New Jersey apartment market boosted by NYC exodus since Sept. 11

New Jersey apartment market boosted by NYC exodus since Sept. 11 - Brief ArticleReal Estate Weekly, Feb 6, 2002 E-mail Print Link Marcus & Millichap Real Estate Investment Brokerage Company recently released its Apartment Research Report for the Northern & Central New Jersey markets. The report indicates that the exodus from New York City in the aftermath of Sept. 11 has given the New Jersey apartment market a boost, according to David Thurston, regional manager in the firm's Fort Lee office.
Following are some of the most significant aspects of the report:
More Articles of Interest Report: NJ apt market...Kushner Companies...Legg Mason Dorman &...Andrew Previtali -...Campus' $50m college... Most Popular Publications in Business Business WireBlack EnterpriseReal Estate WeeklyLos Angeles Business ...Communication WorldMore » * Job growth is forecast to be stagnant in 2002, but new office and residential developments will aid in sustaining the long-term health of the local economy. In addition to job relocations to New Jersey from across the Hudson, new building construction has led to continued job formation in the region in certain locations. While manufacturing jobs in Newark dipped by more than 5% in October 2001 on a year-over-year basis, the F.I.R.E. sector experienced solid gains of 3% during that time frame.
* Apartment construction had begun to slow by the end of last year, and the forecast is for a moderate building season due to the current economic climate. Although apartment construction has continued throughout Northern and Central New Jersey, the pace has slowed somewhat due to economic constraints. As a result, the number of units completed over the next 12 months will fall.
Demand from residents across the Hudson may spur increased activity this year, however, particularly by mid-year as the economy begins to stabilize. Permit activity decreased in 2001 across Northern and Central New Jersey by more than 13%. Construction activity in Jersey City actually increased, as demand from local residents for luxury rental units near the Hudson priced at a discount to Manhattan rents continued to lure developers.
* The local market will be one of the few in the nation that experiences a decline in vacancy this year. Unlike most other areas of the country, and despite the difficult economic times, Northern and Central New Jersey should experience a decline in average vacancy rates over the next 12 months. Once construction slows in Hudson County and the market begins to stabilize, average vacancy in this submarket will be among the lowest in the region. At present, Bergen and Morris counties are the tightest in the area and have experienced vacancy levels below 2%.
* Rents are forecast to grow by an average of 3% over the next 12 months as residents migrate across the Hudson and bring additional competition to the local rental market. Surprisingly tight market conditions amidst a difficult economic period will lead to rent growth of roughly 3% over the next 12 months. New properties in Hudson County have pulled up the overall rents in the market and the new luxury product that has been coming online in the area will continue to bolster average rent gains for Northern and Central New Jersey.
* Values will rise as a result of strong market fundamentals. Low vacancy and strong rent growth will increase values by an average of 4% in 2002. The majority of sales have historically involved older Class C properties, but with the development of new high-end properties as well as the redevelopment of older properties, the local apartment market is in the midst of a renaissance. Current low interest rates allow for more aggressive bids by investors; however, rates are likely to increase as the economy begins to rebound by mid-year. Average sales prices will be higher in the beginning of the year and then taper off slightly by the end of 2002.
COPYRIGHT 2002 Hagedorn PublicationCOPYRIGHT 2002 Gale Group

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