New Jersey is a triple threat: urban, suburban, and farm to table. Bordering Philadelphia and New York, the Garden State remains a tourist hotspot as well as an investor’s best- kept secret. In fact, underneath its public exterior is a booming underbelly of commercial real estate.
With deposits of sprawling apartment complexes, high-rise rentals, and office space, the demand often outpaces the fever pitch for new construction. Unlike other real estate bubbles, New Jersey has attracted brokers from major markets outside of its periphery… as far as the Mid-West and beyond.
A Safe Bet? New Jersey Real Estate Market Draws Unlikely Capital
In a bold move, San Francisco-based Carmel Partners acquired Hunters Glen, an 896-unit garden apartment complex in Plainsboro. Also, a 37-unit property in uptown Hoboken was purchased by Spirit Bascom, its first value-add deal in the state [1].
And neighboring developers in New York, The Maxal Group and Hartz Mountain, have leased 60 apartments within just one month of debuting their luxury 236-unit rental property based in Weehawken. They also have plans to build a Whole Foods Market – all under the canopy of mass transit access to the Lincoln Tunnel and Hudson River Waterfront Walkway [2.]
As media outlets report, the sweeping demand to sink dollars into dwellings has much to do with staying risk-averse. As the stock market swings like a pendulum, there’s an instinctual need to place stability on a pedestal.
Investors don’t want to receive a blanketed statement in the mail. When they can’t identify the stocks and bonds comprising their portfolio, it often breeds uncertainty. But, hand them a three-dimensional asset, such as stake in a property, and it lends an air of certainty and coveted equity.
“There are emotional and psychological benefits that can come to high-net-worth individuals from direct investing,” says Jeff Sica, president of Circle Squared Alternative Investments LLC. “They can fund projects in towns and cities where they live or that they know well. They can drive past the project site and see how it’s progressing. And in the case of something like a hotel or multi-family development, they can walk through and see the finished product.”
With cap rates compressed and New Jersey real estate flooded with lifestyle amenities and robust commerce, it was only a matter of time before out-of-towners scouted these fixtures.
Yet, residential markets aren’t the only aggregate for investor portfolios these days. There’s one sector that’s fast becoming synonymous with the term “recession proof.”
New Jersey Pharmaceutical Companies: A Remedy for Resilience
The state is a hotbed for life sciences including the biotechnology, medical device, and diagnostic industries and is home to 12 of the world’s top 20 biopharmaceutical research companies. Up to 440,000 jobs are directly or indirectly supported by this sector with a gross economic engine touting as high as $107.4 billion [3].
Commercial space, especially for laboratories and corporate offices has soared, making research and development a viable cushion upon which to perch. Prism Capital Partners, who redeveloped the former Hoffman-La Roche tract, is now adding 400,000 square feet to their life science lab nestled on the borders of Clifton and Nutley [4].
In another move, biotechnology firm Celularity will relocate its headquarters to Florham Park. The clinical giant now commands a 147,215 square foot lease [5]. Their amenities will be just as extensive neighboring with a 268-acre master-planned campus highlighting restaurants, a hotel, and flexible-stay residential community, and surrounding medical groups.
According to reports by ROI-NJ, some science and medical tenants are already apt to trade their Manhattan headquarters for the suburbs. This could be a prudent incubator for smart investors, far and wide, generating residual benefits for years to come. In fact, life science offices account for more than 1.3 million square feet in New Jersey, driving up leasing activity exponentially.
The Garden State has not been shy about its thoughtful planning process, creating convenient epicenters for work and play in the name of longevity and sustainability.
So, what do you dream about as you look to quantify your portfolio? Always consult with a real estate advisement group to understand shifting demands. What’s right in the short-term may not be the long-term solution to your personal security. At Circle Squared Alternative Investments, we don’t limit your options to one lane. If you want to see the bigger picture and expand your horizons, please reach out to us.
We’re proud to call New Jersey home… how about you?
Investors should be aware of additional risks associated with alternative investments due to factors such as economic and political instability, regulatory requirements, increased volatility, illiquidity, higher management fees, lack of performance history, currency fluctuation, and differences in auditing and other financial standards and that these risks can be accentuated in alternative investments. Alternative investments may be suitable only to those who understand and are willing to assume the economic, legal and other risks involved.
The foregoing is not a complete list of the risks involved with alternative investments. You should thoroughly review all pertinent offering documents with respect to alternative investments with your financial, legal and tax advisors to determine whether the investment is suitable for you in light of your investment objectives and financial circumstances.
Circle Squared Alternative Investments, LLC (“CSQ”) is an SEC registered investment adviser with its principal place of business in the State of New Jersey. Registration does not imply a certain level of skill or training. CSQ may only transact business in those states in which it is notice filed or qualifies for an exemption or exclusion from notice filing requirements. Any subsequent, direct communication by CSQ with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration where the prospective client resides. For information pertaining to the registration status of CSQ, please contact CSQ or refer to the Investment Adviser Public Disclosure web site (www.adviserinfo.sec.gov). For additional information about CSQ, including fees and services, send for our disclosure statement as set forth on Form ADV from CSQ using the contact information herein. Please read the disclosure statement carefully before you invest or send money.
Sources:
[1] (Burd, Real Estate New Jersey, 2019)
[2] (Burd, Real Estate New Jersey, 2019)
[3] (Healthcare Institute of New Jersey)
[4] (Johnson, ROI-NJ, 2019)
[5] (Burd, Real Estate New Jersey, 2019)