The parallels between the last real estate run and this are hard to ignore; the record prices, the bidding wars, warehouses being leased before they’re built, the off-market transactions that …
Expect 2021 to perform across all sectors. We are finally getting optimistic results from the Covid vaccines and will be back to business as usual in no time.
Stay healthy and remain positive. Next year will be much different.
We can spend all day long talking about cap rates, interest rates, and investment sales, but at the end of the day the trends begin with the renters and everything else follows suit. So what are our renters up to?
The industrial market will remain strong, as COVID-19 has taught us that e-commerce remains vital, especially in a pandemic.
Overall, the commercial real estate market did well in 2019 and depending on what market you were in, it did very well.
American importers pay a significant portion of the increase and US consumers pay the remainder due to the increase on goods manufactured in China. However, China’s economy is slowing, with consumers holding back and infrastructure spending slowing sharply. This slowdown is expected to worsen as America’s tariffs ramp up. On the other hand, the United States has continued to experience vigorous economic growth, including the lowest unemployment rate since 2000.
Industrial rental rates have skyrocketed in urban areas due to the boom of e-commerce. The demand for third-party logistics, also known as 3PLs have increased substantially. This has driven up rental rates in the industrial market. The industrial market in New Jersey alone has increased 11% year over year. The question of sustainability of rental increases emerges.
The NJ industrial real estate market has now been in a bull market since 2013. Prices have seen levels that were thought to be untouchable, as short as five years ago. Inventories are still relatively low and the question on everyone’s mind is, “Where do we go from here?”