0924 Comm RE dept_Dept 9 / 6 / 24 1 : 59 PM Page 1 R E A L E S T A T E that leads to limited attainability . “ The limited supply of smaller spaces is due to the economies of scale that deter developers from building properties of this size , resulting in higher rental rates and a competitive market for tenants . Ad - Seeking Closure ditionally , the pandemic’s supply - chain challenges have spurred a trend of The current landscape of the real estate industry faces reshoring and nearshoring by manufac - turers , which further influences demand . challenges on a global scale , which are reflected in the While landlords continue to benefit from in the South Jersey market . [ by Carly Murray ] demand trends and healthy occupancy hen it comes to real estate in New Jersey , it’s hard not to levels , they must navigate rising construc - make a surface - level judgment of how cost has skyrocketed tioncosts , potential delays and the impact and accessibility has narrowed . However , this is a trickle - down of rising interest rates on financing , ” agree effect that begins with labor , material and construction regulations W MertzandBrennan . like zoning and permitting . Shortages across the world have led to delays , and Theyalso describe how new deliveries increased time consumption often raises cost ; materials increase in expense with across South Jersey have decreased due diminished availability . to high vacancies — but Salem County is a “ During the pandemic , global supply - chain issues made it tough to source deviation from this trend . “ With 4.4 million materials , causing further delays and cost overruns . The sharp rise in prices for square feet of active construction , ” the key construction materials like lumber and steel , coupled with labor shortages township is a hotspot of more affordable due to health concerns , led to significant setbacks . Additionally , rising interest land and is in close proximity to major rates further complicated the financial landscape , increasing the cost of transportation routes that allow logistical borrowing for new construction projects , ” explain President of NAI Mertz Cor - anddistribution benefits . This shift demon - poration Scott Mertz , SIOR , and Associate Ryan Brennan . “ Despite these strates developers targeting growth po - challenges , construction starts increased as developers responded to the surge tential over already established areas . in demand for industrial space driven by the rise of e - commerce and the need According to Commercial Metro Market for more distribution and warehouse facilities . ” ReportQ2 2024 data collected from Atlantic Younger generations can only dream of owning property — residential or City - Hammonton by the National Associ - commercial . In the same regard that regional real estate is affected by the ation of Realtors , office , industrial and industry as a whole , residential and commercial real estate are also inherently retail spaces are in higher demand than intertwined . the national average . For comparison , “ Both residential and commercial real estate are feeling the impact of high multifamily residences have a faster price interest rates , inflation and low inventory . With potential rate cuts from the escalation and lower vacancy rates than Federal Reserve on the horizon , both markets might see a boost as buyers are the national average . Manis says this is waiting for better rates . Residential and commercial markets are linked : More leading more people to rent because of homes can drive demand for commercial spaces , and more commercial devel - high interest rates and less rent discounts opment can boost demand for housing . Success in one helps the other , but a than before the pandemic . This supply downturn in one can also drag the other down , ” says Nick Manis , the past and demand in real estate is referred to president of New Jersey Realtors . He adds that new listings as of August this as “ absorption . ” year are up 3.4 % . “ Office vacancy rates are still at record Due to the modern popularity of remote employment options and rapidly highs with more spaces being vacated innovating communication resources , many commercial , industrial and retail than filled . This trend is expected to con - businesses do not necessitate a physical property to serve clients — leaving tinue , leading to higher vacancy rates and vacancies in high supply with a high demand to match , but high competition negative net absorption through at least the next year , ” explains Manis , in reference to data from the National Association of Residential Realtors August 2024 Commercial Real and commer - Estate Market Insights . “ Retail real estate thrived from 2014 to 2017 but took a hit cial markets with the rise of online shopping and then are linked : More homes COVID - 19 . Space availability is tight ; only can drive demand for 4.7 % is up for lease , a record low , which commercial spaces , has kept vacancy rates near 4 % . Over the and more commercial last year , retail net absorption was 34.1 million square feet , rent growth was 2.4 % , development can and the cap rate was 6.9 % . After booming boost demand for in2022 , industrial real estate is now dealing housing . ” with too much supply and declining ab - — Nick Manis , past president , sorption . Over the past year , net absorption NewJersey Realtors dropped 68 % , reaching a 10 - year low of square feet . ” 83.4 million 12 | SOUTH JERSEY BIZ | VOLUME 14 ISSUE 9 | SouthJerseyBiz.net