NORTHEAST SNAPSHOT, MARCH 2007

Northern New Jersey Multifamily Market             

Rob Holland, senior vice president and co-managing director of The Kislak Company

Multifamily development and investment remains strong in northern New Jersey. As the interest rates rise and home buying slows, the popularity and demand for apartment buildings continues to grow. Additionally, the continued population growth, coupled with the strong demand for product in close proximity to Manhattan, is keeping values up in the multifamily market in New Jersey. There are also difficult barriers to entry in the northern New Jersey multifamily market since there is not a great deal of developable raw land.

As a result of these trends, there is new development taking place throughout New Jersey. Most new development is occuring in northern New Jersey along the Hudson River on the Gold Coast. Due to the large concentration of population in the marketplace, the myriad of employment opportunities and the proximity to New York City, this is one of the strongest submarkets in the country. New Jersey is considered another suburb of New York City, and northern New Jersey in particular offers housing to people who want to live and work near Manhattan without paying the city’s high rental rates. There is also a significant amount of development in the New Jersey Shore area, especially along the Garden State Parkway, which has seen large-scale development due to the easy accessibility to highways, thus, making people more willing to commute to their jobs.

There are many local and national developers who have new development projects in the pipeline in northern New Jersey. With the strong demand for apartments, developers will continue to build new product to meet the needs of the region.

Roseland Property Company, for example, has several multifamily developments throughout Northern New Jersey. They will be developing the Highlands at Morristown Station, a 217-unit, five-story rental community that will also include 8,000 square feet of ground-floor retail space and a three-floor, 722-space parking garage that will be for residents and commuter parking. The development will be a short distance from the heart of Morristown and its central business district. Completion is scheduled for summer 2008. Another development by Roseland is Henley-on-Hudson, which features 94 condominium residences in four six-story buildings and 64 four-level townhomes. Prices for the residences range from $700,000 to $3 million.

The Tarragon Corp. is nearing completion on One Hudson Park in Edgewater and Trio in Palisades Park. One Hudson Park is a 15-story glass and brick tower with 168 residences that will feature one-, two- and three-bedroom units. Trio is luxury condominium development that consists of three high-rise buildings featuring a total of 196 one-, two- and two-plus-bedroom residences.

Applied Development also has several projects in the works in northern New Jersey. Applied Development, in partnership with The Pegasus Group, was scheduled to break ground on Harrison Commons, a New Urbanist master planned community that will feature more than 2,600 luxury residences. The project will also include 80,000 square feet of retail stores in a pedestrian-friendly atmosphere. Construction is also scheduled to commence in early 2007 on The Berkshire, a 65-unit loft-style residential building located in Applied’s Shipyard community on Hoboken’s northern waterfront. In a partnership with Shenkman/Kushner Affiliates, Applied is also developing Liberty Harbor, two rental communities located in downtown Jersey City. The development will contain more than 850 luxury apartments and 50,000 square feet of retail space.

Most new development taking place is high-end luxury apartments and condos. Because the cost of development and land is on the rise, to build in New Jersey, developers must charge higher rents to justify the costs of today. Rental rates range from $1,800 for a one-bedroom to $5,000 for larger units, and vacancy rates are holding at 5 percent in northern New Jersey

In the future, keep an eye on Bergen and Hudson counties for growth in the multifamily sector. The proximity to Manhattan and the lower rental rates as compared to New York City are a large draw to these areas. Also, look for development around major highways along the Garden State Parkway in the Jersey Shore areas down to Atlantic City. In addition, the Route 78 corridor, which runs east to west from New York City to Pennsylvania, is seeing substantial development.

There has been a strong and steady growth in the multifamily market in northern New Jersey over the past year. There is large amount of new luxury residential buildings, as well as an influx of national developers who are looking to enter the market and reap the benefits of the strong local market conditions. As one of the most densely populated states in the country and based upon its strong demographics, high barriers to entry and proximity to New York City, New Jersey will remain one of the most desirable multifamily housing markets for the foreseeable future.

— Rob Holland is a senior vice president and co-managing director at The Kislak Company.


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