Edwin Cohen, Principal Partner, Prism Capital Partners
Strong relationships with financial institutions and a long-term view are the foundation for any successful project happening in the New Jersey area, according to Edwin Cohen, co-owner and principal of Prism Capital Partners. In an interview with Invest:, Cohen also highlighted the opportunities and challenges facing the real estate sector in New Jersey. “Right now, I see a period of apprehension in the financial markets and the construction markets. And now, with the implementation of the new tariffs, it is hard to predict when things will settle down,” he said.
What were the key highlights for Prism Capital Partners in the last 12 months?
We advanced the approval process for our ON3 campus master development plan, celebrated the opening of the property’s first retail tenant, Starbucks, and this month are delivering a build-to-suit ambulatory care center for Hackensack Meridian Health. We also submitted a proposal for the development of approximately 1,000 residential units, which is one of the later phases of this 116-acre redevelopment. When we bought the complex, there were 1.2 million square feet of existing buildings that we leased up in their entirety in our first couple of years of ownership, and we have since invested heavily in infrastructure and added several developments for multiple purposes.
Additionally, in 2024, we closed on a 33-acre parcel in Woodland Park. Initially developed as a corporate building, it has been re-designated for housing, and we are currently in the submission process with the municipality. Our discussions have been favorable to date.
What is the state of the commercial real estate sector?
The “flight to quality” trend related to office space has proven itself. In the commercial market, which remains somewhat in a state of turmoil, many of the major transactions have fallen into this category. The downside for vacancy rates is that tenants will go from class B or C to class A, but generally take less space. In certain markets, they are paying a premium to be in facilities that feature greater amenities and a higher quality of working environment. Flight to quality correlates directly to employers’ desire to attract the best labor force. For companies, labor, not rent, is the highest cost. We have done a great job at ON3 with leasing all of the vacant office space we had, totaling approximately 1.2 million square feet. Additionally, Quest Diagnostics joined the campus with the construction of a state-of-the-art, 250,000-square-foot testing facility. ON3 has attracted the highest quality corporate tenants who are willing to pay a premium to be in this truly Class A environment. This trend is expected to continue as back-to-office initiatives continue.
What is the state of the industrial real estate sector?
The industrial market was the most explosive market in real estate over the past several years. Some say that demand is off, but it is simply coming down to what normal velocity and vacancy rates used to be. Of course, industrial real estate remains popular, but now there is a more balanced supply/demand condition in the marketplace. Decisions are not made instantaneously because tenants are not competing with four or five others for the same unit of space.
How is Prism Capital Partners navigating the affordable housing shortage?
We have been providing affordable housing units in all our projects, except where municipalities exempt that component. We have had anywhere from 15% to 20% of affordable housing units in the residential projects that we have developed in the past several years. It is something that we believe should be part of a socially conscientious development process. With the increasing cost of living in the region, the question is, how can the average person afford to live in the current economic climate? It is challenging, so you have to provide means of affordability. As a developer, we factor the affordable housing component into the purchase price.
What challenges are developers facing in the region?
Due to New Jersey’s “Home Rule” regulations, it is increasingly harder for developers to execute their business plans in a timely fashion. We are dealing with projects that used to take anywhere from 18 to 24 months from start to finish, that are now taking as long as four to five years. Construction costs are also challenging. During the COVID pandemic, we experienced an increase in construction costs – as much as 50% – almost across the board, which poses the question of how to underwrite deals and transactions. It can be difficult, unless you have a strong group behind you, to forecast what the eventual outcome will be. Also, many communities are becoming increasingly anti-development. We have the affordable housing issue, which has been top of mind for the public for many years and which still has not eased. So you have to pick and choose. Right now, I see a period of apprehension in the financial markets and the construction markets. And now, with the implementation of the new tariffs, it is hard to project when things will settle down.
What advice would you give investors seeking to break into the New Jersey market?
It can be a tough road to get things done in the state of New Jersey. This market is not for the weak of heart and not for the undercapitalized. You need to be careful and work with a great team that knows how to buy and purchase, and that has access to reliable contractors and subcontractors. Unless you have a strong financial partner in your corner, it can be a difficult process. We have the best of the best as far as that goes and are never at a loss when it comes to raising additional capital for our projects. The key is to fit the particular project with the proper partner. Additionally, you need to have patient money, not people who want to get in and get out with a big hit. That is not us, so it works.
What is your outlook for the real estate sector in New Jersey moving forward?
I am bullish on New Jersey and the opportunities here for developers, their partners, and the consumers and commercial tenants we serve. We are still an under-supplied residential market, and our geographic advantages will always be a magnet for corporate and industrial space users. For real estate practitioners willing to work hard, the end result is well worth the effort.
