302 COMMERCE SQUARE BOULEVARD 302 Commerce Square Blvd • Burlington, NJ 08016 Offering Memorandum 1
302 COMMERCE SQUARE BOULEVARD302 Commerce Square Blvd • Burlington, NJ 08016
Offering Memorandum
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N O N - E N D O R S E M E N T A N D D I S C L A I M E R N O T I C E
Confidentiality and 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 andshould 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, unverifiedinformation 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 duediligence 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, thefuture 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 orasbestos, 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 anytenant'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 mattersand 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 ofthe 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 nameis 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, orcommercial listing of Marcus & Millichap, and is solely included for the purpose of providing tenant lessee information about this listing to prospective customers.
ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY.PLEASE CONSULT YOUR MARCUS & MILLICHAP AGENT FOR MORE DETAILS.
302 COMMERCE SQUARE BOULEVARDBurlington, NJACT ID Z0300645
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P R E S E N T E D B Y
Brian HoseyBrokerNew Jersey OfficeTel: (201) 742-6150Fax: (201) [email protected]: NJ 1434917
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TABLE OF CONTENTS
SECTION
INVESTMENT OVERVIEW 01Offering Summary
Regional Map
Local Map
Aerial Photo
Site Plan
FINANCIAL ANALYSIS 02Tenant Summary
Lease Expiration Summary
Operating Statement
Notes
Pricing Detail
Acquisition Financing
MARKET COMPARABLES 03Sales Comparables
Lease Comparables
MARKET OVERVIEW 04Market Analysis
Demographic Analysis
302 COMMERCE SQUARE BOULEVARD
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302 COMMERCE SQUARE BOULEVARD
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INVESTMENT
OVERVIEW
302 COMMERCE SQUARE BOULEVARD
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OFFERING SUMMARY
6
EXECUTIVE SUMMARY
EXPENSES
PRO FORMA $/SF
Real Estate Taxes $108,099 $1.30
Total Expenses $108,099 $1.30
DEMOGRAPHICS
1-Miles 3-Miles 5-Miles
2018 Estimate Pop 7,351 76,439 179,664
2010 Census Pop 7,160 75,823 178,417
2018 Estimate HH 2,726 28,326 66,402
2010 Census HH 2,662 28,139 66,009
Median HH Income $49,712 $57,842 $62,771
Per Capita Income $26,642 $28,833 $30,173
Average HH Income $71,502 $77,272 $81,358
VITAL DATA
PRO FORMA
Price $3,100,000 CAP Rate 6.66%
Down Payment 30% / $930,000 Net Operating Income $206,397
Loan Amount $2,170,000 Net Cash Flow After Debt Service 22.19% / $206,397
Loan Type Proposed New Total Return 22.19% / $206,397
Interest Rate / Amortization 0% / 0 Years
Rentable SF 83,000
Price/SF $37.35
Current Occupancy 100%
Year Built 1969
Lot Size 8.19 acre(s)
302 COMMERCE SQUARE BOULEVARD
OFFERING SUMMARY
Approximately 83,000 SF Industrial/Flex Property in Burlington County
Municipally Owned and Managed Property
969 Office/Industrial/Recreation Center Construction with 1999 Renovation
Easy Access to I-95, I-295, Route 130 and the Delaware River
INVESTMENT HIGHLIGHTS
Marcus & Millichap is pleased to present 302 Commerce Square Boulevard in Burlington New Jersey. The approximately 83,000 SF vacant,Class B, Industrial/Flex building was built in 1969 and renovated in 1999. Located in the Delaware Valley with easy access to Philadelphia,the Delaware River, and more than 10% of the national population within a 90-minute drive along I-95 and other regional corridors, this 8.19-acre property presents compelling upside with historically low 5.5% market vacancy. Located approximately a half mile away from the NJentrance of the Burlington-Bristol Bridge. 1-minute walk to the Burlington South Light Rail Station. Median Household Income $63,450 in 1-mile Radius.
INVESTMENT OVERVIEW
7
302 COMMERCE SQUARE BOULEVARD
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PROPERTY SUMMARY
OFFERING SUMMARY
THE OFFERING
Property 302 Commerce Square Boulevard
Price $3,100,000
Property Address 302 Commerce Square Blvd, Burlington, NJ
Assessors Parcel Number 05-00001-0000-00003
Zoning I-1 Industrial Districts
SITE DESCRIPTION
Number of Floors 1
Year Built/Renovated 1969
Rentable Square Feet 83,000
Ownership Fee Simple
Parcel Size 8.19 acre(s)
Parking 100+ Parking Spaces
Intersection/Cross Street Burlington Bristol Bridge
UTILITIES
Gas Natural Gas
Electric City
Water City
Sewer City
CONSTRUCTION
Foundation Concrete
Framing Metal
Exterior Metal
Parking Surface Paved
Ceiling Height 30'
Roll-Up Doors 4 - 8x10
Floor to Floor Height 28'
Sprinkler System Wet
8
MECHANICAL
Fire Protection Sprinkler System
Power 480V
REGIONAL MAP
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LOCAL MAP
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AERIAL PHOTO
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SITE PLAN
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FINANCIAL
ANALYSIS
FINANCIAL ANALYSIS
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TENANT SUMMARY
OPERATING STATEMENT
FINANCIAL ANALYSIS
302 COMMERCE SQUARE BOULEVARD
PRICING DETAIL
28
MARCUS & MILLICHAP CAPITAL CORPORATION CAPABILITIES
MMCC—our fully integrated, dedicated financing arm—is committed to providing superior capital market expertise, precisely managed execution, and unparalleled access to capital sources providing the most competitive rates and terms.
We leverage our prominent capital market relationships with commercial banks, life insurance companies, CMBS, private and public debt/equity funds, Fannie Mae, Freddie Mac and HUD to provide our clients with the greatest range of financing options.
Our dedicated, knowledgeable experts understand the challenges of financingand work tirelessly to resolve all potential issues to the benefit of our clients.
National platform operating
within the firm’s brokerage offices
$6.24 billion total national
volume in 2018
Access to more capital sources than any other
firm in the industry
Optimum financing solutions to enhance value
Our ability to enhance buyer pool by expanding finance options
Our ability to enhance seller control
• Through buyer qualification support
• Our ability to manage buyers finance expectations
• Ability to monitor and manage buyer/lender progress, insuring timely, predictable closings
• By relying on a world class set of debt/equity sources and presenting a tightly underwritten credit file
WHY MMCC?
Closed 1,678 debt and equity
financings in 2018
ACQUISITION FINANCING
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302 COMMERCE SQUARE BOULEVARD
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MARKET
COMPARABLES
302 COMMERCE SQUARE BOULEVARD
SALES COMPARABLES MAP
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302 COMMERCE SQUARE BOULEVARD(SUBJECT)
1750 Woodhaven Dr
220 Rittenhouse Cir
1211 Ford Rd
Keystone Industrial Park
East Gate Center
Budge Bldg
SALES COMPARABLES
1
2
3
4
5
6
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PROPERTY NAME302 COMMERCE SQUARE BOULEVARD
SALES COMPARABLES
Avg. $47.13
$0.00
$5.80
$11.60
$17.40
$23.20
$29.00
$34.80
$40.60
$46.40
$52.20
$58.00
CommerceSquare -City of
Burlington
1750Woodhaven
Dr
220Rittenhouse
Cir
1211Ford Rd
KeystoneIndustrial
Park
East GateCenter
Budge Bldg
Average Price Per Square Foot
SALES COMPARABLES SALES COMPS AVG
PROPERTY NAME
MARKETING TEAM
302 COMMERCE SQUARE BOULEVARD
SALES COMPARABLES
rentpropertyname1
rentpropertyaddress1
rentpropertyname1
rentpropertyaddress1
rentpropertyname1
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SALES COMPARABLES
Asking Price $3,100,000
Price/SF $37.35
Year Built 1969
Occupancy 100%
Divisible True
Rentable SF 83,000
Occupancy 0%
Parking Ratio 1.62
Divisible Multi-Tenant
Power 480V
Clear Height 28
Percentage of Office 15-20%
COMMERCE SQUARE - CITY OF BURLINGTON
302 Commerce Square Blvd, Burlington, NJ, 080161
Close of Escrow 10/1/2017
Days On Market 1042
Sales Price $3,800,000
Rentable SF 80,918
Price/SF $46.96
Year Built 1975
Occupancy 50%
Parking Ratio 1.62
Divisible Multi-Tenant
Power 400a/120-240v 3p
Clear Height 16
Percentage of Office 5.00%
NOTESThe property was around 50% leased at the time but other than vacancy had no other conditions that impacted price (deferred maintenance or debt assumption). The seller is getting out of owning industrial product.
1750 WOODHAVEN DR1750 Woodhaven Dr, Bensalem, PA, 19020
2
Close of Escrow 3/1/2017
Sales Price $4,950,000
Rentable SF 100,800
Price/SF $49.11
Year Built 1975
Occupancy 52%
Parking Ratio 1.02/1,000 SF
Divisible Mulit-Tenant
Power 3,000a/480v Heavy
Clear Height 21-23
Percentage of Office 22.00%
NOTESOn March 21, 2017 the 100,800-sf industrial property at 220 Rittenhouse Circle was sold in an owner/user transaction for $4,950,000 or $49.11/sf. At the time of sale, it was a vacant, class-B warehouse that first delivered in 1975. Currently listed for Sale.
220 RITTENHOUSE CIR220 Rittenhouse Cir, Bristol, PA, 19007
PROPERTY NAME
MARKETING TEAM
302 COMMERCE SQUARE BOULEVARD
SALES COMPARABLES
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rentpropertyaddress1
rentpropertyname1
rentpropertyaddress1
rentpropertyname1
rentpropertyaddress1
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SALES COMPARABLES
NOTESA.T. Chadwick Company, Inc sold the 103,421 square foot industrial building to Northeast Building Products Corp for $5,300,000, or about $51 per square foot.
0.0% Leased at Sale. The new owner plans to occupy the entire facility.
3
Close of Escrow 2/1/2018
Sales Price $5,300,000
Rentable SF 103,421
Price/SF $51.25
Year Built 1970
Occupancy 1%
Parking Ratio 1.22
Power 500-2,000a/240-480v Heavy Utilit
Clear Height 18
Percentage of Office 5.90%
1211 FORD RD1211 Ford Rd, Bensalem, PA, 19020
4
Close of Escrow 7/1/2019
Sales Price $2,000,000
Rentable SF 53,696
Price/SF $37.25
Year Built 1981
Occupancy 1%
Parking Ratio 4.66/1,000 SF
Divisible Yes
Power 2,000a/480v 3p Heavy
Clear Height 25
Percentage of Office 10.00%
NOTESOn 7/1/19, the 48,745 SF industrial building located at 180 Rittenhouse Circle sold for $2,000,000. The property is part of the Keystone Industrial Park in Bristol, PA. According to the buyers, they purchased it as a redevelopment project. 0.0% Leased at Sale
KEYSTONE INDUSTRIAL PARK180 Rittenhouse Cir, Bristol, PA, 19007
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Close of Escrow 7/1/2019
Sales Price $7,350,000
Rentable SF 129,175
Price/SF $56.90
Year Built 1974
Occupancy 1%
Divisible Yes
Power 1,600a/480v 3p Heavy
Clear Height 21'6" - 22'6"
NOTESFanda Corporation sold the 129,175-SF industrial building in Mount Laurel, MJ to Bluewater Spe Llc for $7,350,000, or approximately $56.90 price per square foot.
EAST GATE CENTER901 Pleasant Valley Ave, Mount Laurel, NJ, 08054
PROPERTY NAME
MARKETING TEAM
302 COMMERCE SQUARE BOULEVARD
SALES COMPARABLES
rentpropertyname1
rentpropertyaddress1
rentpropertyname1
rentpropertyaddress1
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rentpropertyaddress1
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SALES COMPARABLES
NOTESLKQ Corporation sold the 65,744 square foot warehouse to Vesey Capital LLC for $2,715,000, or about $41 per square foot.The building was purchased as an investment. The building was vacant when it traded.
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Close of Escrow 10/11/2017
Sales Price $2,715,000
Rentable SF 65,744
Price/SF $41.30
Year Built 1973
Parking Ratio 0.98/1,000 SF
Divisible Yes
Power 2,000a/480v Heavy
Clear Height 17
Percentage of Office 4.60%
BUDGE BLDG1005 Sherman Ave, Pennsauken, NJ, 08110
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302 COMMERCE SQUARE BOULEVARD
LEASE COMPARABLES MAP
302 COMMERCE SQUARE BOULEVARD(SUBJECT)
Commerce Dr
Haines Industrial Center
Georges Rd - SB-138
Bristol Commerce Center
Stults Rd
Station Rd - Building 1
Bucks County Business Pk
Bunzl Distribution Inc.
East Gate Center
2001 Gehman Rd
4
7
8
9
11
20
12
14
15
16
17
13
18
10
4
7
8
9
10
1
2
3
5
6
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PROPERTY NAME302 COMMERCE SQUARE BOULEVARD
LEASE COMPARABLES
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AVERAGE OCCUPANCY
Avg. 98.60%
0
10
20
30
40
50
60
70
80
90
100
CommerceSquare -City of
Burlington
Commerce Dr HainesIndustrialCenter
Georges Rd- SB-138
BristolCommerce
Center
Stults Rd StationRd -
Building 1
BucksCounty
Business Pk
BunzlDistribution
Inc.
East GateCenter
2001Gehman Rd
PROPERTY NAME302 COMMERCE SQUARE BOULEVARD
LEASE COMPARABLES
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AVERAGE RENT PER SQUARE FOOT
Avg. $6
$0
$1
$1
$2
$3
$4
$4
$5
$6
$6
$7
CommerceSquare -City of
Burlington
Commerce Dr HainesIndustrialCenter
Georges Rd- SB-138
BristolCommerce
Center
Stults Rd StationRd -
Building 1
BucksCounty
Business Pk
BunzlDistribution
Inc.
East GateCenter
2001Gehman Rd
PROPERTY NAME
MARKETING TEAM
302 COMMERCE SQUARE BOULEVARD
LEASE COMPARABLES
rentpropertyname1
rentpropertyaddress1
rentpropertyname1
rentpropertyaddress1
rentpropertyname1
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Asking Rent/SF $6.50
Year Built 1969
Occupancy 100%
Lease Type NNN
Lot Size 8.19 acre(s)
COMMERCE SQUARE - CITY OF BURLINGTON
302 Commerce Square Blvd, Burlington, NJ, 08016
1
Rentable SF 100,920
Asking Rent/SF $6.50
Year Built 1985
Occupancy 100%
Lease Type NNN
Lot Size 9.8
Parking Ratio 2.00/1,000 SF
NOTES2/00: Schenkman & Kushner purchased this building along with 40 Commerce Dr and 1 S Middlesex Ave from South Middlesex Industrial Park Association for $14 million.
* 5" thick floors* Within 1 mile of Exit 8A
COMMERCE DR21 Commerce Dr, South Brunswick,, NJ, 08512
2
Rentable SF 163,588
Asking Rent/SF $4.25
Year Built 1978
Occupancy 100%
Lease Type NNN
Lot Size 9.35
Parking Ratio 0.38
NOTESThe Haines Center is located in Florence and Burlington Townships on over 800 acres of land and is situated at the NJ Turnpike Exit 6A. This industrial corporate park is unparalleled for its proximity and centrality to all major interstate routes such as I-95, I-295, NJ & PA Turnpikes, its solid planning, and public transportation infrastructure. These factors along with economic benefit/job creation, architectural merit and community involvement earned The Haines Center a New Good Neighbors Award from the New Jersey Business and Industry Association.
HAINES INDUSTRIAL CENTER1817 Route 130, Burlington, NJ, 8016
PROPERTY NAME
MARKETING TEAM
302 COMMERCE SQUARE BOULEVARD
LEASE COMPARABLES
rentpropertyname1
rentpropertyaddress1
rentpropertyname1
rentpropertyaddress1
rentpropertyname1
rentpropertyaddress1
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Rentable SF 102,108
Asking Rent/SF $6.08
Year Built 1972
Occupancy 100%
Lease Type NNN
Lot Size 15
Parking Ratio 0.24/1,000 SF
NOTEShe property is located on 15 acres with room for expansion.
December 2002: Lion Industrial Fund, a shell company of Clarion Partners, purchased this building when Clarion acquired Crow Holdings LLC.Ample parking.
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GEORGES RD - SB-138138 Georges Rd, South Brunswick, NJ, 08810
4
Rentable SF 309,000
Asking Rent/SF $6.25
Year Built 2019
Occupancy 100%
Lease Type NNN
Lot Size 19.978
Parking Ratio 0.89/1,000 SF
NOTESNewly Designated KOEZ through 2022
BRISTOL COMMERCE CENTER2401 Green Ln, Levittown, PA, 19057
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Rentable SF 369,000
Asking Rent/SF $6.12
Year Built 1974
Occupancy 100%
Lease Type NNN
Lot Size 45.035
Parking Ratio 0.45/1,000 SF
NOTESFenced Lot, Property Manager on Site Amenities: Fenced Lot, Property Manager on Site
STULTS RD83 Stults Rd, South Brunswick, NJ, 08810
PROPERTY NAME
MARKETING TEAM
302 COMMERCE SQUARE BOULEVARD
LEASE COMPARABLES
rentpropertyname1
rentpropertyaddress1
rentpropertyname1
rentpropertyaddress1
rentpropertyname1
rentpropertyaddress1
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Rentable SF 812,739
Asking Rent/SF $6.34
Year Built 1975
Occupancy 100%
Lease Type NNN
Lot Size 60
Parking Ratio 1.00
NOTES* Parking for 375 cars and 150 trailers* 117 docks (107 with automatic levelers)* 2 rail spurs serviced by Conrail* Energy saving fluorescent lighting with reflectors* Roof: 4 ply, built-up system and a Polycan Polyester membrane* Combination masonry block and metal panels over a steel frame* High-density sprinkler rated with in-rack wet system, serviced by 1.4 million gallons of on-site water in semi-submerged tanks* Power: 1500 & 2100 KVA Substations* Expansion capability of 105,812 square feet
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STATION RD - BUILDING 166 Station Rd, Cranbury, NJ, 08512
7
Rentable SF 102,000
Asking Rent/SF $5.05
Year Built 1981
Occupancy 100%
Lease Type NNN
Lot Size 7.36
Parking Ratio 0.73/1,000 SF
NOTESFenced Lot
BUCKS COUNTY BUSINESS PK2201 Cabot Blvd W, Langhorne, NJ, 19047
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Rentable SF 223,977
Asking Rent/SF $5.15
Year Built 1978
Occupancy 100%
Lease Type NNN
Lot Size 16.43
Parking Ratio 0.15/1,000 SF
NOTESStrategic location between Exits 9 and 8A of the New Jersey Turnpike.
* Rail possible* 30 car + trailer parking
BUNZL DISTRIBUTION INC.27 Distribution Way, Monmouth Junction, NJ, 08852
PROPERTY NAME
MARKETING TEAM
302 COMMERCE SQUARE BOULEVARD
LEASE COMPARABLES
rentpropertyname1
rentpropertyaddress1
rentpropertyname1
rentpropertyaddress1
rentpropertyname1
rentpropertyaddress1
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Rentable SF 105,450
Available SF 26,000
Asking Rent/SF $6.00
Year Built 1984
Occupancy 86%
Lease Type NNN
Lot Size 7.3
Parking Ratio 0.89/1,000 SF
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EAST GATE CENTER820 East Gate Dr, Mount Laurel, NJ, 08054
10
Rentable SF 97,200
Asking Rent/SF $6.75
Year Built 1989
Occupancy 100%
Lease Type NNN
Lot Size 8.32
Parking Ratio 1.79/1,000 SF
2001 GEHMAN RD2001 Gehman Rd, Harleysville, PA, 19438
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MARKET
OVERVIEW
MARKET OVERVIEW
OVERVIEWSOUTHERN NEW JERSEY
Southern New Jersey is home to 1.9 million residents encompassing the
counties of Burlington, Camden, Gloucester, Atlantic, Salem, Cumberland
and Cape May. Camden County is also part of the Philadelphia metro
and accounts for largest portion of the market’s population. The eastern
part of the market is largely a coastal resort area, while the western
portion has the highest population density and contains a well-developed
transportation infrastructure.
Once reliant on the agricultural industry, Southern New Jersey now has an expanding number of businesses in the professional and business services sector, consisting largely of small businesses with less than 15 workers.
The services sector employs a large portion of the labor force, forming the backbone of the local economy through hospitals, schools, hotels, business and social services, and entertainment facilities.
The region boasts a large tourism and recreation industry, especially in Atlantic City, where gaming generates billions of dollars of revenue each year.
Fortune 500 company Campbell’s Soup is headquartered in the region.
DEMOGRAPHICS
1
ECONOMY
METRO HIGHLIGHTS
* Forecast Sources: Marcus & Millichap Research Services; BLS; Bureau of Economic Analysis; Experian; Fortune; Moody’s Analytics; U.S. Census Bureau
302 COMMERCE SQUARE BOULEVARD
DIVERSIFIED EMPLOYMENT BASEThe region’s economy is moving away from agriculture to a more diversified employment base that includes business services, hospitality and tourism.
FAA’S WILLIAM J. HUGHES TECHNICAL CENTERThe center is one of the nation’s premier aviation research, development, test and evaluation facilities. It employs engineers and technicians.
THREE DISTINCT AREAS IN ONE REGIONAtlantic and Cape May counties are tourism-based. Greater Philadelphia is the main business center in the metro, while Cumberland and Salem counties are primarily agricultural.
1.9M2018
POPULATION:
687K2018
HOUSEHOLDS:
40.42018
MEDIAN AGE:
$68,0002018 MEDIAN
HOUSEHOLD INCOME:
U.S. Median:
38.0U.S. Median:
$58,8003.3%
Growth2018-2023*:
2.5%
Growth2018-2023*:
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PHILADELPHIA METRO AREA
Span of Robust Absorption Extends; Investors TargetWarehouses Along Major Transportation Routes
Stout market demand for strategically located space exists throughout the metro. Philadelphia’s
extensive transportation network and proximity to other major East Coast markets makes it a prime locale for
retailers and logistics firms focused on optimizing supply chains in order to provide same- or next-day
deliveries. Recent expansions by these industrial users supported the absorption of 34 million square feet
over the past four years, negating the delivery of 20 million square feet of space and reducing metro vacancy
to the low-5 percent band. Facilities along the New Jersey Turnpike have been coveted of late, with more
than 5 million square feet absorbed last year in Southern New Jersey counties. Declining availability within
these markets during 2019 will force more industrial users to look across the Delaware River to Philadelphia
and Montgomery counties, where vacancy rates rest just above the metro’s average. A boost in leasing
velocity in these areas allows metro vacancy to reach a cyclically low level, prompting additional speculative
construction proposals.
Areas of below-average pricing steer deal flow. Tight vacancy, a central location and the lowest price
points among major Mid-Atlantic markets have buyers competing for sub-$5 million Class B and C
warehouses. These assets, which will have notable NOI growth potential moving forward, are obtainable at 7
to mid-8 percent first-year returns. Various-sized warehouses near Roosevelt Boulevard and Interstate 95 in
North Philadelphia and Bucks County are in high demand while lower price points persist in these locales.
Low availability and strong asking rent growth along the New Jersey Turnpike has heightened competition for
larger properties in Burlington and Camden counties, with below-average pricing prevalent in the latter locale.
* Forecast;Sources: CoStar Group, Inc.; Real Capital Analytics
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PHILADELPHIA METRO AREA
2019 Market Forecast
Metro employers create 35,000 positions in 2019 after bolstering staffs by
54,400 workers last year.
Delivery volume mirrors 2018. Bucks County represents a top spot for
completions this year.
Metro vacancy compresses for a seventh straight year, falling to 5.0 percent.
Last year, a decline of 10 basis points was recorded.
Positive asking rent growth persists in 2019 albeit at a more subdued pace
than las year, when an uptick of 7.6 percent was noted. At $5.59 per square
foot, the metro’s year-end rent sits 5 percent above the previous cycle’s
peak.
The recent wealth of sub-$5 million transactions in core Philadelphia and
Southern New Jersey forces some buyers to outlying Lehigh and Lancaster
counties when looking to deploy more than $10 million for larger properties.
* Forecast;Sources: CoStar Group, Inc.; Real Capital Analytics
Employment
up 1.2%
Construction
2.6 million sq. ft.
Vacancy
down 10 bps
Rent
up 2.4%
Investment
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2019 PRICING AND VALUATION TRENDS
Yield Range Offers Compelling Options For Investors;
Most Metros Demonstrate Strong Elevated Yields
* 2008-2018 Average annualized appreciation in prices per square foot** Price per square foot for industrial properties $1 million and greaterSources: Marcus & Millichap Research Services; CoStar Group, Inc.; Real Capital Analytics
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2019 PRICING AND VALUATION TRENDS
Pricing and Valuation Trends Summary
Ten-year appreciation favors high-growth markets. Benchmarked from the end of
2008 as the U.S. economy began its rapid tumble into recession, many markets’
industrial prices declined several years more before recovering. Dallas/Fort Worth and
Houston are two markets that experienced a much softer downturn, allowing strong
price appreciation during the growth cycle while maintaining first-year yields higher than
the national rate. Denver leads all markets in appreciation while the nation’s two largest
cities, New York City and Los Angeles, have also posted robust value gains, reflecting
substantive economic growth. Midwestern metros registered marginal appreciation in
industrial prices as their recovery began later in the growth cycle than coastal or
gateway markets.
Smaller metros boast elevated returns. Competitive bidding in secondary and tertiary
markets has pushed up prices above their pre-recession levels, yet many still have the
opportunity to rise at a similar pace as large port markets and major interior distribution
hub metros. As prices climb, these markets’ industrial assets trade with cap rates higher
than the U.S. rate. Comparatively, many primary coastal metros and gateway cities
offer lower first-year returns that have witnessed strong appreciation over the past 10
years, including Seattle-Tacoma and Oakland.
Average Price per Square Foot
(Alphabetical order within each segment)
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2019 NATIONAL INDUSTRIAL PROPERTY INDEX
Regional Distribution Centers and Ports Head Index;
Elevated Vacancy Keeps Metros From Moving Up
Los Angeles retains top spot, reshuffling ensues. Southern California markets dominate the top 10 in this year’s Index. Twin Ports Los
Angeles is one of the busiest ports in the world and the metro also has an expansive manufacturing base, underpinning a robust industrial
sector. Solid absorption of space has kept vacancy in Los Angeles the lowest in the nation for five consecutive years. The movement of goods
from the ports to markets throughout the world as well as expanding e-commerce demand have produced a vibrant distribution and logistics
sector in neighboring Orange County (#4) and Riverside-San Bernardino (#8). Tightening vacancy and the greatest rent growth among metros
in the Index propelled Northern New Jersey (#2) onto the second rung. Detroit (#3) benefits from new autonomous vehicle technology that is
spurring additional space needs for automobile manufacturers and their suppliers. Newcomer to the index, Minneapolis-St. Paul (#5) debuts in
the fifth position, as the metro’s diverse economy and position as a distribution hub for the Upper Midwest produce steady absorption and rent
growth. Rounding out the top 10 slots are Seattle-Tacoma (#6), Cleveland (#7), Oakland (#9) and Tampa-St. Petersburg (#10).
Biggest Index movers. Milwaukee (#13) registered the greatest improvement in the 2019 NIPI, leaping six rungs. Strong manufacturing hiring
and minimal new inventory will fill existing space, dropping vacancy and boosting rents. Cleveland (#7) and Atlanta (#14) followed, each
climbing four spots. A slow delivery pipeline in Cleveland will keep vacancy well below the national level, moving rents higher, while the growth
in e-commerce demand and steady absorption in Atlanta will produce outsized rent advances. Elevated vacancy that is stifling rent growth is a
trend in markets with the largest declines and those sitting near the bottom of the NIPI. Dallas/Fort Worth (#23) and New York City (#24) each
fell seven rungs to remain in the bottom half of the Index, while Baltimore lost two notches to land at the bottom of this year’s rankings.
Index Methodology
The NIPI ranks 32 major industrial markets based upon a series of 12-month, forward-looking economic and supply-and-demand variables.
Markets are ranked based on their cumulative weighted-average scores for various indicators, including projected employment growth,
vacancy level and change, construction, and rents. Weighing both the forecasts and incremental change over the next year, the Index is
designed to indicate relative supply-and-demand conditions at the market level.
Users of the Index are cautioned to be aware of several important considerations. First, the NIPI is not designed to predict the performance of
individual investments. A carefully chosen property in a bottom-ranked market could easily outperform a poor choice in a top-ranked market.
Second, the NIPI is a snapshot of a one-year time horizon. A market facing difficulties in the near term may provide excellent long-term
prospects, and vice versa. Third, a market’s ranking may fall from one year to the next even if its fundamentals are improving. Also, the NIPI is
an ordinal index, and differences in rankings should be carefully interpreted. A top-ranked market is not necessarily twice as good as the
second-ranked market, nor is it 10 times better than the 10th-ranked market.
* Through 3Q 2018
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NATIONAL ECONOMY
Rising Wages Sustain Consumption in 2019;
Growth Solid Despite Moderating Momentum
Wages continue to climb as firms compete for talent. With help from a tight labor market, economic
growth will extend into 2019. Organizations will add 2 million workers to payrolls this year, keeping the
nation’s unemployment rate near 4 percent. Though many companies are eager to expand employment
bases, a lack of qualified workers may inhibit them from filling open positions. In an effort to attract quality
talent, firms will bolster compensation packages, supporting an uptick in wage growth after annual increases
in the mid-2 percent band were witnessed regularly during the past few years. Rising wages should become
more prevalent as the year progresses, translating to relatively active spending habits and encouraging
retailers to keep inventories elevated. Additionally, many companies are aiming to beat potential tariffs by
bringing spring merchandise into the country early, putting pressure on warehouses and other storage
facilities to maintain heightened levels of imports.
Economy to stay on solid footing as momentum begins to ebb. The U.S. economy will remain
fundamentally stable in 2019 despite consumer confidence dipping from last year’s historically high levels. All-
time highs of U.S. household wealth and disposable income will keep consumers optimistic, particularly as
several factors could threaten domestic growth moving forward. The longer-term effects of a government
shutdown remain unclear in addition to any implications from still-unresolved trade tensions. Also, weakening
international economies will weigh on U.S. economic expansion. Accounting for these factors, momentum will
ease this year, moderating GDP growth into the low- to mid-2 percent range annually. Steady growth will help
maintain positive levels of consumption, boosting property performance as retailers increase inventories to
keep pace with spending.
* Forecast
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NATIONAL ECONOMY
2019 National Economic Outlook
Organizations sustain accelerated pace of hiring. After reaching 3 percent at the end of 2018 for the
first time in more than 10 years, wage growth is expected to remain above historical averages this year.
An exceptionally tight job market will be the primary driver of wage gains as job creation reaches 2 million
for the for the ninth year in a row. Positions in the professional and business services sector as well as
education and health services will be abundant in 2019.
Coastal warehouses impacted by trade war. Many of the nation’s major seaports are experiencing the
effects of ongoing trade tensions. Imports are coming in larger quantities as retailers order products in
advance, attempting to beat a potential hike in tariffs on goods from China in March, ultimately crowding
nearby storage facilities. U.S. tariffs of 10 percent on $200 billion worth of Chinese goods that took effect
in September 2018 are scheduled to increase to 25 percent this spring barring successful negotiations
prior to that.
Steady retail spending expected in 2019. Last year, core retail sales averaged 4.7 percent growth,
reaching peak levels last summer when expansion hit 6.0 percent. While December posted a yearly
increase of just 2.2 percent, spending is expected to stabilize this year amid a solid economic climate.
Online sales should continue to rapidly rise, further benefiting the industrial sector.
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NATIONAL INDUSTRIAL OVERVIEW
Changing Consumer Expectations Motivating NewStrategies in the Industrial Property Sector
Last-mile delivery costs push demand toward urban industrial. The transformation of the industrial sector
has accelerated to an unheard of pace as online shopping has blurred the lines between retail and industrial
properties. Shifting consumer habits are rewiring the sector in the digital age as e-commerce sales grew by
13.5 percent last year to now account for roughly 10 percent of overall retail sales. Most retailers are
implementing omnichannel strategies to meet customer needs, bolstering demand for warehouse and
distribution space across the nation. Rising shipping and transportation costs, driven by trucking shortages,
are encouraging more companies to find space within population centers to limit distribution expenses. With
consumers expecting shorter delivery windows, companies are turning to vacated retail space in dense
residential areas while some developers are making a move toward multistory warehouses to combat
logistical challenges in the urban core.
Leasing demand driven by retailers building their online presence. Demand for industrial space climbed
past supply growth for the ninth straight year in 2018 as e-commerce and last-mile delivery motivated
companies to locate closer to the end consumer. This year, e-commerce and the related functions of the
business will once again fuel space demand, with companies like Home Depot, Kroger and Walmart
substantially growing their footprint. Home Depot is investing $1.2 billion into its supply-chain network,
intermingling online and physical retail with a greater emphasis on same-day pickup, a strategy followed by
Walmart as well. Kroger recently partnered with online supermarket Ocado as consumers increasingly
purchase their groceries online, fueling the need for grocers to expand their customer fulfillment capabilities.
With Amazon accounting for nearly half of all e-commerce sales last year, other retailers are moving quickly
to streamline their supply chain to catch up, pushing the national industrial vacancy rate to its lowest point on
record.
* ForecastSources: CoStar Group, Inc.; Real Capital Analytics
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NATIONAL INDUSTRIAL OVERVIEW
2019 National Industrial Outlook
Developers tackle logistical hurdles with taller warehouses. Supply constraints amid exceptional
space demand in the urban center have influenced developers to bring multistory warehouses to the U.S.
for the first time, with the first of its kind rising in Seattle last year. Common in dense urban areas of
Europe and Asia, these types of warehouses allow trucks to be loaded on multiple levels, which can be
accessed by ramp. Similar projects are underway in New York City and the Bay Area as strong rental rate
growth and low vacancy in the core justify the higher construction costs. As more retailers make efforts to
close the gap between the last mile of the supply chain and the end consumer, demand for taller
warehouses in the tightest markets will grow.
Vacancy tightens further as construction eases. Developers are starting to respond to higher costs,
helping to slow deliveries this year to 210 million square feet following the completion of more than 246
million square feet in 2018. Tenant demand pushes past supply growth for the 10th consecutive year,
compressing the national industrial vacancy rate to 4.5 percent, the lowest on record. Supply constraints
support another year of healthy rent growth, climbing 4 percent this year to $7.27 per square foot after
recording a 5.4 percent increase last year.
Growing production pushes gauges higher. Expansion of the manufacturing sector raised a leading
index of activity to signal steady growth. The subsidiary gauge of new orders, a leading indicator of future
manufacturing activity, maintained a strong level, indicating a positive outlook. With a healthy outlook on
all fronts, the manufacturing sector is positioned to make contributions to the industrial property sector this
year.
* Forecast** Through January 2019Sources: CoStar Group, Inc.; Real Capital Analytics
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U.S. CAPITAL MARKETS
Fed Eyes Slowing International Economies;Shifting Consumer Preferences Support Acquisitions
Fed adopts cautious stance. Ongoing trade disputes between the U.S. and China together with slowing
growth throughout Europe have begun to weigh on the global economy. Financial market volatility and
elevated caution have sponsored a flight to the safety of Treasurys, pushing the 10-year yield to the mid-2
percent range. While domestic economic output has moderated in recent months, the government shutdown
and waning impact of the tax cut stimulus are likely to trim forward estimates. As a result, Chairman Jerome
Powell stated that the Fed is considering an adjustment to ongoing balance sheet runoffs through quantitative
tightening and put further interest rate hikes on hold as the central bank takes a wait-and-see approach to
monetary policy. The bond market has begun to price in a much more dovish Fed, with flattening interest
rates reflecting this more cautious stance. Fed officials will likely focus on the intersection of a global growth
slowdown and continued labor market strength as they define their plans. Barring a significant economic or
political event, investors can expect interest rates to be a bit more stable this year.
E-commerce strength powering broad industrial demand. As consumer preferences shift toward more
spending online, lenders including local, regional and national banks and insurance companies have been
active. Sentiment remains upbeat, with tightening lending standards apparent only in the riskiest proposals.
High-profile distribution facilities and warehouses in urban areas remain a portfolio staple, with loan-to-value
(LTV) ratios in the 55 to 75 percent range, depending on borrower, asset and location factors. Non-core
locations and use cases typically require more nuanced financing such as mezzanine and bridge loans to
undertake capital improvements. Elevated construction in some markets has also caused a slight pullback in
willingness to lend toward additional developments, particularly in tertiary locations without a signed tenant in
place.
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U.S. CAPITAL MARKETS
2019 Capital Markets Outlook
Inflationary pressures benign despite upbeat wage growth. Following the implementation of tariffs on
several key trading partners, core inflation has remained just above 2 percent, showing little impetus for
an uncontrolled surge. Muted inflationary pressure has given the Fed more maneuvering room,
particularly as international pressures weigh on sentiment. Meanwhile, low unemployment has sponsored
steady wage growth gains, expanding by 3.0 percent over the last year.
Monetary policy allows flexibility into potential downturn. While other central banks have maintained
ultra-low interest rates, the Federal Reserve has undertaken a much more prudent policy stance,
embarking on a series of rate increases since the fourth quarter of 2015. The current fed funds rate of 2.5
percent offers the Federal Reserve sufficient ammunition to combat potential headwinds to domestic
growth, helping to boost sentiment.
Treasurys offer arbitrage opportunities for global investors. Offering a premium of up to 200 basis
points compared with other countries, the 10-Year Treasury provides a significantly higher yield to
international investors, particularly on a risk-adjusted basis. This arbitrage has sponsored tremendous
capital inflows into U.S.-based assets, with an emphasis on Treasurys, which has suppressed interest
rates.
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U.S. INDUSTRIAL INVESTMENT OUTLOOK
Strong Growth Prospects and Elevated Returns ExpandPool of Industrial Investors
Crowded market lifts competition for industrial properties. An abundance of equity capital expanded into
the industrial property market last year, intensifying investor competition and placing upward pressure on
asset values. Pricing across the country remains near or above all-time highs, while gateway markets like Los
Angeles are recording the tightest first-year yields and the highest prices. Robust competition among buyers
and the opportunity for higher yields are motivating institutional and private groups to enter secondary and
tertiary markets, though superior liquidity characteristics will keep most institutional buyers focused on
primary markets. Strong NOI growth will be a major focus among investors this year, lifted by sizable rent
gains across most markets. Prospects of a rising interest rate climate could also be a significant factor
affecting investor decisions, though pressures appear to be alleviated for now.
Deep pool of investors presented with an abundance of opportunities. Urban infill properties will remain
a top target among investors as e-commerce and last-mile demand push tenants closer to the end consumer.
Challenges faced in retail are providing investors with opportunities to convert vacated big-box stores into
smaller distribution centers that can serve the local market, particularly with minimal supply growth for infill
space. Port markets on the West Coast, Southeast and the New Jersey port markets will also drive deal
volume as a strong U.S. consumer and trade tensions fuel space demand. Investment activity for data
centers will remain aggressive as Microsoft, Google, Amazon and other firms rapidly grow their server farms,
boosting liquidity in key markets such as Northern Virginia, Dallas, Chicago, New York and Northern
California. Many corporations have also been motivated to sell these assets, utilizing a sale-leaseback
strategy that has become increasingly popular under recent tax reform.
* Through 3Q
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U.S. INDUSTRIAL INVESTMENT OUTLOOK
2019 Investment Outlook
Aggressive investment activity compresses cap rates further. Higher returns in the industrial sector
spur investors to place a premium on Class A and Class B properties over replacement costs, though a
robust construction pipeline could lead sellers to be more competitive with pricing this year. The average
cap rate compressed to the upper-6 percent territory, a record low, as demand continues to outpace new
supply. Class A properties in some of the nation’s primary markets have achieved a cap rate closer to 4
percent, motivating buyers to seek higher yields in secondary and tertiary markets.
Cross-border acquisitions climb past $15.5 billion. An attractive yield alternative when compared with
a broad range of investment options has foreign investors acquiring more industrial portfolios, diversifying
away from office and multifamily assets. A combination of low-risk and growth characteristics pushed
capital inflows by foreign entities to a record high last year, expanding into major gateway markets such
as Dallas, Los Angeles, Chicago and Atlanta.
New opportunity arises from migration to online shopping. Adaptive reuse of outdated properties is
expected to grow this year as e-commerce lifts demand for logistics space. Freestanding big-box stores
and some Class B office buildings are prime candidates for conversion due to centralized locations, clear
heights and presence of a loading dock. Investors have been active in secondary markets when looking at
conversions, realizing higher returns than are typical in primary markets.
PROPERTY NAME
MARKETING TEAM
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DEMOGRAPHICS
Source: © 2018 Experian
Created on December 2019
POPULATION 1 Miles 3 Miles 5 Miles 2023 Projection
Total Population 7,322 77,183 182,023
2018 Estimate
Total Population 7,351 76,439 179,664
2010 Census
Total Population 7,160 75,823 178,417
2000 Census
Total Population 7,069 74,149 172,885
Daytime Population
2018 Estimate 9,106 68,954 157,944
HOUSEHOLDS 1 Miles 3 Miles 5 Miles 2023 Projection
Total Households 2,733 29,016 68,140
2018 Estimate
Total Households 2,726 28,326 66,402
Average (Mean) Household Size 2.59 2.66 2.68
2010 Census
Total Households 2,662 28,139 66,009
2000 Census
Total Households 2,687 27,102 62,819
HOUSEHOLDS BY INCOME 1 Miles 3 Miles 5 Miles 2018 Estimate
$200,000 or More 2.64% 3.43% 3.72%
$150,000 - $199,000 5.41% 5.83% 6.20%
$100,000 - $149,000 15.17% 15.42% 16.93%
$75,000 - $99,999 13.47% 14.01% 14.88%
$50,000 - $74,999 13.06% 18.22% 18.63%
$35,000 - $49,999 15.61% 14.57% 13.74%
$25,000 - $34,999 10.96% 9.11% 8.63%
$15,000 - $24,999 11.23% 9.31% 8.45%
Under $15,000 12.45% 10.09% 8.83%
Average Household Income $71,502 $77,272 $81,358
Median Household Income $49,712 $57,842 $62,771
Per Capita Income $26,642 $28,833 $30,173
POPULATION PROFILE 1 Miles 3 Miles 5 Miles Population By Age
2018 Estimate Total Population 7,351 76,439 179,664
Under 20 24.54% 24.17% 23.79%
20 to 34 Years 19.81% 19.68% 20.00%
35 to 39 Years 6.20% 6.28% 6.43%
40 to 49 Years 12.30% 12.77% 12.60%
50 to 64 Years 21.15% 21.39% 21.70%
Age 65+ 16.00% 15.73% 15.45%
Median Age 39.55 39.90 39.80
Population 25+ by Education Level
2018 Estimate Population Age 25+ 5,084 53,134 125,396
Elementary (0-8) 2.65% 2.80% 2.16%
Some High School (9-11) 6.80% 7.21% 6.66%
High School Graduate (12) 38.03% 40.34% 37.75%
Some College (13-15) 20.96% 20.75% 21.78%
Associate Degree Only 7.58% 7.15% 7.40%
Bachelors Degree Only 15.50% 14.40% 15.94%
Graduate Degree 7.07% 6.41% 7.43%
Time Travel to Work
Average Travel Time in Minutes 28 30 30
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Income
In 2018, the median household income for your selected geography is$49,712, compare this to the US average which is currently $58,754.The median household income for your area has changed by 10.75%since 2000. It is estimated that the median household income in yourarea will be $57,498 five years from now, which represents a changeof 15.66% from the current year.
The current year per capita income in your area is $26,642, comparethis to the US average, which is $32,356. The current year averagehousehold income in your area is $71,502, compare this to the USaverage which is $84,609.
Population
In 2018, the population in your selected geography is 7,351. Thepopulation has changed by 3.99% since 2000. It is estimated that thepopulation in your area will be 7,322.00 five years from now, whichrepresents a change of -0.39% from the current year. The currentpopulation is 47.73% male and 52.27% female. The median age of thepopulation in your area is 39.55, compare this to the US averagewhich is 37.95. The population density in your area is 2,336.50 peopleper square mile.
Households
There are currently 2,726 households in your selected geography. Thenumber of households has changed by 1.45% since 2000. It isestimated that the number of households in your area will be 2,733five years from now, which represents a change of 0.26% from thecurrent year. The average household size in your area is 2.59persons.
Employment
In 2018, there are 3,723 employees in your selected area, this is alsoknown as the daytime population. The 2000 Census revealed that55.81% of employees are employed in white-collar occupations in thisgeography, and 43.41% are employed in blue-collar occupations. In2018, unemployment in this area is 5.91%. In 2000, the average timetraveled to work was 28.00 minutes.
Race and Ethnicity
The current year racial makeup of your selected area is as follows:59.25% White, 29.98% Black, 0.05% Native American and 3.61%Asian/Pacific Islander. Compare these to US averages which are:70.20% White, 12.89% Black, 0.19% Native American and 5.59%Asian/Pacific Islander. People of Hispanic origin are countedindependently of race.
People of Hispanic origin make up 7.77% of the current yearpopulation in your selected area. Compare this to the US average of18.01%.
PROPERTY NAME
MARKETING TEAM
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Housing
The median housing value in your area was $188,461 in 2018,compare this to the US average of $201,842. In 2000, there were1,797 owner occupied housing units in your area and there were 890renter occupied housing units in your area. The median rent at thetime was $555.
Source: © 2018 Experian
DEMOGRAPHICS
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DEMOGRAPHICS
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