It was a challenging second half to the year for the real estate market in 2020, with a strong finish unable to make up for the pandemic’s challenges, according to NAI DiLeo-Bram & Co.’s Winter 2020 Capital Markets Snapshot for northern and central New Jersey.
The real estate firm’s report covers five counties: Essex, Middlesex, Morris, Somerset and Union.
Total trades and volume for the region were down year-over-year, the firm said, with industrial, office and retail trades all declining from the same period in 2019.
“It is reasonable to maintain conservative expectations related to sales activity during (the first half of 2021),” David A. Simon, the Piscataway-based firm’s chief operating officer, said in a prepared statement.
There were, however, more trades in the second half of the year than in the first, and three of the five counties — Essex, Middlesex and Morris — topped their five-year average volume figure.
The firm noted that, while industrial sales volume was 37% off its five-year average, it was retail that faced the greatest challenges due to the pandemic, posting its lowest volume in a single year since 2015.
“Retail continued to have challenges, and will have the slowest recovery of the asset classes tracked in our report,” Simon said. “There will be acquisition opportunities in this sector, and occupiers will have the ability to relocate to more desirable locations while maintaining or reducing their occupancy costs.”
While the industrial sector recorded its fewest trades and lowest volume in a year since 2016, there was about a 35% increase in the average price per square foot, he said.
“Values for industrial properties seem poised to increase,” Simon noted.
Office prices, meanwhile, came in at the highest level in the last five years for the region.
“Activity in this sector will increase as the vaccine is rolled out to the general population,” Simon said.