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WCRE 2018 SECOND QUARTER REPORT

SOUTHERN NEW JERSEY & PHILLY CRE MARKETS SEE MODERATE GAINS WHILE WAITING FOR ANTICIPATED BENEFITS FROM TAX REFORM LAW

July 11, 2018 – Marlton, NJ – Commercial real estate brokerage WCRE reported in its latest quarterly analysis that the Southern New Jersey market remains in good shape, making moderate gains and showing strong fundamentals. The firm believes the market may be poised for strong growth as benefits of the new tax law begin to materialize.

“Our market continues to show quiet strength and may take off as consumers and businesses feel the effects of lower tax rates,” said Jason Wolf, founder and managing principal of WCRE. “We expect the new law to be a net positive for overall economic growth in 2018 and be especially beneficial to the commercial real estate industry.”

There were approximately 303,656 square feet of new leases and renewals executed in the three counties surveyed (Burlington, Camden and Gloucester), which was a gain of about 10 percent over the previous quarter. Leasing picked up, and the sales market stayed active, with about 1.46 million square feet on the market or under agreement and an additional 317,961 square feet trading hands.

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New leasing activity accounted for approximately 61.4 percent of all deals. Overall, net absorption for the quarter was in the range of approximately 253,000 square feet.

Other office market highlights from the report:

● Overall vacancy in the market is now approximately 10.4 percent, which is nearly one point better than the previous quarter.
● Average rents for Class A & B product continue to show strong support in the range of $10.00- $15.00/sf NNN or $20.00-$25.00/sf gross for the deals completed during the quarter. These averages have stayed near this range for most of 2018, though they are trending a bit higher.
● Vacancy in Camden County improved dramatically, to 11.6 percent for the quarter.
● Burlington County vacancy was at 9.2 percent, which was also lower than the first 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 second quarter in Pennsylvania include:

● Philadelphia’s office market vacancy rate was unchanged during Q2 2018. Though positive absorption was 547,339 square feet, a 20 percent improvement over the first quarter. Vacancy rates for Class A properties stood at 10.5 percent, while Class C properties had vacancy of 5.5 percent.
● Average asking rent across all office property classes in the Philadelphia market was $22.72/SF in the second quarter. Within the CBD it was $29.64/SF.
● There are about 3.8 million square feet of office space currently under construction in Philadelphia. During the second quarter 590,632 new square feet became available via completed new construction.
● Philadelphia’s retail market is moving in the right direction. Average asking rents have jumped the past few quarters, net positive absorption was 909,884 square feet, and retail vacancy rates ticked down to 4.4 percent.
● Industrial vacancy in Southeastern Pennsylvania was down to 5.6 percent. The market saw positive net absorption of more than 6.6 million square feet.

WCRE also reports on the Southern New Jersey and Philadelphia retail market. The second quarter saw a drop in consumer confidence as well as a generally positive outlook for consumer spending, buoyed by a strong job market.

Other highlights from the retail section of the report include:

● Retail vacancy in Camden County stood at 7.7 percent, with average rents in the range of $13.75/sf NNN.
● Retail vacancy in Burlington County stood at 9.8 percent, with average rents in the range of $14.59/sf NNN.
● Retail vacancy in Gloucester County stood at 7.4 percent, with average rents in the range of $14.74/sf NNN.

The full report is available upon request.

About WCRE

WCRE is a full-service commercial real estate brokerage and advisory firm specializing in office, retail, medical, industrial and investment properties in Southern New Jersey and the Philadelphia region. We provide a complete range of real estate services to commercial property owners, companies, banks, commercial loan servicers, and investors seeking the highest quality of service, proven expertise, and a total commitment to client-focused relationships. Through our intensive focus on our clients’ business goals, our commitment to the community, and our highly personal approach to client service, WCRE is creating a new culture and a higher standard. We go well beyond helping with property transactions and serve as a strategic partner invested in your long term growth and success.

Learn more about WCRE online at www.wolfcre.com, on Twitter & Instagram @WCRE1, and on Facebook at Wolf Commercial Real Estate, LLC. Visit our blog pages at www.southjerseyofficespace.com, www.southjerseyindustrialspace.com, www.southjerseymedicalspace.com, www.southjerseyretailspace.com, www.phillyofficespace.com, www.phillyindustrialspace.com, www.phillymedicalspace.com and www.phillyretailspace.com.

New Jersey Marijuana Reform Presents Commercial Real Estate Opportunities

New Jersey Marijuana Reform

New Jersey Marijuana Reform

Let’s look at New Jersey Marijuana Reform and Commercial Real Estate. Governor Phil Murphy campaigned on a pledge to fully legalize marijuana in New Jersey. On January 23, 2018 he signed an Executive Order directing a complete review of New Jersey’s existing medical marijuana program within 60 days, which sets the stage for legalizing recreational marijuana. Presently, only medical marijuana is legal under a New Jersey law enacted in January 2010. Likely marijuana reform presents unique real estate investment opportunities and will probably increase the demand for commercial and industrial real estate. However, there are significant risks that must be carefully considered before making any investment decisions, including criminal and civil liability (including property seizure) if federal laws are enforced, and a limited number of potential lenders and buyers.

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Opportunities Associated with New Jersey Marijuana Reform

New Jersey Marijuana Reform presents a unique opportunity to be capitalized upon by risk tolerant investors willing to invest in real estate and benefit from the cannabis trend. Vacancy rates may decline based on the experience in other states following marijuana legalization and expansion, where cannabis suitable commercial real estate became hot commodities.

For example, in four states with legalized recreational cannabis (i.e. California, Colorado, Oregon and Washington), industrial real estate prices surged. In some Denver neighborhoods, the average asking lease price for warehouse space reportedly jumped by more than 50 percent from 2010 to 2015. Industrial space has been in high demand due to both marijuana growers and manufacturers seeking industrial warehouses to cultivate and process their product. Commercial real estate prices have also experienced double digit annual increases in some markets.

Risks Associated with New Jersey Marijuana Reform

The federal government does not recognize a legitimate medical use of cannabis and can impose criminal or civil liability under the Controlled Substances Act. Marijuana is currently classified as a Schedule I drug, which puts it
under the same category as heroin, cocaine, peyote, meth and fentanyl. It is currently illegal under federal law
to lease or rent real estate for the purpose of manufacturing or distributing any controlled substance. However,
the Department of Justice can direct the enforcement of these laws differently between administrations, as the
Obama Administration issued guidance discouraging the enforcement of federal marijuana laws in states where it had been legalized. United States Attorney General Jeff Sessions has long been strongly opposed to the legalization of marijuana and there is a fear of federal enforcement among owners, developers and lenders as long as the federal and state positions remain at odds. It is tough to make long term real estate investments without clarity predicated on the assumption that the federal government will not enforce its own laws.

Banks traditionally answer to federal regulators and risk losing their licenses by dealing with marijuana businesses. Federal banking laws also prevent banks from lending to or accepting deposits from illegal businesses. The federal government is also allowed to seize property. Thus, obtaining financing from traditional sources and collecting rents is difficult. Borrowing costs will therefore likely be higher than a typical real estate transaction, and tenants may be limited to properties that are owned free and clear of traditional financing.

Therefore, many companies that get into the marijuana business try to buy and control their own real estate. If the state approves expansion, it will probably issue licenses allowing business to legally sell recreational marijuana in designated places, and businesses must find a local jurisdiction that will allow them to operate.

Towns will need to change their zoning ordinances to allow for such uses.

What Does This Means for Commercial Real Estate Investors?

Higher risks will likely translate into higher rents for commercial and industrial landlords based on anecdotal evidence seen in California, Colorado, Oregon, Washington and other states that have permissible marijuana laws. Developers, landlords and investors with a suitable risk tolerance should closely follow the state’s progress in introducing and passing legislation to accomplish Governor Murphy’s goals and evaluate potential opportunities and risks. They should also monitor subsequent municipal efforts to accommodate such uses by amending their zoning ordinances, and work to identify potential opportunities in suitable locations.

The contents of this article are for informational purposes only and none of these materials offered are, nor should be construed as, investment advice, legal advice or a legal opinion based on any specific facts or circumstances.

kenneth-morgan

 

Anthony V. Mannino, Esq. Promoted to COO of WCRE

Wolf Commercial Real Estate (WCRE) is pleased to announce that Anthony V. Mannino, Esq., has been named Chief Operating Officer. Mannino has served as Vice President, Corporate Strategies since joining WCRE in October, 2015. As COO, Mannino will have a broader focus on the operations and growth strategies of the firm.

Mannino’s new role comes as WCRE has an expanding presence in the region, adding four new brokers and increasing its activity in southeastern Pennsylvania. Earlier this year, WCRE became a regional affiliate of CORFAC International, a network of independently-owned, commercial real estate brokerage firms in 47 U.S. markets and world wide.

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“Tony’s guidance within the firm will play a key role in managing our growth, especially as our CORFAC alliance opens up new business opportunities,” said Jason Wolf, Managing Principal of WCRE. “His efforts will ensure that our team continues to deliver class-leading real estate services to our clients.”

Mannino came to WCRE after nearly ten years serving as chief of staff to two members of Pennsylvania’s General Assembly. Prior to his years of public service, he was a litigation attorney in the private sector for more than a decade, practicing in Pennsylvania and New Jersey.

Like his colleagues at WCRE, Mannino has been an active supporter of many civic institutions in Philadelphia, from community associations to advocacy non-profits. He is currently a board member of the Philadelphia Regional Port Authority and the Preservation Alliance for Greater Philadelphia.

About WCRE

WCRE is a full-service commercial real estate brokerage and advisory firm specializing in office, retail, medical, industrial and investment properties in Southern New Jersey and the Philadelphia region. We provide a complete range of real estate services to commercial property owners, companies, banks, commercial loan servicers, and investors seeking the highest quality of service, proven expertise, and a total commitment to client-focused relationships. Through our intensive focus on our clients’ business goals, our commitment to the community, and our highly personal approach to client service, WCRE is creating a new culture and a higher standard. We go well beyond helping with property transactions and serve as a strategic partner invested in your long term growth and success.

Learn more about WCRE on Twitter & Instagram @WCRE1, and on Facebook at Wolf Commercial Real Estate, LLC. Visit our blog pages at www.southjerseyofficespace.com, www.southjerseyindustrialspace.com, www.southjerseymedicalspace.com, www.southjerseyretailspace.com, www.phillyofficespace.com, www.phillyindustrialspace.com, www.phillymedicalspace.com and www.phillyretailspace.com.