According to a NorthJersey.com report, vacancy rates for premier Bergen County commercial real estate in the area have now reached just over 18 percent, which is the lowest level in four years. As Philly.com reports, after the New Jersey Economic Development Authority has approved millions of dollars in tax credits for office space renovations and repurposing for commercial real estate throughout the state recently, Bergen County is more attractive to investors this year. With its close proximity to Manhattan, the area has become a haven for underutilized office buildings that can be remodeled and renovated at discounted prices.
Potential boom in premier office property due to vacancy rates
This investment trend has already begun, but the expectation is that northern Bergen County will continue to fill up its high quality commercial office buildings. According to an interview with NorthJersey.com, Andrew J. Merin, vice chairman and head of the investment sales group at Cushman & Wakefield in the East Rutherford area, explained that these office buildings have great potential for investment because of their high quality and location.
"When someone buys an older building, they do several things to increase value," Merin stated. "They will renovate the main lobby and look at the amenities package - a cafeteria, exercise room, shared conference rooms." Merin's comments are somewhat counterintuitive given the recent trend in northern Bergen County as major corporations have left the area, which resulted in the high vacancy rates. However, as Jeff Hipschman, senior managing director for New Jersey at the real estate firm CBRE, argued in a separate interview with NorthJersey.com, the same basic tenets of real estate still apply: location, location, location. "Owners are picking their assets to invest in," Hipschman commented. "They see opportunities for rent growth in 2016 for top assets."
Bergen County's advantages
With vacancy rates in Midtown Manhattan increasing for premier commercial office space, investors see more opportunities in northern New Jersey's location, population density and proximity to highway systems. This makes office buildings in Bergen County more attractive for all types of manufacturing and warehousing companies because of its access to all points in the tri-state region. A prime example of this type of repurposing recently was Montvale's Memorial Sloan Kettering Cancer Center, which took over a commercial office space. In the same interview with NorthJersey.com, Merin explained that many potential investors are eyeing office locations in the area to repurpose them into medical and industrial spaces. "When I started out in the 1970s, the Meadowlands was emerging and people were buying old industrial buildings and tearing them down and putting up office buildings," Merin noted. "Now people are looking at buying office buildings, tearing them down and putting up industrial."
Vacancy rates for industrial buildings in Bergen County hit 6.4 percent in 2015, which marked the lowest level in eight years. Merin expects this trend in occupancy rates for industrial properties to increase this year as more office buildings become repurposed.