Ask Jose Cruz to sum up the commercial real estate market in one word, and he can’t do it — and he’ll tell you why before you even finish the question.
“There’s a lot of different kind of trends going on,” he said.
The buyer pool is deeper than it’s been in two or three years, he said, with institutions back closing on retail and multifamily and increasing their exposure to industrial. Office remains mostly a private buyer’s game, though Cruz said national groups are starting to show up there too.
The catch: everything is taking longer to get done.
“If it fits in the box, then we have an incredibly deep pool,” Cruz said. “If it’s one foot outside the box, it’s very skinny.”
Buyers are underwriting aggressively but staying selective, he said.
Cruz, senior managing director of JLL Capital Markets, who tracks deals across the greater New York region, including New Jersey, has been doing this long enough to understand what impacts activity and what doesn’t.
Rates are the influencer now.
The 10-year Treasury has crept north of 4.6% over the past month and a half, Cruz said, and that’s driving far more of the day-to-day conversation than anything happening overseas — or in Washington or Trenton, for that matter. Cruz said neither the midterms nor New Jersey’s new administration have shown up as real factors in deal conversations. Investors, he said, have largely made peace with the state’s political landscape and are closing deals regardless.
“It’s rates, it’s pricing, it’s rent growth across product types,” he said. “Those are the top three.”
Retail is the market’s biggest surprise, Cruz said — and a reminder not to assume the obvious narrative still holds.
Leasing has pushed many centers north of 90% occupancy, and institutions, having spent years favoring multifamily and industrial, are now underweighted in retail and looking to catch up. Large deals are still hard to find, he said, simply because retail properties rarely reach the size of a big multifamily or industrial portfolio.
That divide — between deals that work and deals that don’t — shapes how Cruz and his team advise clients.
“We’re waving that stuff through — let’s go to market,” he said of well-located, well-performing assets. On the ones that aren’t: “We’re calling a timeout to try to figure out what’s going on and why isn’t it performing the way it should.”
Cruz pointed to two recent deals as proof of where the real demand sits.
JLL closed a $160 million institutional multifamily sale after three rounds of bidding among four groups, landing a record per-unit price north of $760,000 and a cap rate below 5%.
“There was a lot of groups that were upset they didn’t win it,” he said.
On the retail side, a $45 million grocery-anchored deal outside New Jersey drew four rounds of bidding from two institutions, a REIT and a 1031 buyer — what Cruz called “the dream buyer pool from a brokerage perspective.”
Even office showed signs of life: JLL recently awarded a $100 million office deal in Northern New Jersey.
“It’s been a little while since we’ve seen demand, real demand for a $100 million office deal in New Jersey,” he said.
All of which adds to a hard-to-describe market.
“It is an interesting time,” Cruz said. “We have more BOVs than we’ve had in the last 24 months. We have more deals in the market. But they’re taking longer to do.”
For information about JLL Capital Markets, go to jll.com.
