C&W capital markets team heading for record year

Real Estate Weekly,  Nov 14, 2007  

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Commercial real estate investment sales activity fell offprecipitously during summer 2007, and industry experts anticipate a slow fourth quarter.

Yet Cushman & Wakefield's Metropolitan Area Capital Markets Group already has cinched a record year--with upwards of $3.2 billion of value in 60 transactions closed or under contract through October.

According to Andrew Merin, a Cushman & Wakefield vice chairman and head of the group, much of his team's activity early in 2007 stemmed from a carry-over of deals that commenced toward the end of 2006.

He also credits the continued dynamic pace of the investment sales market during the first half of this year.

"A seismic shift, starting in approximately 2000, positioned commercial real estate as one of the most attractive investment sectors," Merin noted. "Since then, unabated investor demand fueled by ongoing capital market expansion has led to extraordinary activity levels. Our success mirrors this trend."

Founded by Merin and David Bernhaut in 1987 and based at Cushman & Wakefield's East Rutherford, N.J., office, the Metropolitan Area Capital Markets Group also includes Jose Cruz and Gary Gabriel and specializes exclusively in real estate investment sales in northern New Jersey; Fairfield County, Conn.; and Long Island and Westchester County, N.Y. This includes orchestrating investor acquisitions and dispositions, structuring joint venture partnerships, and coordinating major corporate dispositions.

Looking at current conditions within this niche, Class A office product continues to be the darling of the investment community, according to Merin.

The Metropolitan Area Capital Markets Group has been involved in several large office transactions this year, including the sale of Metro Park Office Center in Iselin, N.J., for $228 million and the sale of Merrill Lynch's Plainsboro, N.J., campus for $122 million. From a housing perspective, demand for rental properties throughout the tri-state suburbs has helped to maintain aggressive pricing.

"Our team is approaching a standout $1 billion in multifamily activity this year, highlighted by the sales of Hudson Harbour Apartments & Townhomes in Poughkeepsie, N.Y., and Crystal Hill Club in Pomona, N.Y.," Merin noted.

Retail and industrial properties have not been quite as fluid during 2007, with few assets coming on line.

Among those that have traded this year, the Metropolitan Area Capital Markets Group arranged the $45.4 million sale of Riverfront Plaza Shopping Center in Hackensack, N.J.

On the industrial front, the team orchestrated the $12 million sale of 190 Jony Street in Carlstadt, N.J., and recently picked up several additional industrial assignments--a sign of stepped-up activity in that sector, according to Merin.

Regarding the current slowdown, Merin noted that liberal underwriting over the past several years and the resulting overleveraged investments have created a backup of debt in the market. That and the spillover from the residential subprime crisis have resulted in tougher lending standards that have slowed investment dealmaking considerably.

"For sellers, pricing has become a challenge," Merin said. "Value is down five to 10 percent since summer. In many cases, we are advising our clients to wait until we are comfortable that the capital markets have settled down."

The question is how quickly that will happen. "During the most recent slowdowns--in 1998 and in 2001 after September 11th--the markets came back quickly," Merin noted.

"In the current case, I expect things to correct during the first or second quarter of 2008. However, some are saying that this could drag out over the next 12 months."

Whatever the timing, the Metropolitan Area Capital Markets Group remains ready, willing and more than able to help leading commercial real estate investors, developers and users continue to maximize their strategic positions. The 14-member Metropolitan Area Capital Markets Group team has orchestrated more than 373 transactions with a total value of $14.9 billion since 1995--more volume than any other team in the suburban tri-state region. For the past three years, this included more than $2.0 billion in transactions annually.

The group's involvement in some of the region's most important real estate transactions has been recognized with the prestigious NJ-NAIOP "Deal of the Year" award five out of the last eight years. The team won the same honor for Westchester in 2006.

COPYRIGHT 2007 Hagedorn Publication
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