N.J.’s apartment market reveals impressive resiliency, Gebroe-Hammer says

By Emily Bader
New Jersey | Jul 16, 2019 at 3:00 am

The apartment market in New Jersey revealed impressive resiliency the first half of 2019, according to Gebroe-Hammer Associates.

The Livingston-based investment brokerage firm reported $820 million in multifamily sales encompassing 5,675 units year-to-date at the end of the second quarter of this year. The firm said it is outpacing its competition nationally and regionally, as it did in 2018, with the arrangement of 65 deals so far this year.

“These benchmarks indicate a Gebroe-Hammer transaction increase of approximately 6 percentage points over the same time period last year – signaling that the investor confidence index remains very high as brand new apartment-property deliveries top off this year and apartment-fundamental pressure eases,” Ken Uranowitz, president of Gebroe-Hammer, said. “In turn, these conditions will only feed rent growth and property appreciation over the next five to 10 years and beyond, based on forecasted demographic patterns.

“Furthermore, affordability issues remain for the foreseeable future in the millennial population saddled with college debt and/or a lack of expendable cash for a down payment on a single-family home purchase. This leaves no other housing alternative other than apartment rentals. And, we can add into this tenant pipeline an aging Baby Boomer and empty-nester population that no longer wants the burden of shoveling snow, paying high real estate taxes, or incurring other related housing costs that are otherwise eliminated in an apartment-rental lifestyle.”

According to Reis, the delivery of new construction product is expected to decrease in 2020 and 2021, while at the same time apartment occupancy and rent growth will increase.

“Historically, whenever new-product deliveries slow down tenant demand trends up and vacancies drop,” Uranowitz said.

Uranowitz said there is healthy demand in the Class A luxury to value-add property space.

“Investors are targeting the full spectrum of apartment buildings, regardless of vintage, tenant demographic or locale, from transit-rich cities to commuter-friendly suburban-bedroom communities,” he said. “With the recent passing of onerous rent control legislation in New York, we expect to see an onslaught of investor demand in New Jersey shifting from across the Hudson River to out-commuter-dense submarkets. In turn, this will create an even wider delta where there is an already constrained demand/supply imbalance, which will intensify pricing pressure and deepen cap-rate compression. The anticipated lowering of interest rates by the Fed this year just adds more fuel to this fire.”

Gebroe-Hammer highlighted several of its sales in Q1 and Q2, including the $75 million, 487-unit, North Jersey Metro portfolio sale in Hudon and Bergen counties and the $58.5 million sale of New Providence Gardens, a 232-unit apartment community in XXX. The firm also closed on more than $78 million in urban-core sales in Bayonne, East Orange/Orange, Elizabeth, Irvington, Jersey City, Newark, Plainfield and Union City.

Emily Bader | ebader@roi-nj.com | emilybader