From Globe St:
Vacancies down. Rents up. Investor interest way up. That is real estate firm Marcus & Millichap’s prediction through the end of 2012 for the New Jersey multifamily market–despite the fact that construction is also way up and the economy is unpredictable.
“Nearly 4,400 market-rate units are under way, with more than half of the stock slated for northern New Jersey,” the California-based firm said in a report supplied to GlobeSt.com. Michael Fasano heads the office in Elmwood Park.
A large number of those units will be completed next year and in early 2014, expanding statewide inventory by 1.3%, M & M’s new report noted.
Based on statistics through June, the vacancy rate for apartments will nevertheless remain at only about 3.5% – the lowest it has been since 2008 – through the end of this year, M & M predicted.
M & M’s Jersey office report laid this to continuing uncertainty in the residential for-sale market, stemming from overall economic uncertainty and the rising tide of home foreclosures in the state. After the hold on court foreclosure actions following the “robo-mortgage-signing” scandal was lifted this year, foreclosure rates have risen sharply.
Under these conditions, landlords will have the leverage to continue boosting rental rates, which have already hit new highs in 2012. By year’s end, average asking rents will reach $1,366 a month, says the report. Effective rents will jump 4 % for the year to $1,311 a month. Last year, effective rents were up 2.3%.
Meanwhile, fierce investor competition for the best properties in areas closest to Manhattan will keep investor’s capitalization rates compressed near 5%. Competition in the north is increasing driving “risk-tolerant” investors to older and distressed properties along train lines in Essex County, and smaller investors to central and South Jersey, M & M reported, saying the trend will continue.