Sales sector strong, according to C&W. (New Jersey).

The financial services group of Cushman & Wakefield, Inc. in East Rutherford, N.J. announced the completion of $453 million in sales transactions during the first six months of 2002. The activity included 13 properties in New Jersey, in addition to California, Connecticut, and Massachusetts, and involved approximately 3.7 million SF of office, industrial and retail space.

"Despite the softening market for leasing activity, there is a strong demand for well-located, stabilized properties," said Andrew J. Merin, executive vice president of C&W. "Although today's market fundamentals are weak, there has been a surge of capital, reflecting the continuing shift from the stock market to tangible investments."

As a result of the heightened level of investor demand, the value and number of FSG sales transactions year-to-date far exceeds projections. If the current pace continues, FSG will close more deals in 2002 than in any other year in the past decade. From 1992 to year-end 2001, the team completed 149 transactions, totaling 38 million SF and nearly $3.5 billion.

This included 25 transactions annually in 1997, 1998, and 1999--the height of the real estate boom. During the first half of 2002, FSG's activity involved diverse property types and locations. The $25.5 million sale of the Village at Bedminster shopping center in Bedminster, N.J. highlighted FSG's retail activity. The team also orchestrated the $23.5 million sale of the 101,397 SF411 West Putnam Ave. office building in Greenwich, Coun. and the $50 million sale of 131 Morristown Road, a 211,000 SF, class "A" office building.

The 414,059 SF sale of Whitehall's Meadowlands portfolio in Carlstadt, N.J. topped FSG's industrial activity, at $21,3 million. The group was also involved in a number of land sales, including the $3.3 million disposition of 4.8 acres at 902 Carnegie Center in Princeton, on behalf of Beaverkill Associates.

The team was active in a number of corporate dispositions, supporting the Commercial Brokerage Group in the sale of AT&T's headquarters to Pharmacia and Lucent's sale of a 500,000 SF office campus in Marlboro, Mass. Of the four property types tracked by FSG, retail has been the most surprising during the first half of 2002, according to Merin.

"Consumers are supporting the economy, and retail leasing has remained strong," he said. "As a result, capital is flocking to retail."

"At the same time, multi-family, which has been the darling of the investment community for the past eight years, is having a tougher time. With low projected job growth and an oversupply of new units, the market has flattened out. Industrial property is also being impacted by the economy."

Merin reported that office product has been the hardest hit among all property types.

"In New Jersey, class 'A' vacancy rates have increased from- 10.5% at yearend .2000, to 14.0% at year-end 2001, to 15.4% at the end of this year's first quarter," he noted.

"Office demand is based on job growth, which currently is stagnant. Once job growth picks up, it will be another 12 months or so before the demand begins to grow. A significant recovery may take from one to three years."

According to Merin, the paradox created by the influx of capital to a weak market will be short-lived. "The properties attracting today's capital are 'safe' investments, involving fully occupied with long-term leases in place," he said.

"Those buildings leased to credit tenants are still particularly desirable, although we expect that funding will begin to dry up by the end of the year."

"Our advice to landlords with stabilized assets is to consider exiting now," he added. "Investors in the market are focusing on fully leased, class "A" properties; less funding exists for opportunistic investments."