405 northfield ave -...

405 NORTHFIELD AVEWEST ORANGE, NJ 07052

CONFIDENTIAL OFFERING MEMORANDUM

405 NORTHFIELDAVENUE

OFFICES NATIONWIDE AND THROUGHOUTCANADAWWW.MARCUSMILLICHA P.COM

EXCLUSIVELY LISTED BY:

KIM KRETOWICZVice President Investments

New Jersey Office Phone: (201) 742-6155

[email protected]

FAHRI OZTURKVice President Investments


[email protected]

TYLER VAN WAGONERAssociate Investments


[email protected]

http://WWW.MARCUSMILLICHAP.COM/

405 NORTHFIELD AVENUE

Table of Contents

CONFIDENTIAL OFFERING MEMORANDUM

405 Northfield AvenueWest Orange, NJ 07052

www.MarcusMillichap.comOFFICES THROUGHOUT THE U.S. AND CANADA

01 EXECUTIVE SUMMARYOffering Summary Investment Highlights

02 PROPERTY DESCRIPTIONInterior Photos

Floor Plans

Property Survey

Property Outline

03 FINANCIAL ANALYSISRent Roll

Income Statement

Tenant Lease Abstracts

Market Rental Analysis

04 MARKET & LOCATION ANALYSISLocation Overview

Market Rental Analysis

Demographics

Market Overview

http://www.MarcusMillichap.com/

EXECUTIVE 1SUMMARY

This information has been secured from sources webelieve to be reliable, but wemake no representationsor warranties,expressed or implied,as to the accuracy of the informa-tion. Referencesto square footage or ageare approximate. Buyer must verify the information andbearsall risk for anyinaccuracies.Anyprojections,opinions, assumptions or

estimates used herein are for example purposes only anddo not represent the current or future performanceof the property. Marcus & Millichap Real Estate Investment Services isa service mark of Marcus & MillichapReal Estate Investment Services, Inc. © 2018 Marcus & Millichap

405 Northfield AvenueEXECUTIVE SUMMARY 7

Marcus & Millichap has been selected to exclusively market for sale 405 Northfield Ave, a 83% leased, 37,533 +/- square

foot medical office building located in West Orange, New Jersey. The three story building is located minutes away from

Route 280, the Garden State Parkway and the NJ Turnpike, 8 miles from Newark International Airport and 15 miles

from both the Lincoln and Holland Tunnels. The accessibility and density of population continually drive office

demand in the neighborhood, which is currently achieving average market rents of $29 per square foot.

VITAL DATAPrice $7,900,000

In Place Cap Rate 6.26%

Pro Forma Cap Rate 7.34%

Effective Gross Income $869,444

Expenses $374,818

Net Operating Income $494,626Price Per Sq. Ft. $210

Real Estate Taxes $169,796

PROPERTYSUMMARYAddress 405 Northfield Avenue, West Orange NJ 07052

BuildingSize 37,533 SF

Stories Three Floors

Yearbuilt 1981

Number of Tenants 18

Occupancy 83%

Parking 156

Acres 2.00 Acres

Offering Summary

405 Northfield AvenueEXECUTIVE SUMMARY 8

T R A I N S T A T I O NLocated approximately two miles from the Highland Ave and Mountain Train Station with direct routes

into Manhattan

SECURE MEDICAL TENANTSPredominate and expanding medical component

which will enhance tenant retention and rental rate growth in the future

I N C O M E S T A B I L I T YThe property is well leased and positioned and is

currently 83% occupied by 18 tenants with an average weighted lease expiration of 4 years

L O C A T I O NLocated minutes away from Route 280, the Garden State Parkway, the NJ Turnpike, and 16 miles from

New York City

Investment Highlights

PROPERTY 2DESCRIPTION



Lobby / Entrance

405 Northfield AvenuePROPERT Y DESCRIPTION11


Common Area/Bathrooms


Interior


Pediatric Dentistry and Orthodontist


Additional Tenant Interior Pictures


405 Northfield AvenuePROPERTY DESCRIPTION 16

Floor Plans / Basement


Floor Plans / First Floor


Floor Plans / Second Floor

MERIDIAN CENTER IIPROPERT Y DESCRIPTION405 Northfield AvenuePROPERTY DESCRIPTION19

Property Survey

405 Northfield AvenuePROPERT Y DESCRIPTION 20

FINANCIAL 3ANALYSIS



Unit Tenant Sq. Ft. Lease StartLease

Expiration Rent PSFMonthly

RentAnnual

RentTAX

RecoveryCAM

RecoveryElectric

Recovery(CAM+TAX+

Electric)Total

Annual Rent

108 VACANT 3,646

LL 8 VACANT 2,669

103 Dr. Jhoe & Tong 2,576 2/01/2015 1/31/2025 $21.50 $4,615 $55,380 Inc. in CAM $3,799 $5,152 $8,951 $64,331

104 Posture Perfect Chiropractic 2,547 5/10/2017 5/31/2022 $17.33 $3,679 $44,144 Inc. in CAM $1,505 $5,094 $6,599 $50,743

107 Cross Country Orthopedics 2,977 8/20/2016 8/31/2028 $24.00 $5,955 $71,456 Inc. in CAM $2,118 $7,443 $9,561 $81,017

200 Atlas Physical Therapy 1,521 12/01/2017 1/31/2023 $21.00 $2,662 $31,941 $3,422 $3,422 $35,363

201 Guiding Hands (1) 1,323 12/01/2016 11/30/2021 $22.00 $2,425 $29,095 $2,645 $2,645 $31,740

202 Robert Bagoff, DMD 2,208 11/01/2014 10/31/2024 $25.50 $4,692 $56,304 Inc. in CAM $3,396 $4,416 $7,812 $64,116

203 Progressive Pain Mgmt. 2,300 12/18/2009 1/31/2023 $22.00 $4,217 $50,600 $50,600

204 Associates in Psychiatry 2,221 5/01/2013 4/30/2023 $24.00 $4,441 $53,296 Inc. in CAM $3,648 $5,552 $9,200 $62,496

205 Dr. Paige (Summit Medical) 2,672 10/15/2010 9/14/2022 $23.75 $5,288 $63,460 $5,344 $5,344 $68,804

206 Affiliated Eye Surgeons 1,651 10/01/2014 6/30/2021 $24.50 $3,372 $40,459 $3,716 $3,716 $44,175

LL 1 Accelerated Hand Therapy 1,790 12/18/2009 2/28/2023 $22.00 $3,282 $39,380 $4,475 $4,475 $43,855

LL 2 Deborah A. Coy M.D., LLC 2,578 4/01/2011 3/30/2021 $24.00 $5,157 $61,879 Inc. in CAM $6,508 $6,445 $12,953 $74,832

LL 3 Dr. Robert Eagle 1,317 4/01/2010 3/31/2019 $25.00 $2,744 $32,925 $3,293 $3,293 $36,218

LL 4 Rohini Fernandes, DDS 1,050 04/01/2004 5/31/2021 $20.00 $1,750 $21,000 Inc. in CAM $4,095 $4,095 $25,095

LL 5 Glow Fitness (Maverick) 2,137 3/01/2017 2/28/2022 $17.00 $3,027 $36,324 Inc. in CAM $1,505 $4,274 $5,779 $42,103

LL 7 Reliance Diagnostics 350 4/07/2017 4/30/2022 $11.00 $321 $3,850 $350 $350 $4,200

Roof AT&T Antenna 8/30/2004 8/30/2019 N/A $3,606 $43,272 $43,272

Roof T Mobile Antenna 2/08/2007 2/07/2022 N/A $3,674 $44,083 $2,400 $2,400 $46,483

Total 18 Spaces(16 Tenants + 2 Antenna) 37,533 $22.15 $64,904 $778,848 $26,575 $64,020 $90,595 $869,444

405 Northfield AvenueFINANCIAL ANALYSIS

Rent Roll

22(1) Guiding Hands – $2,425 rent will commence on 12/1/18. Current rent is $1,265

Income StatementACTUAL PRO FORMA (1)

INCOME %EGI %EGI

Current Rent Roll $779,848 $779,848

Projected Rent for Vacant Space - $25 PSF $157,875 $157,875

Electric Reimbursement $64,020 $64,020

CAM & TAX Contributions $26,575 $26,575

Vacancy & Collection Loss ($157,875) 16.83% ($70,254) 7.5%

Effective Gross Income $869,444 $957,064

EXPENSES %EGI PER SF % EGI PER SF

Property Taxes (Building & Antenna) $169,796 20% $4.52 $169,796 20% $4.52

Insurance $12,184 1% $0.32 $12,184 1% $0.32

Utilities – PSEG $92,813 11% $2.47 $92,813 11% $2.47

Water & Sewer $11,836 1% $0.32 $11,836 1% $0.32

Cleaning Contract $25,700 3% $0.68 $25,700 3% $0.68

Repairs & Maintenance $10,000 1% $0.27 $10,000 1% $0.27

Supplies $2,000 0% $0.05 $2,000 0% $0.05

Alarm/Safety $2,092 0% $0.06 $2,092 0% $0.06

Landscaping & Trash Removal $10,785 1% $0.29 $10,785 1% $0.29

Snow Removal $5,350 1% $0.14 $5,350 1% $0.14

Elevator $3,180 0% $0.08 $3,180 0% $0.08

HVAC Maintenance $3,000 0% $0.08 $3,000 0% $0.08

Management Fee $26,083 3% $0.69 $28,712 3% $0.76

Total Expenses $374,818 43% $9.99 $377,446 39% $10.06

Net Operating Income $494,626 $579,618

Cap Rate 6.26% 7.34%

(1) Assumes $25 PSF for vacant spaces. 405 Northfield AvenuePROPERTY DESCRIPTION 23

Unit Tenant Sq. Ft. Lease ExpirationRenewal Options Annual Rent

Pro RataShare

Tax/CamReimbursement

CAM Recovery PSF

Total CAM Recovery

Total ElectricRecovery

(CAM+TAX+Electric)

Total Annual (Inc. Rec.)

Increase Schedule

108 VACANT 3,646

LL 8 VACANT 2,669

103 Dr. Jhoe & Tong 2,576 1/31/2025 (2) 5-Year $55,380 7.20% % Share over Base Year 2014 $1.47 $3,799 $5,152 $8,951 $64,331 50 Cents

104 Posture Perfect Chiropractic 2,547 5/31/2022 (2) 5-Year $44,144 6.34% % Share over Base

Year 2015 $0.59 $1,505 $5,094 $6,599 $50,7436/1/19 = $4,6706/1/20 = $4,8826/1/21 = $5,095

107 Cross Country Orthopedics 2,977 8/31/2028 (2) 5-Year $71,456 8.20% % Share over Base

Year 2016 $0.71 $2,118 $7,443 $9,561 $81,01750 Cents

every other year

200 Atlas Physical Therapy 1,521 1/31/2023 (2) 5-Year $31,941 3.78% % Share over Base Year 2016 $0.00 $0 $3,422 $3,422 $35,363 2.75%

201 Guiding Hands (1) 1,323 11/30/2021 (1) 5-Year $29,095 3.64% Gross $0.00 $0 $2,645 $2,645 $31,740 50 Cents

202 Robert Bagoff, DMD 2,208 10/31/2024 (2) 5-Year $56,304 5.97% % Share over Base Year 2014 $1.54 $3,396 $4,416 $7,812 $64,116

50 Cents every other

year

203 Progressive Pain Mgmt. 2,300 1/31/2023 (1) 5-Year $50,600 6.21% Gross $0.00 $0 $0 $0 $50,600 3%





Unit Tenant Sq. Ft.Lease

ExpirationRenewal Options

Annual Rent

Pro RataShare

Tax/CamReimbursement

CAM Recovery PSF

Total CAM Recovery

Total ElectricRecovery

(CAM+TAX+Electric)

Total Annual(Inc. Rec.) Increase Schedule

204 Associates in Psychiatry 2,221 4/30/2023 (2) 5-Year $53,296 6.36% % Share over Base Year 2013 $1.64 $3,648 $5,552 $9,200 $62,496 50 Cents every

other year

205 Dr. Paige (Summit Medical) 2,672 9/14/2022 None $63,460 7.35% Gross $5,344 $5,344 $68,804 FLAT

206 Affiliated Eye Surgeons 1,651 6/30/2021 (2) 3-Year $40,459 6.36% Gross $3,716 $3,716 $44,175 50 Cents

LL 1 Accelerated Hand Therapy 1,790 2/28/2023 (1) 5-Year $39,380 4.92% Gross $4,475 $4,475 $43,855 3%

LL 2 Deborah A. Coy M.D., LLC 2,578 3/30/2021 (2) 5-Year $61,879 6.97% % Share over Base Year 2011 $2.52 $6,508 $6,445 $12,953 $74,832 $1.00 every three

years

LL 3 Dr. Robert Eagle 1,317 3/31/2019 None $32,925 3.77% Gross $3,293 $3,293 $36,218 FLAT

LL 4 Rohini Fernandes, DDS 1,050 5/31/2021 (2) 2-Year $21,000 3.00% Fixed $3.90 $4,095 $4,095 $25,095 50 Cents

LL 5 Glow Fitness (Maverick) 2,137 2/28/2022 (2) 5-Year $36,324 5.77% % Share over Base Year 2016 $0.70 $1,505 $4,274 $5,779 $42,103 1/1/19 = $3,116

LL 7 Reliance Diagnostics 350 4/30/2022 (1) 5-Year $3,850 0.48% Gross $350 $350 $4,2005/1/19 = $6335/1/20 = $6485/1/21 = $661

Roof AT&T Antenna 8/30/2019 None $43,272 N/A N/A $43,272 3%

Roof T Mobile Antenna 2/07/2022 None $44,083 N/A N/A $2,400 $2,400 $46,483 3%

Total 37,533 $778,848 $26,575 $64,020 $90,595 $869,444


ADDRESS SF TYPE PRICE/SF TERMS

405 Northfield Ave, West Orange

159 Main Street, West Orange

54,000 Office/Medical $28

2 769 Northfield Ave, West Orange 75,000 Office/Medical $25

31001 Pleasant Valley Way, West Orange

10,000 Office/Medical $26

4 456 Prospect Ave, West Orange8,800 Office/Medical $35

AVERAGE $29

Rental ComparablesWest Orange, New Jersey


Gross Asking Rent Per SF in West Orange

Market Rental AnalysisEssex County, New Jersey

$25.58Gross Rent Per SF

14,657,533Existing SF

33,618Average Building SF

10.3%Vacancy Rate

221,95012 Mo. Absorption SF

450,03012 Mo. Leasing SF

* Data from CoStar


MARKET & LOCATION 4ANALYSIS



30405 Northfield AvenueMARKET & LOCATION ANALYSIS

405 NORTHFIELD AVE

In Close Proximity to:

Interstate 280 1.4 Miles

Route 10 2.2 Miles

Garden State Parkway 3.5 Miles

Interstates 280/287Garden State Parkway

Interstate I-95

Newark Liberty Airport

Manhattan

5-10 Miles 12 Miles 16 Miles


405 NORTHFIELD AVE


East Orange General Hospital 2 Miles

Saint Barnabas Medical Center 3.5 Miles

Englewood Hospital Medical Center 5 Miles

Mountainside Hospital 5 Miles

745 Northfield

94 Old Short hill road

Mountainside Hospital

Saint Barnabas Medical Center

Englewood Hospital and Medical Center

East Orange General Hospital

East Orange General Hospital

M O U T A I N T R A I N S T A T I O N

405 NORTHFIELD AVE

H I G H L A N D A V E T R A I N S T A T I O N


Highland Ave Train Station 2.3 Miles

Mountain Train Station 2.8 Miles

Both trains are direct to NYC


33

Location Overview


West Orange, New Jersey

IncomeAs per the 2010 Census, the current year per capita income in yourarea is $43,368, compare this to the US average, which is $29,638. Thecurrent year average household income in West Orange is $88,917,compare this to the US average which is $77,468. Males had a medianincome of $65,854 versus $43,223 for females.

There is approximately 7.1% of the population living below thepoverty line.

PopulationAs per the 2010 United States Census, the population in West Orangewas 46,207 people. This reflected a near 1% increase in populationsince the previous census conducted in 2000. The population densitywas 3,708.7 persons per square mile.

In the city, 23.7% of the population were under the age of 18, 7.1%from 18 to 24, 23.7% from 25 to 44, 27.6% from 45 to 64, and 15.9% whowere 65 years of age or old

HouseholdsThere are currently 16,790 households in West Orange, New Jersey.This number of households presents a density of 3,836 units per squaremile. The town has an estimated 11,753 families residing within. Thishousehold count has reflected an increase to accommodate for theincreasing population.

Employment• Immediate access to Manhattan provides endless employment

opportunities

• Many industrial and shipping centers provide industrial work flow

• Strong retail markets along the main corridors

Race and EthnicityThe racial makeup of the city is approximately 57.15% white, 26.58%Black or African American, 7.96% Asian, 0.38% Native American, and4.82% from other races.

People of Hispanic origin make up 16.20% of the population in WestOrange. Compare this to the US average of 56.8%.

OverviewWest Orange is the southern tip of New Jersey’s Hudson County.Located beneath Jersey City and across the Upper Bay from Brooklynand Manhattan, West Orange is 11.08 square miles in size. WestOrange is historically a blue-collar neighborhood with generationalfamilies.

34

Demographic Highlights

2017 FORECAST JOB GROWTH

* POPULATION AGE 20-34

Metro 20%U.S. Average 21%

**SQ. FT. PER OFFICE WORKER

Metro 268U.S. Average 210

2017 OFFICE-USING JOB GROWTH

POPULATION OF AGE 25+* PERCENT WITH BACHELOR DEGREE+

Metro 38%U.S. Average 29%

27% Urban

73% Suburban

**OFFICE SQUARE FOOTAGE

Rising Demand for Office Buildings Farther Inland Fuels a Rise in Deal Flow

Outlook: Strong demand for offices inproximity to transit and with upgradedamenities will hold deal flow elevated thisyear, driving more investors to acquireproperties in suburban destinations.

VacancyRate

Y-O-YBasisPoint

ChangeSubmarket

AskingRent

Y-O-Y%Change

Union County 12.4% -10 $23.87 0.8%

Hudson County 16.1% 290 $32.93 0.6%

Bergen County 16.5% 40 $25.54 -0.2%

Passaic County 16.6% -90 $21.56 0.8%

Essex County 17.3% -60 $26.72 1.4%

Morris County 25.0% -120 $26.45 3.6%

Overall Metro 18.2% 10 $26.87 1.3%

Submarket Trends

Lowest Vacancy Rates 1Q17

Sales Trends

• Sales activity climbed 21 percent in the last four quarters, led by a robust increase intrades in Essex and Union counties.

• Class C assets traded during the period averaged $123 per square foot while Class Bproperties sold for $131 a square foot on average. Top-tier office buildings averaged$165 per square foot.

** Trailing 12 months through 1Q17Pricing trend sources: CoStar Group, Inc.; Real Capital Analytics

* 2017-2022**1Q17

U.S. Average 1.4%

Metro 0.8%

Metro 0.6%

U.S. Average 2.2%U.S. Average 32%

U.S. Average 68%



3535



POPULATION 1 Miles 3 Miles 5 Miles 2022 Projection

Total Population 10,408 173,380 558,525

2017 Estimate


2010 Census


2000 Census


Current Daytime Population

2017 Estimate 8,948 141,543 480,316

HOUSEHOLDS 1 Miles 3 Miles 5 Miles 2022 Projection

Total Households 3,798 64,307 206,956

2017 Estimate


Average (Mean) Household Size 2.76 2.68 2.68

2010 Census


2000 Census


HOUSEHOLDS BY INCOME 1 Miles 3 Miles 5 Miles 2017 Estimate

$200,000 or More 25.73% 12.21% 10.32%

$150,000 - $199,999 15.80% 7.28% 6.30%

$100,000 - $149,000 22.57% 13.52% 12.84%

$75,000 - $99,999 12.79% 10.57% 10.83%

$50,000 - $74,999 8.25% 14.92% 15.76%

$35,000 - $49,999 4.45% 9.81% 10.84%

$25,000 - $34,999 2.51% 9.50% 9.14%

$15,000 - $24,999 3.96% 9.87% 9.95%

Under $15,000 4.56% 11.72% 13.10%

Average Household Income $175,056 $107,682 $99,133

Median Household Income $127,936 $63,692 $58,967

Per Capita Income $63,407 $39,711 $36,597

POPULATION PROFILE 1 Miles 3 Miles 5 Miles Population By Age

2017 Estimate Total Population 10,388 173,738 558,365

Under 20 25.82% 26.85% 27.35%

20 to 34 Years 11.86% 18.53% 19.53%

35 to 49 Years 22.11% 20.89% 21.02%

50 to 59 Years 15.91% 14.33% 14.00%

60 to 64 Years 7.01% 5.73% 5.45%

65 to 69 Years 5.35% 4.47% 4.21%

70 to 74 Years 3.49% 2.98% 2.93%

Age 75+ 8.43% 6.22% 5.51%

Median Age 43.91 38.51 37.34

Population by Gender

2017 Estimate Total Population 10,388 173,738 558,365

Male Population 48.37% 46.96% 47.03%

Female Population 51.63% 53.04% 52.97%

AVERAGE HEALTH CARE EXPENDITURE

1 Miles 3 Miles 5 Miles

2017 Estimate Total Expenditure

Percent of Total 9.71% 11.26% 11.62%

Health Care Insurance $4,506 $3,298 $3,143

Percent of Total 73.16% 73.78% 73.87%

Medical Services $949 $656 $617

Percent of Total 15.41% 14.67% 14.51%

Medical Supplies $230 $149 $139

Percent of Total 3.74% 3.34% 3.27%

Percentage Change 2017-

Health Care Insurance 6.36% 11.67% 12.56%

Medical Services 11.00% 14.95% 15.63%

Medical Supplies 17.05% 22.41% 23.45%

MONMOUTH COUNTY

37 405 Northfield AvenueMARKET & LOCATION ANALYSIS

NORTHERN NEW JERSEYOVERVIEW

Northern New Jersey consists of Bergen, Hudson, Passaic, Essex, Morris and Union counties. The region contains roughly 4 millionresidents in more than 200 municipalities. Bergen county is home to roughly 1 million people, while Essex County, which includes thecity of Newark, is at approximately 800,000 citizens. The region is bordered to the east by the Hudson River and New York City, to thesouth by Middlesex and Somerset counties, to the west by Warren and Sussex counties, and to the north by New York state. A largeportion of the area is almost fully developed and densely populated. The region is a part of the New York metro and is linked to the cityby the George Washington Bridge, the Lincoln Tunnel, the Holland Tunnel, several ferries and commuter rail tunnels.

METRO HIGHLIGHTS

DIVERSE INDUSTRIESPharmaceuticals, healthcare and finance are a few of the segments that contribute to the metro’s economic base.

LARGE LABOR POOLThe region’s diverse and highly skilled labor pool, as well as access to workers in other nearby metros, draws businesses.

UNIQUE ECONOMYNorthern New Jersey has its own economic drivers and is connected to New York City’s robust economy.

Market Overview

38

Northern New Jersey is home to numerous Fortune 500 companies including Prudential Financial, Merck, PBF Energy and Honeywell International. The airline industry accounts for a significant share of jobs in the region. United Airlines has a major presence at Newark Liberty International Airport. Trade is a key employment sector, at Port Newark-Elizabeth Marine Terminal with vehicle imports accounting for a substantial amount of the port’s

business. Spillover from Wall Street bolsters finance jobs in Essex, Hudson and Bergen counties.

MAJOR AREA EMPLOYERS

Prudential

UAL (United Continental Holdings)

University of Medicine and Dentistry of NJ

Hackensack Medical Center

New Jersey Transit

Englewood Hospital Association

Novartis Pharmaceuticals Corp.

St. Joseph’s Hospital and Medical Center

Valley Health Systems

ISO Services Inc.* Forecast

SHARE OF 2016 TOTAL EMPLOYMENT

MANUFACTURING6%

GOVERNMENT

HEALTH SERVICESEDUCATION AND

+OTHER SERVICES

4%

LEISURE AND HOSPITALITY FINANCIAL ACTIVITIES

22%AND UTILITIES

TRADE, TRANSPORTATION CONSTRUCTION

PROFESSIONAL ANDBUSINESS SERVICES

2%INFORMATION

ECONOMY

Market Overview


3939

Landlords boost amenities to differentiate properties from stockpile of olderinventory. As more companies move to urban settings to attract young talent,suburban locations in Northern New Jersey remain in demand as amenity upgradesand transit proximity meet tenants’ needs. However, aging campuses and corporateconsolidations, particularly between pharmaceutical companies, have weighed onproperty performance, resulting in a high vacancy rate. To combat the stagnation,landlords are investing in substantial upgrades and large redevelopments, spurringgreater leasing activity as these properties increase in quality.

Development led by suburban projects. Construction will inch up slightly from 2016with a strong push by developers to suburban destinations in Essex and Morriscounties, accounting for the bulk of this year’s deliveries. Office properties openingthis year are largely pre-leased, supporting a modest drop in the vacancy rate toreach the tightest level of the current cycle at year-end. Medical office completionsmark a substantial increase this year as 121,000 square feet are anticipated fordelivery, the largest being the 86,000-square-foot Clara Maass Medical Center inBelleville. As more top-quality space is added to the region, asking rents are set toclimb for the fourth straight year.

Investors Met With Opportunity In Transit-Oriented Areas of the Region

* Trailing 12 months through 1Q17Sources: CoStar Group, Inc.; Real Capital Analytics

Investment Trends

Office 2017 Outlook

517,000 sq. ft. will be

completed

3.1% increase in

asking rents

20 basis point

decrease in vacancy

Construction:

Rents:

Vacancy:

Completions climb past the 322,000 squarefeet completed last year, with the largestdelivery being a 200,000-square-foot officefor UPS in Parsippany.

The average asking rent is anticipated toclimb to $27.59 per square foot this year,outpacing the 2 percent rise in office rentsposted in 2016.

More than 765,000 square feet will beabsorbed to drop the vacancy rate to 18percent, falling at a greater pace than lastyear’s 10-basis-point compression.

• Led primarily by local and New York buyers, investors broadened acquisitioncriteria in the last 12 months ending in March, placing greater focus onassets that could be upgraded or repurposed. A larger number of propertieschanged hands in the suburban areas of Essex and Union counties andpushed overall deal flow higher compared with the previous time period.

• Marketwide, going-in cap rates edged 10 basis points higher to the low-7percent band. Some of the best properties in the urban areas of Jersey Cityand Hoboken traded with an initial yield in the mid-5 to mid-6 percentterritory. Assets farther inland commonly sold with a cap rate in the mid-7 toupper-8 percent range.

• The revitalization of downtown Jersey City will spur greater investor interestwhile intense competition for properties in some of the best locations willdrive investors to areas of more affordability in Morristown, Parsippany andNewark.

Market Overview


C ONFIDENTIALITY & DISCLAIMERThe information contained in the following Marketing Brochure is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Marcus & Millichap and should

not be made available to any other person or entity without the written consent of Marcus & Millichap. This Marketing Brochure has been prepared to provide summary, unverified information to

prospective purchasers, and to establish only a preliminary level of interest in the subject property. The information contained

herein is not a substitute for a thorough due diligence investigation. Marcus & Millichap has not made any investigation, and makes no warranty or representation, with respect to the income or

expenses for the subject property, the future projected financial performance of the property, the size and square footage of the property and improvements, the presence or absence of contaminating

substances, PCB's or asbestos, the compliance with State and Federal regulations, the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant, or

any tenant's plans or intentions to continue its occupancy of the subject property. The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable;

however, Marcus & Millichap has not verified, and will not verify, any of the information

contained herein, nor has Marcus & Millichap conducted any investigation regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the

information provided. All potential buyers must take appropriate measures to verify all of the information set forth herein. Marcus & Millichap is a service mark of Marcus & Millichap Real Estate

Investment Services, Inc.

© 2018 Marcus & Millichap. All rights reserved.

NON-ENDORSEMENT NOTICEMarcus & Millichap is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified in this marketing package. The presence of any corporation's logo or name is not

intended to indicate or imply affiliation with, or sponsorship or endorsement by, said corporation of Marcus & Millichap, its affiliates or subsidiaries, or any agent, product, service, or commercial

listing of Marcus & Millichap, and is solely included for the purpose of providing tenant lessee information about this listing to prospective customers.

ALL P R O P ERTY S H O WINGS ARE BY APPOINTMENT ONLY.P LEAS E CO NSULT YO UR MARCUS & MILLICHAP A GENT FOR M O RE D E TAILS.

40405 Northfield AvenueCONFIDENTIALITY & DISCLAIMER

405 northfield ave -...

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