Livingston, N.J. – Multi-family continues to be the optimum commercial real estate investment throughout New Jersey, northeast Pennsylvania and New York State’s densely populated, transit-rich submarkets, according to the brokerage professionals at Gebroe-Hammer Associates. The Livingston, N.J.-based company, which is the tri-state area’s top multi-family investment firm with more than 132 deals involving 12,117 total units sold for $1.83+ billion in 2016, reports overall absorption is healthy and prospective homebuyers are not expected to abandon apartment living anytime soon.
“This year, we anticipate solid across-the-board gains for apartment assets spanning every class category, with continued unabated record-pace demand. It was the year of deal velocity in 2016 for Gebroe-Hammer– and our best year ever in our 41-year history!” said Ken Uranowitz, president. “While many brokerage firms and real estate organizations indicated there was a slow-down during the latter part of the year, this was not the case for us. In fact, December was our second highest month at $230.145 million – coming in behind $345 million in March – in terms of units sold and total sales dollars.”
Across the region, the firm’s market specialists report the apartment sector is continuing its favorable run in terms of rent gains and occupancy rates. Furthermore, there have been no ill effects on existing properties as a result of the recent construction boom. However, this wave of development will slow in the coming year due to a variety of conditions. These include, but are not limited to, available land-use opportunities, more restrictive construction financing availability and slowed lease-ups at newly or nearly built Class A developments.
“In Northern and Central New Jersey, the trend toward a more ‘post-suburban’ lifestyle is feeding the tenant and multi-family investment pipeline. The state is transitioning from suburbanization to a more walkable, transit-focused lifestyle, rendering multi-family properties in close proximity to downtown shopping/dining/cultural districts the commercial real estate asset of choice,” explained Uranowitz. “The children of Baby Boomers don’t want the same things their parents did. Instead, they’re trading in the dream of a suburban, single-family home for an urban, semi-urban or bedroom community apartment that offers better affordability and frees them of the burdens of homeownership.”
According to David Oropeza, managing director and the firm’s 30-year urban market specialist who specializes in The Oranges, multi-family also has been driving New Jersey’s construction activity to reach levels over the course of these past three years that had not been seen in the Garden State since 1999. “While development will slow by year-end 2017, annual rent gains will be solid – typical of multi-family’s consistent performance in times of moderating markets,” he explained.
Two urban hubs in which trading was extremely active during the past 12 months are East Orange/Essex County and Greater Hudson County. In total, Gebroe-Hammer’s brokerage teams closed sales of $126.29 million/1,553 units and $106.51 million/747 units in each respective multi-family hotbed.
Suburbs Retain Appeal
Suburban properties on the periphery of major urban centers also continue to garner tremendous investor appeal. “Suburban submarkets have been, and will continue to be, undersupplied in terms of for-sale product as underway development runs its course within cities,” said Joseph Brecher, managing director and the firm’s Central and South Jersey/Philadelphia MSA market specialist. “However, unlike the cities, no additional competitive inventory is expected to be introduced over the next 24 months in Central or Southern New Jersey. Therefore, investors are competing to acquire and reposition existing garden-apartment communities in order to meet demand from the region’s highly educated, affluent tenant base.”
Within Central Jersey’s Middlesex, Somerset, Monmouth and Ocean County submarkets, Gebroe-Hammer closed an astounding $889.12 million in sales encompassing 5,151 units. Some of the year’s largest transactions in these submarkets were recorded by Brecher. These trades involved a 109-residential building complex with an array of amenities such as a fitness center, pool and picnic area in Middlesex County; a sprawling apartment-home community comprised of more than 640 one- and two-bedroom layouts in Somerset; an 800+ unit complex in Woodbridge; and a 1,142-unit garden-style community in Piscataway.
In nearby New Providence, on the northwestern edge of Union County, Gebroe-Hammer Associates kicked off and closed out the year with two prominent sales. These involved the trade of 171 units at Murray Hill Apartments for $47 million in Q1’16 as well 232 units sold for $55 million at New Providence Apartments and Gardens in Q4’16. Overall, the firm’s $172.15 million in Union County sales totaled 906 units. To the north, in the high-barrier-to-entry submarkets of Bergen and Passaic County, Gebroe-Hammer’s market teams also recorded sales of $165.44 million/723 units.
Philadelphia: A City of Tomorrow Today
Much like its New Jersey urban and commuter-laden bedroom community counterparts, Philadelphia has been gaining ground in its appeal to today’s millennial employee and resident/tenant base. Citywide, newly developed apartments, hip retail centers and the trendy restaurant/bar scene have been transforming Center City and surrounding college neighborhoods over the past three years.
“Simply put, Philadelphia proper and its secondary markets offer greater affordability than a city like New York and access to some of the world’s most renowned higher-education think tanks,” said Eli Rosen, senior vice president, who spearheads Gebroe-Hammer’s Philadelphia market sales with Brecher. “In terms of apartment demand throughout the entire Philadelphia MSA – which extends as far as Trenton – 2017 and 2018 levels are expected to be consistent with existing demand, mirroring current job growth.”
The influx of post-college-grad millennials as employees and tenants is at the crux of the City of Brotherly Love’s rapid transformation and renewed economic health. “Its once-outdated residential housing stock has undergone a major facelift and created new neighborhoods-within-neighborhoods,” added Brecher. “Gentrification has facilitated modest population growth, strong performance in the business professional services/healthcare/education sectors and manageable rent appreciation as it relates to a young professional’s pocketbook.”
In 2016, Gebroe-Hammer’s market specialists arranged $60 million in sales throughout Philadelphia encompassing 780 units. Transaction highlights include 34 residential units and two commercial units at 4401-11 Walnut St.; 39 units at 262 E. Cliveden St.; a 73-unit portfolio spanning 131 S. 48th and 313 S. 50th Streets; 87 units at 1601 W. Allegheny Ave.; and 128 units is Delaware County.
Gebroe-Hammer is the most active multi-family investment sales brokerage firm in the entire New Jersey/Pennsylvania/New York State region. As the trusted brokerage advisor to private owners, REITS, private equity firms and other institutional investors, the firm concentrates on suburban and urban high-rise and garden-apartment properties throughout the Northeast and nationally. Gebroe-Hammer also markets mixed-use and free-standing office and retail properties. Widely recognized for its consistent sales performance, the firm is an 13-time CoStar Power Broker.