Brokerage Outlook: New Jersey

• Central New Jersey Retail

• Northern New Jersey Industrial

• Central New Jersey Industrial

• Central & Southern New Jersey Industrial

• Northern New Jersey Multifamily

• Central New Jersey Multifamily

• Northern New Jersey Office

• Central New Jersey Office

Central New Jersey Retail Greenman Submitted by David Greenman, first vice president with the East Brunswick, New Jersey office of CB Richard Ellis. Posted 10/02/07. What area is your expertise? • Central New Jersey What trends do you see presently in retail development in your area? • Retail development in New Jersey is a highly competitive and a difficult form of development due to a variety of restrictions such as: Municipal bureaucracies, ever-tightening environmental standards and inadequate infrastructure (older roads and services). Despite these obstacles and the fact that both the major accomplished retail developers as well as the neophytes in the industry compete vigorously for development opportunities, the sector is growing at an incredibly fast pace. What type of retail product is doing well in your area? • Supermarket-anchored centers, lifestyle centers, and big box retailers. What retailers are new to your area? • New and exciting retailers in central New Jersey include: Uniqlo, The Apple Store, Ricky’s Candy Cones and Chaos, White House | Black Market, and Tiffany & Co. with its new lease in Red Bank. Who are the active retail developers in your area? • Some of the new developers in the market are: D & O Associates of Colts Neck, which just enlisted CB Richard Ellis (CBRE) Retail Services Group Central Jersey for a 185,000-square-foot project in Hammonton and East Hollywood Development Company, which also just selected CBRE to bring to market its 300,000-square-foot waterfront retail project. This project will be accompanied by a full-service hotel and conference center as well as the state’s first, state-of-the-art film and television studio, encompassing four structures with a total of 150,000 square feet. Please name one or two significant retail developments in your area. What impact will these projects have on the market? • Regionally speaking, Southern New Jersey has seen some unprecedented growth and has entered the main stream in retail with the Towne Place and Market Place at Garden State Park, located in Cherry Hill. Further north in New Rutherford, the long awaited Xanadu project has begun. Where is the majority of development taking place? Why is this area doing well? • While it’s safe to say that there are more straightforward development opportunities available in the southern portion of New Jersey, we are seeing renovations of existing centers and a move to recycle environmentally distressed properties throughout the entire state. What area do you expect to be the next big retail development market? Why? • While all of New Jersey is quite active, south Jersey has become a hot bed of activity with numerous landmark developments. In Southern New Jersey, in our opinion, with the ever growing demographic, retail will continue to flourish. Please describe the retail leasing activity in your area. What major leases have been closed recently? • Simon Properties has added Neiman Marcus and Nordstrom to the Quakerbridge Mall. Tiffany & Co. has signed for a portion of the Garmany Building on Broad St. in Red Bank, and Apple Computer has come to the Freehold Raceway Mall. Please give a measure of retail vacancy rates and a measure of available sublease space. • Rates are difficult to categorize as they are normally determined by a tenants’ square footage, as well as the specific marketplace. What types of retailers should look into your market in the coming year? What type of retail is needed? • New Jersey needs high-end destination oriented retailers. The types of retailers that should be looking at central New Jersey are national and regional retailers that have yet to take a dominant position in the New Jersey market. Would you like to make any additional observations about the retail market in your area? • Retail throughout New Jersey, as well as the rest of the country, is experiencing a major up-tick. The strength of the economy, coupled with aggressive developers and flourishing retailers, has made this one of the most heated markets of all times.

Northern New Jersey Industrial Knowles Submitted by Brian Knowles, principal, industrial services with the Murray Hill, New Jersey office of The Staubach Company. Posted 10/02/07. What area is your expertise? • New Jersey Industrial What trends do you see presently in industrial development in your area? • Redevelopment of Brownfield sites within the port region. What type of industrial product is doing well in your area? • High-bay, modern distribution facilities with ample trailer storage. Who are the active industrial developers in your area? • Matrix Development Group, Panattoni Development Co., Prologis, The Morris Companies and Seagis Property Group. Please name one or two significant industrial developments in your area. What impact will these projects have on the market? • Two significant projects are at Exit 12 on the New Jersey Turnpike known as I-Port 12 (Panattoni) and Port Reading (Prologis). Both of these projects will deliver state-of-the-art modern distribution facilities much closer to the New Jersey ports, which previously had only been mostly attainable at Exit 8A of the New Jersey turnpike. These projects should indicate ongoing forward if tenants are willing to pay higher premiums to be 25 miles closer to the ports. Panattoni and Prologis have spent considerable capital in developing these former Brownfield sites. Where is the majority of development taking place? • Along the turnpike interchanges from Exit 7A to 12. What area do you expect to be the next big industrial development market? Why? • Exit 12 with its close proximity to the ports. The Panattoni and Prologis projects should see much activity over the next few years. Please describe the industrial leasing activity in your area. • Current leasing is slow for larger blocks of space. Please describe the industrial sales activity in your area. • This has been a very tight market sector, many buyers with few properties to consider, however, it is beginning to shift. Please give a measure of industrial vacancy rates and a measure of available sublease space. Northern New Jersey counties (Bergen, Essex, Hudson, Mercer, Middlesex, Monmouth, Morris, Passaic, Somerset and Union) • Total Direct Vacancy Rate 7.0 percent • Total Sublease Vacancy Rate 0.5 percent What impact do current interest rates have on the industrial market? What predictions do you have for interest rates and their effect on the industrial market in the next year? • Should interest rates rise, this will contribute to the leveling off on sale prices. What industries do you expect to expand in the next year to absorb a great deal of industrial space? What areas will be affected? • Continued port volume should force consumer product and retail industries to secure nearby space. Would you like to make any additional observations about the industrial market in your area? • New Jersey Industrial inventory is on the rise. This should open up some nice leasing opportunities for the tenant side of the market. Buyers still may need to be patient.

Central New Jersey Industrial Lissner Submitted by Mindy Lissner, senior vice president with the East Brunswick, N.J. office of CB Richard Ellis. Posted 09/13/07. What area is your expertise? • I specialize in the central New Jersey industrial market. What trends do you see presently in industrial development in your area? • Between the Port and Exit 7A on the New Jersey Turnpike, there is over six million square feet of either new construction or under development industrial properties. If you add in sites that are recently approved or in the approval process, there is an additional four to five million square feet. This quantity of new construction points to developer confidence in New Jersey as a long-term industrial market place. What type of industrial product is doing well in your area? • The greatest demand is for state-of-the-art warehouse and distribution space: high cube, ESFR and cross-dock. Who are the active industrial developers in your area? • Panattoni Development Co., ProLogis, IDI, Morris Co., The Rockefeller Group and AMB. I-Port 12 Please name one or two significant industrial developments in your area. What impact will these projects have on the market. • I-Port 12 in Carteret is a 1.2 million-square-foot development located at Exit 12 of the New Jersey Turnpike. The project is a partnership between Panattoni Development Co. and New York-based P/A Associates. This project offers port related logistics companies the opportunity to warehouse up to one million square feet under roof. It offers proximity to abundant labor and an excellent transportation network. The project is one of the first offering state of the art warehousing in the Port District and is a success story of Brownfield redevelopment as well. Where is the majority of development taking place? Why is this area doing well? • The majority of development is at Exits 7A and 8A. This is where the greatest opportunity for development is due to the availability of developable land. What area do you expect to be the next big industrial development market? Why? • The greatest demand for distribution space has been and will continue to be the Turnpike corridor. Please describe the industrial leasing activity in your area. • Leasing activity is strong in our area. New Jersey has all the factors that contribute to a robust market: labor, consumers, the port and the highway network. Please describe the industrial sales activity in your area. Pricing continues to rise due to high demand, lack of product, and competition between the users and the investor world. What impact do current interest rates have on the industrial market? What predictions do you have for interest rates and their effect on the industrial market in the next year? • Rising interest rates have had little impact to date on the sale prices of industrial real estate. Much of the institutional money chasing industrial real estate is coming from pension funds and as the baby boomers age, the pension fund dollars will increase and will continue looking to real estate opportunities to place money. These buyers will continue to compete with the user and investor market keeping sale prices high. What industries do you expect to expand in the next year to absorb a great deal of industrial space? What areas will be affected? • Greatest activity is in consumer products, food and beverage and logistics. Would you like to make any additional observations about the industrial market in your area? • I am very excited about the growth of the industrial market in New Jersey. It is and will continue to be one of the most desirable industrial markets in North America.

Central & Southern New Jersey Industrial Glick Submitted by Jonathan M. Glick, senior vice president with Sheldon Gross Realty. Posted 09/27/07. What area is your expertise? • I will be discussing the New Jersey industrial market. What trends do you see presently in industrial development in your area? • In my 20 years of experience, the trend has been consistent. Using the Port Authority as the center, development continues along all major truck access to this center. What type of industrial product is doing well in your area? • The easy answer is warehouses with high ceilings, lots of truck doors and those with proximity to the New Jersey Turnpike (NJTP). In reality, if an old manufacturing facility can serve as a warehouse to distribute and offer competitive lease rates or sale price, these properties are in demand as well. Who are the active industrial developers in your area? • Matrix Development Group, Summit Associates, Federal Business Centers, Frank A. Greek and Son, Ike Heller. The Real Estate Investment Trusts (REITS) ProLogis, First Industrial Realty Trust and AMB Property Corp. Please name one or two significant industrial developments in your area. •  Northeast Business Park at and Matrix Business Park at NJTP Exit 7A are two significant developments. What impact will these projects have on the market? • These projects will give companies that need to be in New Jersey and along major distribution routes the option to remove themselves from the more congested areas at Exits 8A, 9, 10 and north along the NJTP. It will also serve as a way to tap into a different labor pool that was not willing to go to Exit 8A. Both business parks are located in Washington Township. Access is one exit off the NJTP at Exit 7A. Matrix Development Group is the primary developer in this market. Matrix Business Park at Exit 7A consists of 480-plus acres and can accommodate approximately 5.3 million square feet of distribution and light manufacturing space. Northeast Business Park at 7A is comprised of 425 acres of land and can accommodate approximately 4.3 million square feet. Although the amount of square footage is impressive, it pales in comparison with the other industrial properties north along the NJTP. Where is the majority of development taking place?Why is this area doing well? • Washington Township is the hot spot for big new development. It is the natural progression as all other exits along the NJTP are closed to complete build out. What area do you expect to be the next big industrial development market?Why? • It is going to take some time to absorb the new product in Washington Township and I believe during this time we will see previous parcels that were less desirable be developed or buildings that were obsolete get renovated. Many companies are under great pressure to control their costs. If you receive 50 to 100 trucks a day or week from the port and do not know what the costs of gasoline will be next year, a conservative approach would be to stay as near to the ports as possible. Please describe the industrial leasing activity in your area. • I believe there is a healthy demand for industrial real estate. Please describe the industrial sales activity in your area. • For the past 4 to 5 years, I believe the sales activity has led the leasing. What impact do current interest rates have on the industrial market? • This is a question we discuss with our customers daily. Since the last increase, I have seen the prices of properties plateau and lease rates remain the same as in probably the last 5 years (at least the landlords are getting annual increases). What predictions do you have for interest rates and their effect on the industrial market in the next year? • If the rate scales back, I believe it will be business as usual with prices remaining high and lease rates holding steady. If the rate increases, I believe more properties will be available for sale and with more supply prices would likely adjust. As for leasing, I believe the landlords will be able to get their long awaited increases. What industries do you expect to expand in the next year to absorb a great deal of industrial space?What areas will be affected? • I think a lot of us have not seen what effect China will have on our pre-existing companies that provide the goods we buy now. I believe Chinese companies that manufacture their goods will also set up distribution facilities here. That will be the new growth. Would you like to make any additional observations about the industrial market in your area? • When speaking with other industrial realtors throughout the country I am confident to say that the Central Jersey industrial market is one of the strongest in the nation.

Northern New Jersey Multifamily Baxter Submitted by Don Baxter, sales associate with the Woodbridge, New Jersey, office of The Kislak Company. Posted 09/21/07. What area is your expertise? • My area of expertise is Hudson County, New Jersey. What trends do you see presently in multifamily development in your area? • Current trends in the apartment market include a slowdown of condominium conversions and buyers who are new to the investment real estate market. Who are the active multifamily developers in your area? • Two main multifamily developers in Hudson County are K. Hovnanian Homes and Applied Development Co. Where is the majority of development taking place? Why is this area doing well? • The majority of the development is occurring in Jersey City. The area has a lot to offer, as the commute to New York City is extremely convenient. What area do you expect to be the next big development market? Why? • I feel that development will continue in Jersey City. Young adults who work in New York City need affordable options and like the proximity to Manhattan. What areas are doing well in terms of apartment leasing? Which areas are struggling with leasing? • Currently, all leasing is quite strong Please give a measure of apartment vacancy rates. • Vacancy rates are relatively low in Hudson County at approximately 3 percent. Please give a measure of condo sales activity in the area. • Hudson County still has a nice frequency at lower numbers. What impact do current interest rates have on the apartment and condo markets? What predictions do you have for interest rates and their effect on the multifamily market in the next year? • I predict that interest rates will increase slowly over time, thus attracting the more serious seller. Would you like to make any additional observations about the multifamily market in your area? • Hudson County’s proximity to Manhattan will always make for a strong market.

Central New Jersey Multifamily Wiener Submitted by Jeffrey P. Wiener, president and co-managing director with the Woodbridge, New Jersey, office of The Kislak Company. Posted 08/17/07. What area is your expertise? • I work throughout New Jersey. The following responses focus on central New Jersey. What trends do you see presently in multifamily development in your area? • There continues to be a trend toward the development of town centers that combine apartments (or condominiums) with a mix of retail and/or office space. Some of the recent developments include the town centers in Manalapan (central), Cranford (north central) Livingston (northern) and Englewood (northern). Development along the New Jersey coast also continues with a variety of projects underway in West Long Branch and Asbury Park. Please name one or two significant multifamily developments in your area. What impact will these projects have on the market? The Village at Manalapan — This development is under way, will provide a walkable town center in an area that previously did not have a traditional downtown along with additional housing and new retail and commercial space. The Village at Manalapan is a development of Manalapan Retail Realty Partners, LLC. The recently completed Cranford Crossing is a combination of upscale retail spaces and luxury apartment rentals in downtown Cranford. Both the new apartments and retail space enhance an already established downtown area. Cranford Crossing is a development of Westminster Communities. Where is the majority of development taking place? Why is this area doing well? • In central New Jersey, developments continue along the Jersey shore as the demand remains strong for ocean front properties. What area do you expect to be the next big development market? Why? • In central New Jersey, the continued development and growth of Perth Amboy and the neighboring areas will continue the waterfront locations and convenient commuter access to northern New Jersey and New York City. What areas are doing well in terms of apartment leasing? Which areas are struggling with leasing? • Statewide the apartment leasing market remains strong, especially in northern and central New Jersey. Demand remains high given New Jersey’s strong job market, population density, high per capita income and proximity to both New York City (northern and central N.J.) and Philadelphia (southern N.J.). As condominium sales have slowed within the state and across the country, apartments have become even more attractive. Please give a measure of apartment vacancy rates. • Vacancy rates in central New Jersey are in the 4  percent to 7 percent range. In northern New Jersey, they are in the 2  percent to 5 percent range. Please give a measure of condo sales activity in the area. • Condominium sales have slowed both within New Jersey and across the country. What impact do current interest rates have on the apartment and condo markets? What predictions do you have for interest rates and their effect on the multifamily market in the next year? • As the condominium market has slowed and interest rates have risen, the apartment market has become stronger. It is impossible to predict where the interest rates will go. What is the status of job growth/(un)employment rates and what bearing will it have on the multifamily market? • Job growth remains strong and unemployment remains low. As a result, the demand for housing and the multifamily market, generally, will remain strong. Would you like to make any additional observations about the multifamily market in your area? • New Jersey remains an extremely attractive multifamily market given the number of businesses/employers within the state, the population density and the high per capita income. There is also the market’s proximity to both New York City and Philadelphia and New Jersey’s miles and miles of beaches.

Northern New Jersey Office McConnell Submitted by Dennis W. McConnell, executive vice president with the Parsippany, New Jersey office of Jones Lang LaSalle. Posted 09/18/07. What area is your expertise? • My expertise is bringing together the resources to represent users of office space and owners of northern New Jersey office buildings. What trends do you see presently in office development in your area? • The Northern New Jersey suburban markets have remained relatively flat with overall vacancy rates in the 20 percent range. Although rental rates have come back to the levels experienced between 1999 and 2001, the growth has been stagnant except for a few isolated submarkets. Developers continue to be cautious of adding new space to the market, instead focusing on repositioning existing assets in key markets. Two such examples are Mack-Cali’s renovation of 412 Mount Kemble Avenue and Advance’s 445 South Street in Morristown. Please name one or two significant office developments in your area. What impact will these projects have on the market? • The Gale Real Estate Services Company in conjunction with JP Morgan has been very active continuing to develop their Center of Morris County site in Parsippany. The recently completed 175,000-square-foot 100 Kimball Drive, is now significantly leased with Deloitte & Touche taking 160,000 square feet. Based on the success of this building, Gale has decided to proceed on spec with the construction of One Jefferson Road in Parsippany. This 100,000-square-foot building is the last to be constructed in the four building campus. Gale expects to break ground this year. I believe the success of 100 Kimball Drive supports Gale’s theory that the lack of large blocks of Class A trophy space in this market enables it to support the construction of another spec building.  What area do you expect to be the next big development market? Why? • I anticipate continued demand in Jersey City, Newark and Metropark, given their proximity to New York City as well as the huge infrastructure of public transportation. If the New York City market reaches the expected saturation levels, developers in New Jersey will have the impetuous to begin construction in the suburbs. Given the low Class A vacancy rates in Jersey City (13.13 percent) and Newark (6.29 percent), I think we can expect to see a push further west. What areas are doing well in terms of office leasing? Which areas are struggling with office leasing? • Jersey City continues to lead the market in activity, while Newark is experiencing historically low vacancy rates. I also anticipate Short Hills and Metropark’s rental rates to continue to rise. The suburbs continue to be plagued with an overabundance of antiquated office buildings and lackluster demand. Please give a measure of office vacancy rates and a measure of available sublease space. • The strongest markets in the state are Jersey City and Newark, while the weakest markets continue to be lower 287 (31.50 percent) and Routes 80/23 (26.03 percent). This excludes the western Route 80 market (59.16 percent) as the majority of the vacancy is contained in one building (the former BASF site in Mount Olive). What is the status of job growth/(un)employment rates and what bearing will it have on the office market? • It’s all about job growth. Job growth is critical to the health of the office market. In the first quarter of 2007 the state’s unemployment rate has increased slightly from 4.1 percent in February to 4.3 percent in April, but it still remains below the national average of 4.5 percent. Nevertheless, due to recent corporation mergers and acquisitions, especially in the financial & pharmaceutical (J&J’s purchase of Pfizer’s consumer products division) sectors, office employment could be affected negatively. Would you like to make any additional observations about the office market in your area? • I am hopeful that 2008 will be the break out year for the New Jersey office market. As New York City’s vacancy rates have declined and rental rates rise, CEO’s will evaluate per employee occupancy costs as a means to control/cut costs. New Jersey will have the solution.

Central New Jersey Office Scanlon Submitted by James Scanlon, executive vice president with the Metropark, N.J. office of Jones Lang LaSalle. Posted on 09/26/07. What area is your expertise? • I will be discussing the central New Jersey office sector. What trends do you see presently in office development in your area? • The current office development includes Class A office space with superlative amenities, uninterrupted power, and maximum efficiency. Who are the active office developers in your area? • Current active developers include Atlantic Realty, BPG Properties, Mack-Cali Realty Corp., Reckson, M. Alfieri Co., and SJP Properties. Please name one or two significant office developments in your area. What impact will these projects have on the market? • MetroTop Phase II, a nine-story, 255,000-square-foot Class A office building is planned to begin construction in central New Jersey’s Metropark market by property owner and developer, Atlantic Realty Development Corp. This is the first speculative development in central New Jersey in 16 years. This project will bring large blocks of premier Class A space to this market. Where is the majority of development taking place? • Metropark is seeing the most development. Why is this area doing well? • There is a lack of vacant space in this submarket. The train station is within walking distance to all Metropark buildings making this an extremely popular choice for employers. With direct access to the Garden State Parkway, New Jersey Turnpike and Interstate 287, commuting by car is equally easy with most buildings having ample covered and surface parking available. What areas are doing well in terms of office leasing? Which areas are struggling with office leasing? • The area doing well in office leasing is Metropark. The area that is struggling with office leasing is the lower 287 corridor. Please give a measure of office vacancy rates and a measure of available sublease space. Overall Vacancy Rates: Metropark (8.0 percent) Overall Vacancy Rates: Lower 287 (37.6 percent) What is the status of job growth/(un)employment rates and what bearing will it have on the office market? • New Jersey unemployment rate for April was 4.3 percent, below the national rate of 4.5 percent and is expected to drop with the onset of seasonal employment. Typically, this employment season is populated with companies hiring international students, but with the stricter visa requirements and the U.S. dollar being weaker, it will be easier for local applicants to find a position in the professional sector. Is there any type of office tenant absorbing a majority of space? What industries do you expect to expand in the next year to absorb a great deal of office space? What areas will be affected? • With the healthcare, pharmaceutical, bio/life sciences and financial services sector growing at a rapid pace, we expect to see these industries continue to lease large blocks of office space in northern and central New Jersey.