JLL’s Tom Walsh Says Newark is Attracting Growth in all CRE Sectors; Exclusive Up-Close Interview
NEWARK, NJ — Thomas Walsh is Vice-President of Capital Markets for JLL, a position he has held since 2011, and will be a featured speaker at CAPRE’s Fifth Annual Newark CRE Summit next week. He will participate in the panel “Newarks Retail Evolution and Mixed Use Mania: Modern Consumer Demand, Impact of Amazon, and Redevelopment of Brick City.” In anticipation of the event, we connected with Walsh to learn talk about what makes Newark tick and where it’s headed next.
CAPRE: Thanks for chatting with us today Tom. Let’s talk about Newark. What kind of demand drivers are setting the pace in the CRE arena there?
Walsh: The demand driver in Newark is actually Newark itself. For the first time in more than a generation, Newark is witnessing growth in all major CRE sectors including office, residential, retail, hospitality and industrial. You can’t point to one specific sector outperforming the other. The city of Newark is the only true CBD in the state of New Jersey and it’s experienced, far and away, the most progressively organic growth of any city in the state. Infrastructure, transportation and convenience are key in attracting companies and investors.
CAPRE: What activity in Newark (or more broadly) is most exciting to you at this moment?
Walsh: The activity being witnessed in the residential market is the most exciting to me at this moment. Less than informed onlookers will cite the need for major incentives or affordable subsidies in order to go “vertical” in Newark, but that isn’t truly the case. When you get down to the street level, Newark has created a dynamic juxtaposition of residential opportunities that is attracting a wide audience of renters. Large adaptive reuse projects such as Eleven80, Walker House and Hanhe & Co and ground-up luxury residential projects such as One Theater Square and One Rector Street are essential, but there are many high-end mid-rise developments such as Rock Plaza Lofts, Packard Lofts, Halston Flats and Textile Lofts. Newark’s residential market is arguably the most diverse in the state and provides a variety of price points and services for every phase of a renter’s lifestyle.
CAPRE: What is unique about Newark? How and why is it different from nearby sub-markets?
Walsh: Honestly, years of stagnation and approval process difficulties are what sets Newark apart from other submarkets. The current administration has been proactive and extremely smart in their approach to organic development. Over the last 20 years, Newark has avoided stick-frame new-urbanism construction projects which kept the central business district’s character intact and will attract a diverse young population as the city itself is an amenity. Edison Properties retrofit of the Iron Mountain Storage building, which will be Mars M&M’s headquarters, is a perfect case study. That property would likely have been demolished years ago in any other submarket, but that building’s smart and unique design ultimately created a workplace that is unlike any other in the state of New Jersey.
CAPRE: Newark has overcome a lot of obstacles. Has it finally “turned the corner”? If not, what challenges does Newark still have to address to reach that “critical mass”?
Walsh: Historically, Newark has suffered from a scenario of “one step forward and two steps back”, but the city has truly turned the corner and I don’t envision it looking back. Being short-listed for the Amazon HQ2 served as Newark’s “coming out party” and the introduction of Opportunity Zone Fund legislation has drawn more eyes on Newark than ever before. Public safety and high-quality education have been key initiatives of both the Booker and Baraka administrations and the dividends are being paid now. As more and more residents, retailers and corporations understand the benefits that Newark offers, along with its accessibility to all major points along the northeast corridor, Newark will continue to grow positively.
CAPRE: Is Newark prepared for a potential economic slowdown? If not, what could upend all of the progress we’re witnessing?
Walsh: I highly doubt that will happen. Infrastructure, convenience and cost are core drivers to Newark’s economy. As antiquated assets are repositioned and price points remain attractive compared to the Hudson Waterfront, Newark will continue to thrive commercially. As the streetscape is further activated and residential options are introduced, Newark will also attract companies and residents from the suburbs as well. Imagine if the Port Authority shut down one of the tunnels leading commuters into Manhattan…..Newark will only benefit further as very few mid-sized cities in the country can compete with it’s infrastructure.
CAPRE: To what does Newark owe all of its recent achievements?
Walsh: Although Amazon didn’t select Newark for HQ2, the process brought together a wide variety of players within the city. In no other time in Newark’s history had so many individuals come together for a common goal and I think it was truly eye-opening to everyone how truly dynamic the city is when you add up all the components. If you remove the “zip code stigma” and just list the city’s attributes from universities to transportation to residential to commercial to arts & culture……Newark has everything a city needs and it all comes at half the cost of Manhattan, yet you can hop a train there in 18 minutes!
CAPRE: Thanks so much Tom. We’ll see you July 18!