of high-paying jobs.
The silver lining in the recession, said Frank H. Wisniewski, a real estate lawyer with Flaster/Greenberg, is "better, more efficient and development- friendly government."
"Crises bring out the best in government. They cut back on expenses and they actually ask developers how they can help."
The downturn in the real estate market created a new business for Mike Williams, whose company Another Option Realty in Berlin Township, manages about 250 residential properties.
Williams' portfolio includes homes of people who needed to relocate for one reason or another, but refused to sell in a down market, and investors who buy low and are waiting to sell high.
His company finds tenants for those houses and manages the rentals.
"We started in 2008 at the height of the recession with about 60 properties. We allow people to move and to handle two mortgages with income from a rental. At the same time, people who are closed out of the buying market because of tight credit are looking to rent," he said.
"It's a sign of the times."
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Sunday, May 19, 2013
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