18B — September 12 - 25, 2014 — New Jersey — M id A tlantic
Real Estate Journal
www.marejournal.com
NJ A partment & M ultifamily S ummit By Kevin O’Hearn, HFF New Jersey apartment sales – recent pricing & trends
T
he New Jersey apart- ment market remains very healthy going
nearly 1,600 units and a retail component. The two properties are located in Mount Olive and North Plainfield and represent class A, garden-style buildings with a full amenity package and unit renovation potential. Older garden complexes like this are routinely trading in the range of $175,000 to $200,000 per unit, with unit renovations, primarily kitchens and bath- rooms, providing for significant value creation. We recently sold a four-property garden portfolio in the towns of Westwood and River Vale (Bergen County) where pricing reached nearly
$205,000 per unit and a going capitalization rate of approxi- mately 5%. Demand for this value-add type of profile is so strong that investors are do- ing all of their due diligence upfront and submitting offers with non-refundable deposits. Additionally, rather than rely- ing on the actual/trailing prop- erty expenses of a property, in- vestors are underwriting with more aggressive estimates in order to maximize the net oper- ating income and push pricing. This renovation strategy is not just limited to older garden-style apartments, but
applicable to properties that were built as recently as 2006. With finish levels and technol- ogy advancements occurring so quickly, some properties built seven to ten years ago are candidates for modern features such as new cabinetry, faux wood or ceramic tile flooring, stainless steel appliance pack- ages, granite or quartz counter- tops, lighting and plumbing fix- tures, glass block backsplashes, two-tone paint, Verizon Fios, etc. Additionally, community amenities are being revamped to include dog parks and dog washing stations, converting
traditional business centers to lounges withWiFi and printers/ charging stations, adding yoga/ meditation rooms, installing rooftop decks in locations with attractive views, and Build- ingLink systems for deliveries/ resident communication. Although value-add offerings are the most sought after deal profile these days, there is still high demand for core and core plus opportunities these days. On a recent core plus offering HFF marketed in Northern NewJersey, we registeredmore than 100 interested groups and performed 30 tours. On core offerings where institutional interest is the strongest, capi- talization rates are routinely in the mid 4% range, with top submarkets such as Hoboken achieving cap rates at or close to 4% and per unit pricing in the $500,000 to $600,000 range. There is a real distinction, however, between core plus and value-add investors, with some groups wanting “more meat on the bone” to garner higher rent premiums and other groups not interested in buildings older than 20 years as the renovation is viewed as “too heavy a lift”. On the development front, c ons t r u c t i on c on t i nue s throughout the state, with concentrations in Jersey City, Fort Lee, Edgewater and the Meadowlands. The Jersey City waterfront market is the most active with 11 communities totaling nearly 4,000 units cur- rently under construction, and ten other properties containing more than 5,000 units planned for future development. The Journal Square section of Jersey City has another 600 units under construction with another 5,000 units approved/ planned. In Fort Lee, TheMod- ern is well under construction and will total 900 units when completed and the Hudson Lights development will add another 276 units. Also inter- esting to note is that the pro- jected rents at some of these new Fort Lee developments are comparable to the rents at the new developments in Jersey City at approximately $3.50 per s/f per month. Fur- ther support for the continued strength of the apartment sec- tor is the fact that several land sites are coming to market and being competitively bid. There- fore, New Jersey remains bull- ish on the apartment market for the foreseeable future. n
into the fall of 2014, with several large p r o p e r t i e s on the mar- ket for sale, various de- velopments o c c u r r i n g throughout
Kevin O’ Hearn
the state and record pricing be- ing achieved. On the sale side, the most notable offering is the Segal family’s portfolio consist- ing of two communities with
proven re sults i n r e a l e s tat e c a p i ta l m a r k e t s s ol u t i on s
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D E B T P L A C E M E N T | I N V E S T M E N T S A L E S | E Q U I T Y P L A C E M E N T | A D V I S O R Y S E R V I C E S | L O A N S A L E S | L O A N S E R V I C I N G
HFF NEW JERSEY CLOSED OVER $580 MILLION IN DEBT & EQUITY TRANSACTIONS IN THE PAST 90 DAYS
Property Sale 240-unit Multi-housing Community Hoboken, NJ CURLING CLUB
Property Sale 249,409 SF Class A Office Building Parsippany, NJ 22 SYLVANWAY
Property Sale & Financing 114,964 SF Grocery-anchored Retail Ctr. Jefferson, NJ RIDGE PLAZA
$52,500,000 Financing 446-bed Student Housing Development Ewing Township, NJ CAMPUS TOWN AT TCNJ
$35,000,000 Refinancing 128-unit Multi-housing Community Hoboken, NJ THE METROPOLITAN
$27,200,000 Construction Financing Refrig. Warehouse & Distrib. Facility Avenel, NJ 275 BLAIR ROAD
For investment sales, financing, distressed debt/REO, loan sales, equity recapitalization, restructuring services, or advisory services, contact HFF.
H F F N E W J E R S E Y | 2 0 0 C AM P U S D R I V E , S U I T E 4 1 0 , F L O R H AM PA R K , N J 0 7 9 3 2 | ( 9 7 3 ) 5 4 9 - 2 0 0 0 | H F F L P. C OM
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