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By Joshua Burd
A surge of new supply is coming to northern New Jersey’s apartment market, with some 12,000 units slated to be delivered this year in a region with one of the country’s lowest vacancy rates.
Marcus & Millichap, the investment sales brokerage, said as much in a recent report on the asset class, noting that the construction pipeline would likely cause availability to rise for the first time in three years. But the firm noted that the vacancy rate, which it expects to rise by 60 basis points to 4 percent, would still hold below its 2019 levels, making North Jersey the only major U.S. market to achieve such a feat.
“One key factor contributing to (northern) New Jersey’s strength is that it continues to benefit from remote work prevalence in New York City,” the report’s authors wrote. “Employees are choosing to live in the metro and enjoy an average rent that trails New York City by roughly $600 per month. The longevity of this trend is uncertain, given that more firms could call workers into offices, but local performance that predates this movement reinforces optimism.”
According to the report, North Jersey was one of just two major U.S. markets where availability fell year-over-year through the first quarter, logging a decline of 10 basis points. It was also among only three major metros with a vacancy rate of 3.5 percent or lower.
Marcus added that the region had absorbed at least 1,000 units in every quarter from the halfway point of 2020 through Q1 of this year. North Jersey has also seen positive absorption, meaning an overall increase in the number of occupied units, in each quarter since late 2013.
The firm projected that 10,300 rentals would hit the market in North Jersey from April through year-end, a total that nearly matches all of 2022. Union County has the largest slate with roughly 2,400 units projected to open, the report said, warranted by the area logging a 140-basis-point year-over-year vacancy drop through March.
Meantime, researchers projected that the pace of rent growth would slow from the 7.5 percent annual average logged across the past two years, but still exceed the market’s historic mean of 1.9 percent. The average effective rent will climb to about $2,355 per month.
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