Latest Sales Exceed $165 Million Spanning Two-Week Timeframe
LIVINGSTON, N.J. – July 8, 2015 – (RealEstateRama) — Extremely favorable demographic and employment trends, coupled with sustained rent and valuation appreciation, are the leading drivers of historic multi-family trading along the New Jersey/Pennsylvania corridor, according to investment brokerage firm Gebroe-Hammer Associates. At the mid-year mark, the firm’s transaction pace is on track to surpass last year’s benchmarks, as evidenced by the recent $165.8+ million in sales involving 912 units in a two-week timeframe.
“On the heels of a ‘for-the-record-books’ 2014 in the multi-family investment sector, 2015 continues to exceed expectations in terms of occupancy rates, rent growth and trading velocity, which is traditionally slower in the first months of any new year,” said Ken Uranowitz, president, who predicts the current pace will pick up through year-end and beyond.
During the past six months, the firm has arranged 51 trades encompassing 3,049 units. “Every urban and suburban municipality in and around top-performing cities like Manhattan and Philadelphia are highly desirable multi-family investment markets due to the strength of their tenant pool, sustained population growth and proximity/connectivity via mass transit to employment centers,” said Brecher.
Existing Properties are Multi-Family’s “Bread and Butter”
Strong fundamentals and investor appetite also are feeding property and rent appreciation of existing apartment buildings – the sector’s “bread and butter” assets – from Northern New Jersey to Philadelphia. A majority of these properties are at a point in their life cycles where they are poised for or have undergone recent value-add renovations.
“There is a high concentration of post-World War II-era apartment buildings in this geographic region that make up multi-family’s enduring core stock and leave little open space for new ground-up development,” explained David Oropeza, managing director. “As a result, these Class B and C assets record historically strong occupancy rates. They also offer rent growth/property repositioning opportunities associated with investor-implemented upgrades to kitchens, baths and flooring.”
Favorable demographic trends and continued expansion of the labor market will feed rent growth throughout the rest of the year. Specifically, one key driver is the age 25 – 34 young adult demographic. “This age group has been and will continue to be crucial to multi-family performance,” added Uranowitz. “Millennials have made a comeback and their numbers will continue rising for the next several years. This, along with a sluggish single-family housing market, will keep demand high for multi-family units.”
Weak Single-Family Housing Market and Affordability Steer People toward Rentals Millennials and their propensity to shun single-family homeownership coincides with a housing market that is expected to remain weak for some time. Despite the low interest rate environment, affordability remains questionable for most professionals and families throughout the Northeast, which is one of the most expensive places to live in the United States. Easing credit standards and lower FHA mortgage insurance rates are not expected to be enough to jumpstart this housing sector anytime soon.
“Rising home prices, albeit slow, and the inevitability of rising interest rates will only lower affordability for families struggling to meet today’s lending standards, leaving no other alternative but to rent,” added Uranowitz.
Based in Livingston, N.J., Gebroe-Hammer is one of the most active multi-family investment sales brokerage firms in the tri-state region. The firm’s brokerage activities concentrate on suburban and urban high-rise and garden-apartment properties throughout the Northeast and nationally. The firm also markets mixed-use and free-standing office and retail properties. Widely recognized for its consistent sales performance, the firm is a 10-time CoStar Power Broker.
CMM Strategic Communications
189 Berdan Avenue, #282
Wayne, NJ 07470