Livingston, N.J. – Unquenched demand among the GenZ tenant pool at midyear and the pricing out of millennial would-be homebuyers from the single-family home market are the launching pad for record-high multifamily investment and enduring optimism, according to Gebroe-Hammer Associates, a nationally ranked multifamily-focused investment brokerage firm based in North Jersey. At the close of Q2, the firm’s New Jersey-Greater Philadelphia MSA-New York State market specialists are reporting a chart-topping $979+M in sales involving 56 deals and 4,587 units.
“Since the post-World War II apartment-building boom and every challenging market cycle thereafter – at least those that have occurred in the past 47 years that I’ve experienced – multifamily properties have always proven to withstand economic and geopolitical headwinds better than any other real estate sector,” said Ken Uranowitz, president. “Moreover, inflationary periods drive investment strategies toward real estate assets where apartments are at the top of the food chain due to their inherent stability as a human need for shelter in a rising rental environment.”
According to Uranowitz, this has translated into a remarkable first half of business for Gebroe-Hammer. “As interest-rate hikes cool the single-family home market, the ceiling on rents seems limitless and occupancies are at record levels as unaffordability is forcing people to rent,” he said. “Demand for multifamily continues unabated and at historic highs, far exceeding pre-pandemic levels. Values and cap rates will adjust accordingly based on increased debt-service costs but should not have any impact on transactional activity.”
Uranowitz also points to the massive amounts of available capital craving multifamily product, regardless of whether it is coming from institutional entities and private equity, or family offices and high net-worth individuals.
“During the first half of the year, many legacy owners realized that taking chips off the table sooner rather than later would be the wisest choice,” he said. “This is especially prescient with the ‘R-word’ and additional rate hikes in the offing – two conditions they have lived through in past cycles.”
In recent months, across New Jersey and the Philadelphia MSA, Gebroe-Hammer Associates’ deal closings involved a mix of property vintages/types ranging from pre-1970s-era garden-style and low-rise properties to value-add and new construction midrise and hi-rise assets. All were located in high-population density urban-core and suburban edge-city municipalities.
Throughout the Northern and Central New Jersey Metros, Gebroe-Hammer’s brokerage professionals’ sales efforts focused on this all-important economic corridor and high-population-density geographic region. In fact, one of the firm’s most-unique Q2 sales involved the $63.5M trade of Northwood Estates Apartments, a 253-unit garden-style community (North Brunswick), and the $14.5M sale of Beech Spring Village Apartments (Summit) to mark completion of a classic multifamily 1031 Exchange.
Additionally, the trade of Ridgewood Commons (South Orange), a 66-unit five-story multifamily asset, was sold for a fourth time since 1999 for an unnamed price by Gebroe-Hammer.
“In New Jersey’s urban and suburban markets, the mass exodus from New York City and its outer boroughs is continuing among those priced out of these markets. These renters-by-choice are now setting their sights across the Hudson River – beyond Hudson County and ‘inland’ – for lower rents and more square footage,” said David Oropeza, executive managing director. “These healthy, robust New Jersey submarkets have a lot to offer, the least of which is one-seat rail service to and from Midtown Manhattan and abundant NJ Transit bus options.”
Similar trends prevail in the Greater Philadelphia MSA/South Jersey Metro. Since Gebroe-Hammer expanded into the region about 17 years ago, it has been representing client interests across New Jersey’s Burlington, Camden, Gloucester, Atlantic, Cumberland and Salem counties as well as Philadelphia proper, its northern neighborhoods and Bucks, Montgomery, Chester and Delaware counties.
“In an about-face of previous investment approaches, investors are open to expanding their reach beyond what was once defined by geography,” said Joseph Brecher, executive managing director. “We have many sellers attracting out-of-area buyers who are aggressively bidding on for-sale product in order to achieve market diversification. As long as there is a shortfall of supply in many Northeast metros and submarkets, this branching out is expected to continue.”