CAPRE’s Northern New Jersey and Gold Coast Investment Outlook Preview: HFF’s Jose Cruz Says “If Activity is Any Indicator, We’re on Solid Footing”

JERSEY CITY, NJMr. Jose Cruz is a Senior Managing Director in the New Jersey office of HFF (Holliday Fenoglio Fowler) with over 20 years of experience in commercial real estate. He specializes in investment sales in New Jersey, New York State and Connecticut. Over the course of his career, Mr. Cruz has been involved in over $17 billion of office, industrial, retail, multihousing and land sales. Mr. Cruz joined the firm in March 2010. Prior to HFF, he was the Executive Director of Cushman & Wakefield’s New York Area Investment Sales Group where he spent more than 17 years. Cruz began his real estate career as a Real Estate Analyst at PaineWebber, UBS, Inc. Jose will be a featured speaker at CAPRE’s Northern New Jersey and Gold Coast Investment Outlook. In anticipation of the summit, we connected with Jose to showcase his take on the real estate game as it stands halfway through 2019.

CAPRE: Thanks for chatting with us today, Jose. Where has your focused been with regards to New Jersey CRE recently?

Jose Cruz, Senior Managing Director, HFF

Cruz: We’ve been fortunate to very active on the multi-family front. There continues to be good product for investors and they’re responding very favorably. Pricing is at record per-unit numbers and cap rates for Class A and Core-Plus on the waterfront is in the fours. And that’s a mix of both institutional as well as private groups. In some cases, we’re seeing even more private groups coming out of New York, as debt continues to be very, very cheap and equity stays plentiful. We’re seeing that come through with pricing, tours, activity levels, number of confidentiality agreements, and ultimately, closing numbers.

CAPRE: With all of this confidence, what is challenging or concerning?

Cruz: It feels like investors are trying to figure out here retail is pricing these days and how to effectively value these centers. Given the transition with some of the tenancy across the country, I think I would say that that becomes, today, one of the more difficult exercises.

CAPRE: What about interest rates? Are you concerned about them at all?

Cruz: You know, I was last year. This year, I’m less concerned. I don’t see it in the short-term as something to be concerned about. I think there is still a lot of debt capital to put to work. Rates are favorable, spreads are favorable. The debt markets are selective, no doubt. it’s not every deal, but on the transactions that work, there’s aggressive financing. And it’s helping to drive the pricing numbers.
 

New Jersey’s Gold Coast has witnessed a real estate renaissance in recent years. Above, developers continue to transform the landscape of Jersey City with innovative office, multifamily, and mixed-use assets. Photos: Brian Klebash for CAPRE

CAPRE
: Which sub-markets or even neighborhoods are you most excited about?
 
Cruz: We’re active up and down the waterfront, in both Hudson and Bergen Counties. We’re excited about Newark. We feel there are some great opportunities there. Some of the industrial markets, we’re seeing great activity in – the Meadowlands, for example, but even outside of those, the demand for industrial is spilling into secondary markets, and those prices are starting to move. Industrial capital is still very active and focused on the opportunity, rather than any specific concerns about sub-markets.
 
CAPRE: What are you looking forward to about CAPRE’s Northern New Jersey and Gold Coast Investment Outlook?
 
Cruz: I look forward to hearing from other panelists and talking through what they’re seeing. I look forward to comparing notes. It’s a very strong line-up of speakers, so I’m anxious to hear what the plan is for the remainder of the year as we embark on the second half of 2019. I want to hear what peoples’ plans are in terms of acquisitions, dispositions, financing, and how active they plan to be as we roll into 2020, which will be here before we know it.
 
CAPRE: What are you hearing from clients? Are there any over-arching themes from those conversations?
 
Cruz: Well, the one thing that does come up in every conversation is real estate taxes and some of the risks of being re-assessed – across product types. That’s something that does become a focal point in a lot of out inbound calls. It’s also a factor for us – we take it into account when we price assets. We’re watching the financial markets very closely in terms of debt and equity and the impact that It has on the real estate market, both directly and directly.
 
CAPRE: So what’s the bottom line with regards to Northern New Jersey and the Gold coast?
 
Cruz: Overall, we’re bullish. If the activity levels are any indicator for the second half of the year, it feels like we’re on solid footing.
 
CAPRE: Got it. Thanks for your time, Jose. We’ll see you June 20 in Jersey City!