Real Estate Industry is Beginning to Wake Up from Hibernation

Realistic Expectations, Efficiencies, Service and Targeted Growth Are Keys to Future Prosperity. End Quote

Newark, NJ (1888PressRelease) March 17, 2011 - While the calendar may tell us that we have reached the end of winter, the commercial real estate industry is beginning to wake up from an extended hibernation. Unfortunately, the recession has taken its toll, but those who were able to dig in and hold on through a very challenging period are beginning to see signs of a brighter future.

Many commercial users, after sitting on the sidelines for such a long time, finally are making commitments to move their operations. Additionally, new dynamics in the corporate world are presenting some attractive opportunities for investors to make strategic purchases in the near term.

For smaller, private owner/investors like Prism Capital Partners, the same factors that helped them endure during the downturn will be keys in enabling them to take advantage of the market's positive trajectory. This includes setting realistic expectations; maximizing efficiencies; providing impeccable service; and embracing targeted growth.

Let's start with expectations. In order to consummate lease transactions, landlords today must be thoroughly aware of the marketplace and be willing to strike very competitive deals. Those who originally "bought right" and placed minimal leverage on their assets are best positioned to do so.

Moving on to efficiencies, maintaining an internal structure with diversified expertise is an invaluable tool for reducing property operating expenses and increasing efficiencies. During lean times, paying close attention to contracts with vendors and suppliers - and competitively bidding out as they expire - can go a long way toward reducing costs. Many vendors are willing to lower their fees, and others are eager to take on new assignments at highly competitive numbers.

In some cases, the money saved on day-to-day operations can be reinvested in capital improvements that not only serve to make a property more attractive to new tenants, but can help maintain occupancy levels in a competitive market.

BroadAcres Office Park in Bloomfield, N.J., provides a great case study. After acquiring the 380,000-square-foot, Class A campus in 2006, Prism reduced operating expenses significantly while at the same time increasing quality by cutting excess spending. To achieve new levels of efficiency in preventive maintenance and repairs, we incorporated an automated work order system, where tenants enter their service request and receive a rapid first response online.

Over the past four years, we have continued to invest capital (even through the peak of the recession) at BroadAcres. This includes the creation of a new outdoor courtyard and patio area; full lobby updates; the addition of tenant conference space; and upscale, specialty sit-down food service and on-site catering.

The result? Nearly 150,000 square feet of leases - including new commitments, expansions and renewals - have closed over the past 15 months. More importantly, we have achieved a tenant retention rate of approximately 90 percent - an impressive figure in challenging times. And we continue to welcome new tenants, who are attracted by the property's first-class work environment.

This activity, as well as strengthening large-tenant movement throughout the market, is promising. In addition to UPS, New Jersey has seen a number of transactions completed in excess of 100,000 square feet during the past several months, including BASF (325,000 sf, Florham Park), Watson Pharmaceuticals (148,708 sf, Parsippany) and Advanced Health Media (123,082 sf, Berkeley Heights). Several additional large-block users are looking to make commitments in the near future.

Which brings us to the final piece of the puzzle - targeted growth. Investors who have available capital - and again who remain realistic about the market - will be able to take advantage of opportunities as they arise. They also will be best positioned to accommodate this anticipated increasing tenant demand.

When 399 Jefferson Road in Parsippany, N.J., - Prism's very first investment in 2003 - came online earlier this year, we re-acquired it. We had sold this 180,000-square-foot office building to a user in 2006, but the intended use for the property changed, and the company never took occupancy. We re-purchased the asset again for the very same reasons that drew us in the first place: its A+ market, excellent accessibility and high parking ratio. We also re-purchased it because we could do so with a low-cost basis, which enables us to offer an excellent value for tenants.

We at Prism are optimistic about the market. The recovery will take time, but it will happen. And those companies with solid footing - in terms of expectations, operations, service and capital to invest will be best able to move forward ahead of the curve.

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