'09
By Dees Stribling
Multifamily properties in New Jersey have suffered along with everything else in the recession, but in spite of it all, they’re managing to pique investor interest. Going forward, however, can interested parties find the financing they need to invest in the New Jersey multifamily market?
Now, more than ever before, the answer is, “it depends.” It depends on investors dotting their i’s and crossing their t’s and making a convincing case that a particular property will thrive in adverse conditions. It also depends on sellers being motivated to go that extra mile, perhaps through seller financing or agreeing to manage a property they’re selling.
“In New Jersey, multifamily properties are fairly closely held, and it can take a long time to build a portfolio,” says Dean L. Marchi, first vice president of the private client group in CB Richard Ellis’ Saddle Brook office, which has closed a number of apartment sales in 2009. “Anytime a property or portfolio comes on the market, there’s interest, even in the current economy. Finance is difficult and the deal volume is slow, but buyers and sellers are starting to make deals happen again.”
Apartment market fundamentals form the backdrop of this slowly thawing market, and they’re decidedly a mixed group in New Jersey. According to Marcus & Millchap’s most recent report on the health of New Jersey multifamily rental properties, as of the first quarter of 2009 northern New Jersey has “pent-up demand near major employers [that] continues to support apartment operations in areas such as Hudson and Bergen counties, where rent growth persists.”
On the other hand, apartment revenue growth in central New Jersey continues to slow, notes Marcus & Millichap. Landlords in Monmouth County are having trouble filling vacancies, though government and health-care industry employees are still supporting demand in places such as Mercer County. As for southern New Jersey, “the effects of the economic downturn have been pronounced, as most submarkets are recording higher vacancy rates,” the report says.
The employment picture for the state, one of the linchpins of apartment demand, isn’t expected to get any better during the rest of 2009. The New Jersey Department of Labor and Workforce Development estimates that there will be a total of 105,000 jobs lost statewide by the end of the year, significantly topping the 63,000 payroll positions that evaporated in 2008.
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