Commercial real estate specialists in the region will be satisfied if this year’s slow and steady growth in the sector continues as expected into 2013.
That’s the forecast for next year nationwide as well, with the National Association of Realtors predicting modest declines in vacancy rates for office, industrial and retail properties.
Commercial agents reported third-quarter improvement in the mainland Atlantic County market and the sale of some large properties.
The quarter began with the sale of a 30,000-square-foot mixed use/fitness facility at 3330 Fire Road in Egg Harbor Township, with Levin Commercial Real Estate in Atlantic City handling the sale.
Joshua Levin said the investment purchase for $2.65 million involved no change in the businesses leasing space in the facility.
A 90,000-square-foot warehouse/industrial building at 206 W. Parkway in EHT was purchased by Jersey Construction, said Richard Baehrle, of Prudential Fox & Roach in Northfield. The building was owned by Caesars Atlantic City.
Baehrle said this year was good, with settlements done or pending on 280,000 square feet of transactions, with most office or retail.
He said medical uses have driven demand in the office market, which is now starting to outstrip supply.
“There is a misconception that there is an overabundance of office supply,” he said.
Hopes for the new year are still pinned to a substantial rebound in the casino industry and the NextGen Aviation Research and Technology Park in Egg Harbor Township finally seeing construction, he said.
“I remain cautiously optimistic that the upward market trend will continue in 2013,” Baehrle said.
Samantha Zerafa Roessler and Frank Sortino, of ForeSite Commercial Realty in Northfield, said they’ve seen slow, steady growth in the office market this year.
“This market is in its second consecutive year of absorption, which is good,” Zerafa Roessler said.
ForeSite’s analysis of the primary office market on the Atlantic County mainland shows a decline in vacancy rates from nearly 13 percent in the fourth quarter of 2011 to about 11 percent in this quarter.
The analysis of four municipalities with more than 300,000 square feet of office space each — including Linwood, Northfield, Egg Harbor Township and Galloway Township — found 206,434 square feet available in the fourth quarter out of total office space of 1.8 million square feet.
In the current quarter, she said, ForeSite has leased properties on New Road and Zion Road in Northfield. Earlier this year, office properties on Central Avenue in Linwood and Chris Gaup Road in Galloway Township were fully leased.
Zerafa Roessler said the highway retail segment has also seen some activity. “We’ve got three properties under contract on the White Horse Pike.”
The office vacancy rate of 11 percent in the core local market is significantly lower than the nearly 17 percent rate reported by the National Association of Realtors nationally.
With the anticipated slow growth in the economy and gradual rise in demand for commercial space, the organization expects office vacancies to remain above 15 percent through next year and into 2014.
Major East Coast markets tracked by the Realtors have office vacancy rates even lower than Atlantic County, with New York and Washington, D.C., at 10 percent.
Office property owners are expected to realize a 2 percent increase in rents this year and a bit more next year.
Industrial vacancies are expected to decline only slightly from their current 10 percent rate, and retail vacancies are forecast to hardly ease from their 11 percent rate nationally, the Realtors said.
A 2 percent increase in rents for industrial space and a 1 percent rise for retail locations is expected for the coming year.
As has been true since the housing bubble collapse and foreclosure crisis, apartment rentals remain the strongest commercial division, with a vacancy rate of a mere 4 percent this year continuing in 2013.
That’s a level considered a landlord’s market, and average multifamily housing rents are expected to increase 4 percent this year and nearly 5 percent next year.
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