Spotlight On: Tom Consiglio, Principal, Resource Realty of Northern NJ

Spotlight On: Tom Consiglio, Principal, Resource Realty of Northern NJ

2022-07-18T02:55:03-04:00December 22nd, 2021|North & Central Jersey, Real Estate, Spotlight On|

Resource Realty of Northern NJ2 min read December 2021 — North New Jersey is a booming business corridor that is rapidly changing as demand for space increases and technology evolves. “We all have the same information out there; it’s how you utilize that information to create value for clients,” Tom Consiglio, principal at Resource Realty of Northern NJ told Invest:. 

How did Resource Realty of Northern NJ continue growing despite the challenges presented by the pandemic?

Our office was shut down for several months, but we would call clients every day just to check in and pass on information to help them with issues like abatements. We set up an alliance with the Society of Industrial and Office Realtors (SIOR) and Gateway Warehouse Association to help clients find short-term leases from developers who had excess space and would be willing to offer it. Our strength is our experience in the market. We opened in 1990, during a very difficult market. We are small and nimble, and we can adjust to the changes in the marketplace quickly as opposed to national firms that are publicly traded and whose decisions are based on cash flow. Technology has helped us tremendously. We all have the same information out there; it’s how you utilize that information to create value for clients. 

Do you think any strategies deployed during the pandemic will become permanent?

Consumer-oriented companies are reducing their number of stores, but the percentage of e-commerce business is dramatically increasing. Lease rates have grown between 8% and 10% per year and greater in some categories. For e-commerce companies that lease large warehouses, it’s sustainable because they’ve reduced their footprint of brick-and-mortar stores and have a lot more money available to pay the higher rents. Where it may not be as sustainable is with companies in the smaller flex market.  These small, privately held companies can’t always pass on the higher costs to their customers. Last year, Amazon leased 7 million square feet in New Jersey. That effect has had everyone competing with them to secure space to provide the same benefits, such as same-day delivery and free shipping. Many companies don’t have the capability to compete and are looking at other geographic areas, such as Burlington County, Orange County, New York, and Delaware for more affordable rents. A good example is a property we are marketing in Orange County, NY.  It is a 500,000 square foot building with 40 foot clear ceilings. The asking rent is $7.50 per square foot compared to the NJ Turnpike corridor, which is in the mid-teens per square foot.  If you can reduce your rent by $3.5 million a year, that more than pays for the higher transportation costs

What are some of the most pressing needs in North Jersey and how will the infrastructure bill affect that?

Our bridges and tunnels need a tremendous amount of work. Even if you go back to 2008 and the Federal stimulus, it seemed so much of the money going toward infrastructure was for quick fixes like paving. States and counties need to get to the most critical projects that have to be done and not just those that can be satisfied to get our share of the money from the federal government. Politicians need to get business leaders involved because things are changing rapidly. From the standpoint of labor, we have a shortage of over 80,000 truck drivers and their average age is 48 years old, so we need driverless vehicles and the infrastructure that supports that. If it doesn’t happen, we’ll see even worse backlogs.

What legislation are investors watching, including the 1031 Exchange changes?

Taxes are always an issue but those real estate investors who make investments to avoid taxes are ultimately the ones who get hurt because they’re not making sound investment decisions. They’re just doing it to avoid taxes and at some point, you have to pay the piper. So, if we have to make a sacrifice with the 1031 to increase revenue, I believe the industry can endure that.

What technology are you using to help in your operations?

There are numerous applications that are now available to CRE providers.  When Resource Realty opened our doors in 1990, all commercial real estate firms had to track property availabilities. Brokerage firms treated this information as proprietary and were not quick to share with other firms. Now, with the expansion of CoStar and Loopnet, property availability has become open to all. Data on recent sales and leases are tracked by companies which are available to real estate providers, as well as investors and occupiers of space. With technology, the business has become very transparent. We have sources for lease expirations, mortgage information on buildings, tax data, actual owners of each building and how to contact them.  With more people working remotely, we have become more active on social media platforms to reach clients and prospects. But when it comes right down to it, commercial real estate is a relationship-oriented business and people do business with whoever they like and trust. Technology will not change that. 

What is your outlook for the next two to three years? 

There’s still strong demand for warehouse space, so we’re working with a lot of our clients that have leases coming due in the next 24 months. In real estate, the cost of a warehouse still isn’t as significant as labor and other costs of goods sold. On the ownership side, there’s a tremendous demand for additional supply so we’re looking at opportunities with tear-down or redevelopment, maybe taking an old office building or retail property that has been sitting empty and finding a better use for it.  We recently completed a conversion of an empty big box retail building in Lodi, NJ. The building was vacant for over two years. We converted a 170,000 square foot, two-story retail facility into a 126,000 square foot high-bay warehouse. By demolishing the second-floor space and adding loading docks, LED lights, a new roof, and air-conditioning the space, we created a 26 foot clear ceiling, modern warehouse which we leased quickly to AAA Wholesale, a commercial cash and carry company.  It was a great example of taking a functional, obsolete property and turning it into an income producing asset.

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