NJ Apartment Market Slowed

Report: NJ apt market slowed - New Jersey apartment market - Brief Article - Statistical Data IncludedReal Estate Weekly, Sept 4, 2002 E-mail Print Link Marcus & Millichap Real Estate Investment Brokerage Company, the nation's largest real estate investment brokerage firm, recently released its Apartment Research Report for the Northern and Central New Jersey market, which finds that the apartment market has slowed along with the surrounding economy, but market fundamentals are still strong.
"Northern New Jersey's popularity among apartment investors continues due to its low construction, high occupancies and overall stable performance," comments David E. Thurston, regional manager of the firm's Fort Lee, N.J., office. "In the short term, the current economic slowdown has harnessed rent and price growth, but market fundamentals and the long-term outlook remain positive."
More Articles of Interest Hilton...Apartment seekers...Fedders acquires 80%...Tom...David Cronheim... Most Popular Publications in Business Business WireBlack EnterpriseReal Estate WeeklyLos Angeles Business ...Communication WorldMore » Following are some of the most significant aspects of the report:
* Local employment will rebound in 2003 after ending this year down only 0.5 percent. In 2001 the Northern New Jersey economy managed to maintain marginally positive growth and a stable employment base. This is somewhat deceiving, however, as job losses in many sectors were camouflaged by a 5 percent increase in F.I.R.E. sector employment between September and December. New York-based firms that had to leave Manhattan to find temporary facilities in Northern New Jersey caused this largely short-term increase.

* Apartment construction is slowing throughout the region although rehab projects continue in Newark. Apartment completions throughout the market should total less than 3,000 units, with three out of four of these projects being constructed in the Newark MSA. The downward trend of construction should continue into 2003. Total multi-family building permits totaled less than 2,500 units in 2001, the lowest level since 1998.
* Despite low single-family home affordability throughout the region, new home sales have impacted rental demand. Not known as a particularly affordable single-family housing market, new home sales have dampened rental demand. Affordability rates vary from a low of 37.2% in the Jersey City MSA to 58% in the Newark MSA, compared to 64% for the overall United States. However, historically low interest rates are pulling tenants out of the rental market into the first-time home-buying market.
* Rents are stable across the market, except for high-end units, which are experiencing concessions and weak demand. Overall, rents will remain relatively flat through year-end but with owners raising rents in rent-controlled markets. Once the economy shows signs of healthy growth, rents will start to climb again.
Rents in this market, like occupancies, have remained relatively stable since last summer. Currently, luxury units have the weakest rent performance and are experiencing concessions and some rent declines.
* Sales prices continue to rise as available product is very thin in the market. Apartment prices continue to rise, in some submarkets significantly, due to the lowest inventory of product in many years. Buyer demand and a low inventory of investment properties will continue to drive prices slightly higher during the remainder of 2002. However, if interest rates and/ or energy costs rise significantly, price levels will stabilize or could even begin to erode.
For a copy of the complete Northern-and Central New Jersey Apartment Research Report, as well as reports on 27 other markets nationwide, visit our website at www.marcusmillichap.com.


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