REAL ESTATE
REAL ESTATE
Uncertainty Remains a Constant
Compiled by Jamie Grill-Goodman
Real Estate is a dynamic industry, influenced by a complex interplay of economic factors, interest rates, and inventory levels. As we move through 2025, market fluctuations will play a significant role in shaping buyer and seller behavior. Understanding these dynamics is crucial for industry professionals as they navigate changing conditions and anticipate trends that will define the real estate landscape in the months ahead.
To gain insight, COMMERCE asked leading New Jersey real estate leaders:
“ How will current market fluctuations – including interest rates and economic uncertainties – and current and projected inventory in your market impact buyer and seller activity in your area this year?”
For additional insight, The Commerce and Industry Association( CIANJ) will host a June 18th event on the Revitalization of New Jersey’ s Vacant Properties. Join us at the APA Hotel, Iselin, NJ, for a deep dive into this timely issue.
Engel & Völkers Hoboken Thomas Worley Real Estate Advisor
Real estate trends in Hudson and Bergen County continue to evolve in response to interest rates, inventory shifts, and economic factors. The days of 3-4 % mortgage rates are gone, yet sellers who have been holding onto homes they’ ve outgrown or had to settle for during the COVID boom know it’ s time for a change. This trend should continue over the next 18 months, gradually adding more inventory to the tight Hudson and Bergen County housing market, subsequently creating opportunities for buyers.
Historically low inventory remains a challenge. The robust national sellers market should diminish, but the local market for suitable homes with an easy NYC commute will continue past this closing window. Demand outpaces supply at most price points enabling sellers to command strong offers.
Hudson County’ s transient nature continues to drive its real estate market. Young professionals who outgrow city living and seek space in the suburbs are being replaced by the next wave of renters and buyers. With COVID in the rearview, corporations are demanding staff return to the office, fueling the easy-commutable market. We have seen a slowdown in the high-end luxury real estate segment. Higher net worth individuals with wealth tied to the stock market are less likely to sell and upgrade because of economic uncertainties. Strategic pricing, personalized
marketing, and time and patience are keys to moving properties in this segment.
No matter the market conditions, one thing remains constant – people move because of the four D’ s: Diapers, Diamonds, Divorce, and Death. Life events drive real estate decisions, and those who are prepared to adapt to changing conditions will be more successful than those who don’ t.
Greek Real Estate Partners David Greek Managing Partner
Greek Real Estate Partners builds and manages industrial properties throughout New Jersey. While industrial leasing velocity slowed significantly in 2024, there was great optimism about a recovery in leasing going into 2025, with expectations that large credit-worthy tenants would start to be active again. While still early, uncertainty over U. S. trade policy has tamped expectations of a quick recovery.
Despite the future being increasingly difficult to forecast, the tenant market has started to show some early signs of recovery, especially amongst large-format, big-box users. Starts on new developments remain low and are expected to stay that way throughout the year, which will help bring vacancy rates down over time and increase pricing power for landlords.
Expectations on interest rates have improved significantly, with the market currently pricing in two small interest rate cuts by the Fed toward the end of this year. The debt markets for industrial properties have improved from last year, with a deep bench of potential lenders and spreads compressing due to increased lending competition. However, equity investors in-large remain highly cautious in their approach to new deals, underwriting slower rent growth and higher exit cap rates than in previous years.
We remain very optimistic about the longterm growth of the industrial market in New Jersey, however uncertainty around trade policy and an increasingly difficult to navigate regulatory environment in NJ will make the path forward a little bumpy.
NAI James E. Hanson William C. Hanson, SIOR President of NAI James E. Hanson
As we approach mid-2025, uncertainty remains the only constant in the commercial real estate market, driven by macroeconomic volatility, a complex political environment, and broader structural challenges.
Nowhere is this more evident than in the office sector, which has undergone a fundamental transformation. This shift presents both challenges and opportunities. Many municipalities are grappling with a growing inventory of obsolete office buildings, leading to vacant properties and complications in managing tax rolls. However, these properties also offer prime opportunities for redevelopment into much-needed housing or more productive commercial uses. At the same time, the slow return to the office has fueled demand for amenity-rich, modern workspaces.
Continued
“ Life events drive real estate decisions, and those who are prepared to adapt to changing conditions will be more successful than those who don’ t,” says Thomas Worley of Engel & Völkers Hoboken.
Photo: Getty Images / iStockphoto / andresr
18 COMMERCE www. commercemagazinenj. com