Why Multifamily Is New Jersey's Hottest Sector
Over the past few years, some New Jersey municipalities have been wary of multifamily development over population concerns and impacts to services. But developers have made a big push back, and more places are beginning to realize the benefits projects can bring. Experts told us just why you want to be in the sector ahead of our NJ Multifamily Bonanza event Dec. 3 starting at 8am at The Newark Club.
“There’s a clear strength in the rental markets,” says Pennrose SVP Tim Henkel, who’ll be speaking at our event. His firm focuses on affordable, market-rate and mixed-income housing, with projects throughout the Garden State. “Many places now understand that an appropriate amount of density can be introduced and what buying power comes along with them.” Downtowns are benefiting financially, he reports, and the municipalities are excited about more bodies and eyes on the street. There’s also a bigger focus on development near transit that allows for denser projects. “These are often places where redevelopment is needed, whether in older buildings or vacant land.”
Pennrose recently broke ground on the 15-story, mixed-income 69 Main Street project in Fort Lee (above), where Tim says the differential between affordable housing rates and what the market will bear is high. “That creates a very healthy mix of occupants, and you couldn’t be any closer to New York City by bus,” he tells us. The firm is also active in Dover, where the township has a redevelopment plan in place and has been proactively working with Pennrose. The site, which is in the early stages, is near the Boonton line train station, and Tim says it’s a market underserved by rental projects. Another opportunity he sees is in the remainder of Jersey City, particularly the west side. Pennrose is completing a mixed-use, mixed-income project adjacent to Lincoln Park, and Tim says the firm is exploring further opportunities in the city.
Transit-oriented development is also a huge opportunity for multifamily developers in New Jersey, and it’s the product type that LCOR specializes in. SVP Jim Driscoll, another panelist, tells us the firm is currently delivering the 258-unit Valley & Bloom project in the center of Montclair’s downtown; there’s also 22k SF of retail at the base of one building and 20k SF of office at the base of the other. In Hoboken, it's the redeveloper with New Jersey Transit for Hoboken Terminal & Yard, which has 2.3M SF of mixed-use projects being built adjacent. Outside of NJ, it broke ground on 55 Bank Street in White Plains on Thursday, another TOD only steps away from Metro-North’s North White Plains train station.
LCOR continues to seek opportunities near transit locations within a simple commute to Manhattan. “We find that most jobs being created are in or around New York City, including the Gold Coast, and workers want an easy commute of a half hour or less,” Jim says. These projects also must provide lifestyle amenities, including the retail and restaurants that are the fabric of their living experience. Valley & Bloom (above), for one, is less than a mile walk to the train, is located on a bus line and is only one block away from a Whole Foods and Starbucks. New Jersey also offers an attractive price point to NYC: units at the building start as low as $2,115 for one bed/bath and $2,725 for two beds/baths. “It’s an alternative lifestyle at a lower price,” he says. “It’s not about the four walls you’re living in, but what surrounds you.”
Investors have certainly taken notice of multifamily’s strong fundamentals in New Jersey. “We still see aggressive pricing,” reports HFF senior managing director Jose Cruz, who’s also speaking. “The buyer pool that’s showing up is still underwriting these deals for rent growth.” He and his team are working on a deal that will set the high-water mark for multifamily in terms of price per unit, he says. “Those are forward-looking buyers that are saying they’re willing to pay a big number because they believe it will further improve over time.”
Among Jose’s recent deals are the sale of the 704-unit The Crest apartment community in Plainsboro (above), which a JV between Harbor Group International and Azure Partners purchased based on the property’s future upside. (Joining him on the transaction were colleagues Kevin O’Hearn, Michael Oliver, Steve Simonelli and Andrew Scandalios.) In addition to the usual institutional capital and REITs, Jose notes that he’s also seeing strong interest from private funds and foreign capital, including Asian, Middle Eastern and European investors who feel that the growth prospect for NYC's suburbs is strong and worth investing in. When he looks at his pipeline of potential transactions, he sees a wide array of core, core-plus and value-add deals coming to market from sellers looking to capture this intense interest.
Hear even more for our panelists, including a keynote from Canoe Brook Management managing member Carl Goldberg, at our NJ Multifamily Bonanza event Dec. 3 starting at 8am at The Newark Club. Sign up today!