NAIOP NEW JERSEY PANEL: OPPORTUNISTIC SITUATIONS ARE DRIVING THE “SMART MONEY”
Top Industry Leaders offer their Views on which Property Sectors are most Attractive—or not
WOODBRIDGE, N.J. – April 2, 2012 – (RealEstateRama) — The program title for NAIOP New Jersey’s chapter meeting asked the very topical question, “Office, Industrial, Mixed-use: Where is the Smart Money Going?” To answer that question, Mark Goldstein of Liberty Property Trust introduced a panel he termed, “true leaders who have given their time and significant financial resources to New Jersey’s economic benefit.” The event was held at the Renaissance Woodbridge Hotel.
“The recovery is underway, and transactions are occurring – people are buying and selling commercial real estate assets. What are you buying and selling, or not?” moderator Alex Klatskin of Forsgate Industrial Partners asked panelists. For Bill Hankowsky, the answer was “industrial. We bought 4.2 million square feet, mostly industrial, in the past year.
“We continue to try to buy value-add situations,” Hankowsky said. “Most of the institutions are looking for stabilized real estate. We’re targeting value-add.”
Hartz Mountain Industries is similarly being “opportunistic,” said the company’s Emanuel Stern. In the process, his company has expanded beyond its office and industrial roots into the multi-family category, including a property acquisition in the Chicago market, and is also buying development sites.
Joseph Taylor of Matrix Development Group agreed with Hankowsky on the industrial category: “We are buying anything we can in that sector,” both in New Jersey and out-of-state. “We are also focusing on redevelopment, and are trying to be opportunistic on the portfolio we already have.”
Mitchell Hersh of Mack-Cali Realty Corp. termed his company’s approach “facile.” One interesting recent transaction by Mack-Cali was the acquisition of debt in Stamford, Conn.: “We were able to do it because of the liquidity on our balance sheet. We are now the debt holder in a senior debt position.
“We’ve all lived through four or five years of economic headwind, and debt provides an opportunistic situation,” said Hersh. He also noted that his company is looking into “company-type acquisitions in our core market,” but conceded that “the integration process can be difficult.”
On the development side, an important effort by Mack-Cali is its joint venture with Ironstate Development Co. to construct four high-rise multifamily residential towers totaling 2,500 units adjacent to the company’s Harborside complex on the waterfront in Jersey City. “Multifamily is one of the more robust sectors,” Hersh said. “We already own the land, and this is a good way to get full value. Beyond that, however, we will be very selective of what we do in terms of mixed-use.”
On the subject of mixed-use, “we will look at that product type,” said Hankowsky. “Our risk diversification model provides for growth diversification.”
What do the panelists regret, if anything, about their activities over the past year? “Our biggest regret is not being more proactive in capital recycling on the ‘sell’ side,” Hersh said. “Our only regret is the deals that we didn’t get,” said Stern, who did concede, however, that “we were lucky we didn’t get some of those deals.”
Focusing on New Jersey, “We need to fill up vacancies – what are some of the public policy issues that have worked to this industry’s benefit, and what are some of the things the State of New Jersey could do better,” asked Klatskin.
“From our perspective, the most important issue is replenishing the Transportation Trust Fund,” Taylor said. “As owners of warehousing/distribution properties, it’s all about access. That said, we do see that Trenton has gotten more cooperative.”
While conceding that the Urban Transit Hub Tax Credit program has been generally successful, “it was supposed to bring companies and jobs into the state,” Hersh said, explaining that many of its major successes have resulted in companies remaining and relocating within New Jersey. “That’s like rearranging the deck chairs.
“I will agree the perception now is that New Jersey ‘gets it,’ and is proactive in its impact on business for the first time in decades,” Hersh said. “We are, in fact, seeing some companies moving to New Jersey from the Midwest. New Jersey will be resilient, but there is still a ‘cloud’ hanging over us, a ‘cloud’ that won’t lift until after the election.”
“The over-arching issue is the federal government,” Hankowsky agreed. “Government regulations are hindering business,” he said, specifically noting the financial, healthcare and defense sectors. “Government should think of us as ‘customers,’ producing a product. The mantra should be, ‘let the people do business.’”
“We will continue our advocacy efforts in Trenton on behalf of our members and this industry,” concluded Michael McGuinness, chief executive officer of NAIOP New Jersey. “There continue to be significant issues affecting all of us, including the state’s new strategic plan, the permit extension initiative, the raising of the Bayonne Bridge, for which the Port Authority of New York and New Jersey has applied for expedited federal permitting, and more.
“All of these initiatives are clearly on our agenda, and we will continue to work with government on all levels,” he said.
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