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The Economy is Moving Forward, but Job Deficits Remain Nationally and Statewide
Noted Economist, Industry Experts talk about the State of the Economy at NAIOP New Jersey Annual Meeting
“We are moving forward, but there are still steep employment deficits and skepticism about recovery,” said Dr. James Hughes, Dean of The Bloustein School at Rutgers University. Noting that as of December 2011 there remained a deficit of 5.6 million jobs nationally from pre-recession totals, “we have fully recovered the nation’s output, but not the jobs.”
While placing the current jobs deficit in New Jersey at 187,900, “the state has made an upturn, and recovery is on track,” Hughes said. “From December 2010 to December 2011, the nation gained 1.9 million jobs, and New Jersey gained 39,400 jobs. Progress is being made.
“The recovery in New Jersey will continue to track the nation, and that’s the first time we can say that in many years,” Hughes said. “The Great Recession and its aftermath have returned New Jersey to the top 10 nationally in employment. The virtues and values of New Jersey are being rediscovered, and this state can effectively be remarketed and re-branded as a result.”
Turning specifically to commercial real estate, panel moderator Andrew Houston,
vice president and principal of Cassidy Turley, termed 2011 “schizophrenic”
Responding to Houston’s question on whether the low cap rates are sustainable, “current cap rates will continue for the rest of the year,” predicted Ed Russo, President and COO of Russo Development. “We’ve seen more demand for industrial product in the last six months to a year than we’ve ever seen from institutions looking to buy real estate in New Jersey.”
Putting current New Jersey cap rates in the six to 6.5 percent range, Brian Townsend, senior vice president of CenterPoint Properties agreed with that prediction: “Those rates are at historic lows, and I believe they will stay there.”
“There is so much cash sitting on the sidelines,” said John Orrico, president of National Realty & Development Corp., noting, “Canadian money is part of that. There is a belief that the economy is getting better.”
Orrico also expressed the view that “the retail landscape is changing, noting the disappearance of some retail names, the growth of others, and the repositioning of still others. What’s growing is discounting. Ironically, the holiday season saw December sales lower than November because of all the deep discounts as the season progressed.
“Retail real estate is dynamic,” he said. “We’re always waiting to see what’s going to happen with our tenants.”
Townsend made the connection between retail and industrial; i.e., retail sales drive the demand for warehousing/
As far as the demand for W/D space, Townsend likened New Jersey to trends in California, where spec building has resumed, and compared that to Chicago, where there is no new construction. “Demand exists in some markets where you can’t find what you need,” he said.
In chapter business, members approved the 2012 slate of officers: George Sowa, President (Brandywine Realty Trust); Michael A. Seeve, President-Elect and Vice President Public Affairs (Mountain Development Corp.); Clark Machemer, Vice President Special Events (Rockefeller Group Development Corp.); Jeffrey Schotz, Vice President Education (SJP Properties); Richard Cureton, Vice President Membership & Communications (Whitesell Construction Co., Inc.); Gil Medina, Vice President Associate Affairs (Cushman & Wakefield of NJ); and Frank D. Visceglia, Jr., Treasurer/Secretary (Federal Business Centers)
“What a difference a year makes,” said Sowa. “Membership is at an all-time high of nearly 600, and we have had significant public policy successes. Our thanks to the leadership and staff that have led us through difficult times. I urge all members to stay well-informed on the important industry issues we continue to face.”
The event also offered brokers and salespersons one Continuing Education Credit (CEU), now required by the New Jersey Real Estate Commission (NJREC) for biennial re-licensing.