NORTHEAST SNAPSHOT, AUGUST 2008
Hudson Valley, New York
The Hudson Valley is part of the “exurbs” of New York City, with population and employment growth that expands out from the denser, more expensive markets. The growth is in the retail, multifamily and residential/retail sectors, primarily because the supply of raw land and existing property is available and more affordable than its neighboring counties. Value and population growth always represent an upside to investors.
In the last few years, major big-box retail tenants, as well as regional and national tenants, have committed to Orange and Dutchess counties in southern New York, creating jobs in the region. Residential development soon followed with the construction of new single-family homes and condo developments. This expansion will slowly continue into Ulster, Sullivan and other, more northern, counties.
Since around 2002, the multifamily rental market has continued to gather strength in both occupancy and increasing rents. There is no rent control in most of the markets, ample employment, good schools, and well-designed transportation infrastructure. The designation of the Stewart Airport as part of the New York/New Jersey Port Authority validates the growth and need for air transportation for local residents and businesses. I personally closed on 1,100 multifamily apartments in the Hudson Valley in 2007, representing approximately $85 million in sales.
This year, transactions have slowed, but I recently closed on a 140-unit property in Goshen that sold for more than $100,000 per unit. Motivated sellers and qualified buyers are doing deals. Banks have the funds, but are looking to finance limited risk deals.
With the arrival of the bear market, each commercial real estate sector in the Hudson Valley is being affected somewhat differently. The strongest is the multifamily rental segment, due to continued demand for apartments and their relatively affordable rents compared to their southern neighbors. Lending for this sector is preferred by institutions, resulting in competitive debt that is enticing property acquisition.
Retail has taken a hit in the market, with consumers cutting back and the smaller local and regional tenants slowing expansion efforts or not renewing leases. This creates vacancy, which impacts retail center traffic and activity for other tenants in the center. Lending is more conservative on a retail property sale. Any vacancy or deferred maintenance would impact a lender’s interest, as well as a buyer’s.
Lastly, office is usually the first to feel the impact of a slowdown, due obviously to small businesses that either leave and go to a less expensive location, or simply go out of business. The office and industrial sectors are the most difficult to finance in times of an economic slowdown.
Real estate is still one of our country’s best assets with a finite inventory. Commercial property is an investment transaction supported by detailed financials that a qualified buyer can review and determine value. An experienced commercial broker that assists and professionally works on all aspects of a transaction will always bring a competitive offer to a seller. If you are considering selling or leasing real estate, make sure the salesperson knows your market and has relationships with experienced, well-funded buyers.
— Janet Bortz is a vice president with Kislak Company, Inc.
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