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Steady recovery projected for New Jersey commercial.

A slow but steady recovery appears on the horizon for the New Jersey commercial real estate market.

The state and federal governments' agenda for creating new jobs through infrastructure and mass transit improvements are positive, but, are likely to produce only short term benefits.

We need to create long-term solutions to achieve meaningful growth in the economy, employment basis and the real estate industry.

We must develop methods and incentives to demolish and rebuild many of the functionally obsolescent buildings that exist in our cities. We must reestablish our cities as manufacturing and R & D centers, thereby providing jobs and a strong tax basis, enabling our cities to continue their residential rebirth. This will require a joint effort of state and local government in conjunction with the private sector.

One key to spurring growth is to solve the lending crisis. Until banks and other financial institutions begin supporting real estate projects, other sources of financing will have to be found.

In the interim, while funding opportunities are limited, K. Hovnanian continues to seek out and acquire existing real estate developments that are attractively priced. The company then turns these buildings around by adding value to its retail, warehouse and flex components.

The growing demand for one area of the company's expertise, retail facilities, is very much in evidence today in densely populated suburban areas that ten years ago would have been described as rural. The hundreds of employees who relocated with their companies in the eighties are the shopping center consumers of the nineties.

To meet this demand, K. Hovnanian opened neighborhood retail centers in Piscataway and Franklin Townships and is expanding its retail services at the Commerce Center in North Brunswick.

Another area of the market K. Hovnanian continues to focus on is flex space. Exceptionally flexible and ideally suited for office space and other needs such as research, warehousing and distribution, flex space has proven to be another growing sector in New Jersey's real estate market.

In recent months the company has experienced strong leasing activity at their facilities. This success is due to an ongoing commitment to tenant service through steady communication, attending to tenant needs on a daily basis, maintaining top order at its facilities and the company's tradition of providing well located, quality products.

At the Commerce Center in North Brunswick, for example, K. Hovnanian recently leased more than 33,000 square feet of space at phase one of Flex II, an 86,000-square-foot high-tech building within the 100-acre mixed-use park. The rapid success at the first phase, now 62 percent occupied just four months after construction was completed, prompted the construction of phase two. Scheduled to be completed this spring, the 33,000-square-foot facility is already under construction.

In addition, a diverse group of tenants has leased over 50,000 square feet of space at three other K. Hovnanian developments in New Jersey - Hovpark in Eatontown; the Piscataway Towne Center in Piscataway, and at Hovpark Atlantic in Egg Harbor Township.

As the market steadily recovers, K. Hovnanian will continue to analyze all prospective deals and opportunities, remaining faithful to the long-term viability of real estate investment in the Garden State.
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Title Annotation:Review & Forecast, Section IV; New Jersey commercial real estate market
Author:Orrico, John
Publication:Real Estate Weekly
Date:Jan 27, 1993
Previous Article:Economic development: what's ahead for '93.
Next Article:1993: the year of the neighborhood.

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