Alexander Summer, L.L.C.
January 2002 -- "From the ownership side, New Jersey's commercial real estate market is fairly healthy," says Alexander von Summer III, executive vice president of Alexander Summer, L.L.C. in Paramus. "It's not as strong as it was a year ago because of the increase in available sublease space. The events of Sept. 11 resulted in the absorption of some of that space, but where landlords may have dictated terms in the past, they now are keen to make a deal…."
On the brokerage or services side, there has been a definate slow down in activity, von Summer says. Companies are still trying to deal with their long-term planning, but many have placed long-range plans, such as expansions on hold.
Although leasing costs have not been bid up as they were say, a year ago, the company really has not seen a change in asking prices. Rather, it has found that landlords are being more flexible and accommodating. "This also is an environment where people are trying to be more cooperative," says von Summer.
"We were pleased not to see price-gouging entering into deals at the expense of companies desperate for relocation space," he explains. "I don't want to say that everybody was answering a patriotic call, but certainly no one wanted to exploit the hardships of Sept. 11…so people tried to get things done in a very cooperative manner.
"I know of some monster deals done in a day that otherwise might have taken a year, which says a lot about the process of negotiation," says von Summer. "While landords were trying to be cooperative, clearly the tenants knew that if they were going to get that level of cooperation, they should not over-negotiate."
The industrial sector has remained strong for Alexander Summer, L.L.C., despite the bad economy.
"New Jersey benefits from a very strong industrial real estate market," von Summer says. "From the point of ownership, the industrial market has retained its strength and has remained fairly steady, without any huge tailing off.
"During the boom of the past few years, there was some upward pressure on rents, but it was not enormous," he says. :"Rents were kept somewhat stable because transportation cost were low. We saw some rise in rents from companies that need to be right here, near a port for example, but in terms of distribution space, you're always up against competition from markets where land is cheaper. The rents now are maybe only about $1 above where they were 10 years ago."
Coming into the economic slowdown, the real estate market was very healthy," von Summer explains. "It was not over-leveraged or overbuilt. It's a mature market, so I don't think you are going to see any grand-slam, home-run deals with people turning vast fortunes overnight, but I think people will continue to be very successful, batting very smart singles over and over.
"The tri-state area is always going to be a dominant center for the country's economy," he says, "and I think New Jersey will continue to be a strong market for a very long time. That's why we have made a major investment in it, both in capital and time, an will continue to do so."
Last fall, Alexander Summer L.L.C. spun off its corporate service group into the CRESA Partners company, which represents the user, or tenant side, of commercial real estate.