By: Steven Denholtz, Chief Executive Officer
At the beginning of 2016, I offered a vision for the future of Denholtz Associates focused on continuing the strategies that have contributed to our success and integrating new technologies to enable us to retain our standing as an industry leader. The Denholtz team exemplifies why we excel at what we do. Our leasing department completed lease transactions exceeding a million-square-feet. We acquired properties in New Jersey and Florida that offer opportunistic returns. We began multiple redevelopment projects that will deliver new retail, residential and commercial spaces, continuing Denholtz Associates’ long tradition of community engagement and improvement. These successes would not have been possible without the expertise, hard work and dedication of the real estate professionals and support staff on the Denholtz team and the contributions of our extended family of brokers, attorneys, engineers and advisors.
As always, there are challenges on the horizon for the commercial real estate industry, most importantly those regarding monetary policy and regulatory reform. All eyes will continue to be on the Federal Reserve as it signals further interest rate increases. With interest rates at their current historic lows, we have refinanced all fully stabilized projects to lock in favorable long-term financing and we will continue this strategy to ensure the highest returns for our investors. Uncertainty surrounding monetary policy always creates a challenging environment for long-term commercial real estate investment, but uncertainty provides opportunity for those with the foresight and resources to take advantage.
We are also hoping to receive a better idea of what tax reform will look like in the coming months. We anticipate reforms focused on the estate tax, 1031 exchanges, and “carried interests”. Tax reform, if it occurs, is likely to have a negative effect on real estate values and we need to be prepared for this. Over these past 60 years, Denholtz Associates has navigated similarly challenging regulatory and monetary climates. We know that 2017 will be no different.
Although uncertainties exist, the underlying fundamentals of real estate have continued to improve. Our balance sheet is stronger than ever, with loan-to-value ratios at historic lows. Over the last three years, tenant expansions have become commonplace. That trend continues. With a dwindling supply of available space, rents are rising in nearly all of our submarkets and we expect this to continue. Market conditions are as strong as they could be. We are almost certainly in the latter stages of this very positive market cycle. We should all take advantage of the underlying fundamentals while cautiously preparing for whatever lies ahead.
Denholtz Associates will continue to focus on adding properties in our core submarkets of northeastern New Jersey and the east and west coasts of Florida. These markets offer solid investment opportunities due to either above average growth patterns and high demand or low supply leading to high rents. We will continue to utilize the best technology to keep ahead of our competition and we will look to partner and collaborate with local municipalities to create projects that not only reflect our company’s vision but the vision of the communities where they are located.
We are always interested in exploring new approaches and ideas with industry professionals, so feel free to contact me if there’s a topic you’d like to discuss.
I’d like to thank everyone who contributed to our success in 2016. We wish everyone in the industry a productive and satisfying 2017.