CUSHMAN & WAKEFIELD CAPITAL MARKETS TEAM INKS $1.3 BILLION IN 2011
Strong Year Punctuated by Steps Forward and Back, “Haves” and “Have-Nots”
EAST RUTHERFORD, N.J. – January 19, 2012 – (RealEstateRama) — With $1.3 billion in completed transactions during 2011, Cushman & Wakefield, Inc.’s Metropolitan Area Capital Markets Group experienced robust activity that reflects a year of steps forward and back, and “haves” and “have-nots,” according to Andrew Merin, vice chairman. Ultimately, the East Rutherford-based team closed its best year since 2008, including multiple record-breaking deals.
“The first six months of 2011 brought a marked increase in activity,” Merin said. “For the first time since the recession took hold, product began to flow and demand increased among buyers. While fundamentals were not improving markedly, things certainly were stabilizing with a resurgence of investment opportunities.”
However, summer’s arrival brought a number of challenges. “Budget and deficit issues here in the United States, problems in Greece and with European banks, and the flighty nature of the stock market caused pause,” Merin noted. “Investors and financing entities quickly returned to a more conservative stance, bringing a rapid slowdown in dealmaking. In fact, our team literally saw confidentiality agreements (which essentially mean a free look at a property) drop by about a third, and bidding reduced by up to one half.”
Still, the Metropolitan Area Capital Markets Group maintained steady activity, orchestrating 23 transactions across product types.
This included nine office sales totaling 3.4 million square feet in New Jersey, New York and Connecticut. Among them were three Jersey City, N.J., transactions, which sold for $670 million at record per-square-foot pricing.
Merin’s team also closed eight industrial trades, totaling 5.5 million square feet in New Jersey, Pennsylvania and South Carolina. The sale of Saw Mill Park in Kearny, N.J. – on behalf of Russo Development – was one of the highest per-square-foot sales in 2011 and sold for a sub 6% capitalization rate.
The Metropolitan Area Capital Markets Group also closed three retail deals involving 610,000 square feet in New Jersey, New York and Pennsylvania; and three New Jersey multifamily transactions involving 464 units. “While both retail and multifamily garnered high demand, less product came online in these sectors last year,” Merin explained. “Still, the properties that did trade drew respectable pricing and cap rates.”
“HAVES” AND “HAVE NOTS”
Throughout 2011—regardless of how much product was trading—buyers and financing sources alike remained particular in terms of their selections. “It was a market of ‘haves’ and ‘have-nots,” Merin said. “Only the right product in the right place drew attention and sold—and it sold competitively. Secondary locations and product simply could not attract bidders.”
Additionally, investors and lenders were hesitant to give credit for any value-add deals based on the need to retain or add tenants, or increase rents, Merin explained. “Rents are not growing, and little tenant absorption is occurring,” he noted. “The only value-add product that is moving are those assets viewed as absolute distress.”
Merin said that his team anticipates an even better—and less contradictory—year in 2012. “Activity likely will return to a more promising pace, commensurate with some resolution of economic and global issues,” he noted. “Additionally, this is an election year, which traditionally serves as a boost to the stock market. And, as banks begin to write down some of the assets they have been holding, we will see a significant number of deals come out of distressed pools. This will create additional investment opportunities for some of the money that has been forced to sit on the sidelines.”
Cushman & Wakefield’s Metropolitan Area Capital Markets Group specializes exclusively in investment sales of office, industrial, multifamily and retail properties throughout New Jersey, New York, Fairfield County, Conn., and Pennsylvania. Since 2000, the team has closed in excess of 348 transactions totaling $15.4 billion. This includes 176 office buildings totaling approximately 62.5 million square feet, retail space totaling 20.8 million square feet, industrial space totaling 26.2 million square feet and 38 multi-family properties including 13,905 residential units.
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