CBRE’s Steven Beyda Previews CAPRE’s Industrial Real Estate Revolution: “The Industrial Market is On Fire”
NEW YORK CITY, NY — Steven I. Beyda is the First Vice President Salesperson at CBRE, Inc. With 10 years of experience in the New Jersey Industrial Markets, Steven has represented owner/landlords and user/tenants. His thoughtful approach has resulted in more than six million square feet or more than $200 million in total transaction value in combined leases and sales over that short span of time. Beyda will be a featured panelist at CapRE’s upcoming I-REV: The Industrial Real Estate Revolution & 2020 Forecast on December 10, 2019. We connected with him in anticipation of the event to learn about his latest activity and observations in the industrial arena.
CAPRE: Thanks for chatting with us today, Steven. Tell us — what projects have kept your team busy in 2019?
Beyda: The industrial market has been on fire. Our team at CBRE has been handling a lot of client-related business—traditionally we’ve been tilted toward tenant representation – usually 70/30 tenant vs landlord. This year we’ve had a greater focus on agencies due to some of our bigger projects. In particular, we have two, four million square foot developments on our plate right now and the tenant representation side we’ve catered to some niche food deals, for example a 300,000 square foot freezer deal. It’s been a combination of an increased agency load and our usual tenant representation activity.
CAPRE: What is the overall investment climate of New Jersey real estate? Against this backdrop, how is the industrial market positioned?
Beyda: There has been a substantial increase and interest in the state of New Jersey from ecommerce retail and distribution companies. Certain sub-markets are seeing vacancies down to 0%, while others, if not 100% leased, are seeing historically low vacancy rates. The lease rates are climbing as a result, almost exponentially from deal to deal, as the market has progressed. The investment market is pretty strong as a result – land prices and lease rates are going up.
CAPRE: What are the challenges facing members of the industry?
Beyda: For tenant representation our team is challenged simply with finding viable spaces. It’s becoming an increasingly tight market and certain users are locking down a fair portion of the market – well in advance. It’s leaving out other tenants who might not have as much creditworthiness or brand recognition.
On the flipside, landlords are trying to secure some of these e-commerce tenants, but are they willing to take some credit risk with some of these smaller startups or are they only willing to wait for those investment-grade tenants? They’re trying to take advantage of this strong market. Back to the tenants, as the decision window shrinks, the harder the decision gets. Some tenants are willing to wait and see how the market plays out, but risk being left with inferior options at higher rates at crunch time.
CAPRE: How do you foresee these market dynamics evolving in 2020?
Beyda: I don’t see any reason why over the next few months that it would change. It should be a tight market through 2020. Supply is definitely lagging behind demand. Clients are trying to secure facilities for Q1 & Q2 of next year, but it’s too late. The available product coming ahead likely won’t be available until Q3 or Q4. We’re compressing more demand into a shorter window of supply, and that will continue to tighten the market.
CAPRE: What are you most looking forward to at CAPRE’s Industrial Summit?
Beyda: I always like to hear the perspective of developers and other brokers in the market. Our clients are dealing with big challenges, and while we typically like to confirm what we’re seeing, there might be something we’re not seeing, yet our peers have focused on. I’ll be speaking on the 10:05-10:35 am panel in relation to cold storage, “Industrial End-User Special Focus: Cold Storage Sector.” It promises to be a good session, since cold storage is one of our strengths. We have a unique insight into that side of the industry.
CAPRE: With regard to cold storage, is the region under-built?
Beyda: Very much so. I’ll be talking about this more at the conference, but the region is sorely underbuilt for a variety of factors. We’re hoping with more institutional attention, this sector of industrial will pick up some development steam — maybe even see a speculatively developed cold storage facility like we recently had in Dallas, a project CBRE marketed and pre-leased.
CAPRE: What geographical sub-markets are on the rise within New Jersey & the mid-Atlantic, and which are slowing down?
Beyda: The turnpike corridor is the key. It’s going to be key for industrial in New Jersey – it’s always been that way and it will continue to be. We’re seeing that market expanding a little bit, but it is so tight and there’s such little supply, that if the trend continues, then tertiary markets might get a second look.
From the tenants’ perspective, some are already engaging in those areas, because the labor pool in the core turnpike submarkets has been tapped. Markets that weren’t getting as much of a focus before are finally getting some. They’re looking to towns that don’t already have a ton of industrial product – for example, Phillipsburg. We recently secured a 975,000 square foot lease with Uniqlo. The town is excited about it and so are the locals. We expect to see that trend continue.
CAPRE: Got it, thanks for the intel Steven! We’ll see you next week in Jersey City.