Is New Jersey’s Commercial Real Estate Market a Sign of the Times?

With social distancing and remote work becoming the new normal amid the Covid-19 pandemic, commercial real estate will undergo a transformation. The state of New Jersey is experiencing this fork in the road, but what path will it take moving forward?

Per a New Jersey Business report, “There’s no doubt that COVID-19 will affect the future of commercial real estate in New Jersey, but the question is to what degree? For many of us, the days of commuting into midtown Manhattan or to a New Jersey suburban office park for work seem like a lifetime ago, but what does the digitalization of the workforce mean for companies looking to lease office space?”

“Office leasing is not dead in any way,” Timothy Greiner, executive managing director of JLL, said.

“We have been fortunate to see that the bigger deals still closed,” Greiner added. “What has been common with a lot of [the transactions we are seeing]is they have been short term, temporary office commitments predominately close to executives’ homes who don’t want to commute into the city.”

The report noted that short-term leases are becoming more prevalent to allow companies to assess what the market is doing and what trends will persist in a post-pandemic environment.

“Companies don’t want to commit significant capital today in this environment,” Greiner said. “Nobody wants to make a 10- or 15-year commitment until they get a sense of where this ends up.”

^MSEMURE Chart

^MSEMURE data by YCharts

For exchange-traded fund (ETF) investors who want to take advantage of the forthcoming changes in real estate, one fund to look at is the FlexShares Global Quality Real Estate Index Fund (GQRE). The fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Northern Trust Global Quality Real Estate IndexSM. The index is designed to reflect the performance of a selection of companies that, in aggregate, possess greater exposure to quality, value, and momentum factors relative to the Northern Trust Global Real Estate Index.

Another fund to check out is the Xtrackers International Real Estate ETF (HAUZ), which seeks investment results that correspond generally to the performance of the iSTOXX Developed and Emerging Markets ex USA PK VN Real Estate Index. iSTOXX Developed and Emerging Markets ex USA PK VN Real Estate Index is a free-float capitalization-weighted index that provides exposure to publicly traded real estate securities in countries outside the United States, Pakistan, and Vietnam.

For more market trends, visit the ETF Trends.