Thomas A. Vetter, SIOR, Senior Vice President
Every real estate market, no matter how niche, is at its core a free-market which will pit larger institutional owners against the smaller independent real estate owners. Institutional investors with a value-add strategy will look for assets within the marketplace that they can quickly enhance (structurally and aesthetically) and fill with a tenant. The larger purse strings of these companies can leave independent owners at a serious disadvantage for luring top tenants, especially in a market as hot as the industrial Meadowlands market is right now.
Independent owners of industrial assets in the Meadowlands market may not be able to raise the ceilings of their buildings or remodel to a potential tenant’s specs like institutional investors can, but there is still so much they can do in order to compete with their newly-renovated institutional neighbors. The key is to maximize your investment.
Potential tenants are often lured by attractive branding and color schemes. (Think Prologis and Sitex Group). A professionally painted exterior / interior will pay for itself in attracting the type of tenant that you are hoping to secure. Likewise, many tenants are turned off by chipped, discolored and damaged floors. We recommend having the floor surfaces inside your building patched, painted and sealed. This will have an immediate impact on your building and make you more competitive with institutional owners.
Another way that independent owners can stay competitive in the Meadowlands marketplace is to upgrade to energy efficient lighting fixtures throughout their building. This is really a win-win-win. You do well by the environment, your tenant’s pocket as they save on the electric bill, and following the initial investment, energy efficient lighting really is the most sustainable way to keep your building lit.
If your asset has office space and you cannot afford to completely renovate it, consider my first point regarding a fresh coat of paint. New carpets would be a plus as well.
Independent owners who are having trouble competing with the more well-financed value-add institutional owners (who are increasing their market share) should at the very least feel confident in the fact that a rising tide lifts all ships and a marketplace boasting a 6% vacancy rate will continue to be a landlord’s market.
We at NAI Hanson have been working with independent owners of industrial assets for decades. I strongly believe that my own experience within the Meadowlands marketplace can prove to be a valuable asset to anyone who would like to learn more about competing with their institutional neighbors.
You can contact me at any time by calling my mobile phone at (201) 723-2059 or by emailing me at tvetter@naihanson.com.
