Mid Atlantic Real Estate Journal — NJAA Conference & Expo — May 11 - 24, 2012 — C


NJAA C onference & E xpo

obust demand for apartments along the Gold Coast will By Michael J. Fasano, Marcus & Millichap Real Estate Investment Services Strong job growth sparking New Jersey apartment development R

is taking place in Newark that will create 2,500 jobs. Bartlett Dairy, for instance, recently moved from Queens to a facility in the SouthWard that added 400 jobs to the area. In addition, Wakefern Food is building a warehouse and distribution center in the East Ward of Newark that will generate 120 permanent positions by year end. Job growth, coupled with soft demand for single-fam- ily homes, helped underpin an 80-basis-point decrease in vacancy in the state to

a four-year low of 3.7 per- cent, including a decrease of 20 basis points in the first quarter. Landlords increased asking rents 2.1 percent in the same span to $1,322 per month, while effective rents climbed 2.8 percent to $1,267 per month. The low interest rate envi- ronment will fuel investment activity this year. Owners will take advantage of the cap rate compression and list Class A/B complexes to avoid a possible increase of interest rates or capital gains taxes in

2013. Properties in prime ar- eas of Northern New Jersey, including Bergen, Hudson, Passaic and Morris counties, will receive multiple offers from private investors seek- ing healthy, long-term cash flow. A few buyers will secure leverage to enhance cash-on- cash returns, while capitaliz- ing on the favorable interest rate spreads. Opportunistic investors looking for lower price points will target older buildings near mass-transit stations in Essex and Union counties, where the median

price is roughly 40 percent below the region’s. Elsewhere, local syndicates will purchase properties in Monmouth and Middlesex counties, and re- position the complex to boost rent rolls. REITs, meanwhile, will acquire Class A assets across New Jersey, which will trade at cap rates in the sub-6 percent area. Michael J. Fasano is the vice president and re- gional manager of the New Jersey office of Marcus & Millichap Real Estate Investment Services. n

i gni te de - velopment in Northern New Jersey, while strong e m p l o y - ment gains will create new renter households in South Jer-

Michael J. Fasano

sey. Young professionals will target amenity filled com- munities near the PATH in Jersey City, where rents are nearly 30 percent cheaper than comparable units in Manhattan. Families facing distress or seeking larger, more affordable living space will also migrate across the Hudson to high-end rentals inWeehawken and Hoboken. As supply tightens, develop- ers will capitalize on access to financing and use the Urban Transit Hub Tax Credit to cover the gap between debt and equity needs. Cities off the waterfront in Hudson County will receive thou- sands of new apartments over the next few years, which could force landlords to be creative to compete for tenants. In South Jer- sey, operations will improve this year as solid job growth boosts renter demand. The $2.4 billion Revel hotel and casino, for example, recently opened in Atlantic City, and will help revitalize the area with 5,500 new jobs. As many of these hospitality workers tend to lease apartments, vacancy in the region will fall to the lowest level in three years. Tax incentives and elevat- ed activity at the Port en- couraged businesses in the trade, transportation and utilities industry to boost head counts. As a result, the sector recorded the largest year-over-year growth in more than a decade, gaining 7,700 jobs through the first quarter. The statewide edu- cation and health services segment has posted seven straight quarters of employ- ment increases, after com- panies added 8,100 jobs in the first quarter. In the past year, the sector gained over 23,400 positions, the largest increase on record. Roughly $700 million in developments

Expertise Locally, Trusted Nationally Making a Market from Wall Street to Main Street


Newark, NJ 306 Units North Brunswick, NJ 184 Units Haddon Township, NJ 80 Units North Plainfield, NJ 47 Units Rahway, NJ 30 Units Haddon Heights, NJ 22 Units Newark, NJ 18 Units Teaneck, NJ 16 Units West New York, NJ 13 Units

Marlton, NJ 296 Units Atlantic City, NJ 158 Units Plainfield, NJ 70 Units Hackensack, NJ 45 Units Oaklyn, NJ 28 Units Bound Brook, NJ 20 Units Plainfield, NJ 18 Units East Rutherford, NJ 15 Units Midland Park, NJ 12 Units

Rahway, NJ 194 Units Newark, NJ 115 Units East Orange, NJ 50 Units Bloomfield, NJ 34 Units New Brunswick, NJ 22 Units Irvington, NJ 19 Units Nutley, NJ 16 Units Clifton, NJ 14 Units Bogota, NJ 11 Units

Visit us at Booth 306 NJAA Annual Conference & Expo Atlantic City Convention Center May 22 – 23, 2012

Offices Nationwide



Made with FlippingBook - Online Brochure Maker