Search
 

North Jersey Feels the Recession's Crunch

The job losses in the financial services sector are dealing a blow to Northern New Jersey's apartment market.

By Sule Aygoren Carranza | Updated on March 02, 2009

EAST RUTHERFORD, NJ-The slowdown in the single-family housing sector hasn’t had the positive impact on the Northern New Jersey apartment market many industry insiders would have hoped. According to Jose Cruz, an executive director with Cushman & Wakefield’s locally based Metropolitan Area Capital Markets Group, the culprit is the continuing job losses that have plagued the region.

While the first half of 2008 saw many would-be home buyers opt to rent apartments instead, the trend slowed down as the year progressed and the pace of layoffs rose. More than three-quarters of the positions lost last year occurred in the fourth quarter, he points out. “As renters became more cautious about their employment prospects, shared living arrangements emerged as the preferred option, especially for distressed tenants and recent college graduates living in the most desirable locations,” he states. “As the employment sectors responsible for driving the Northern New Jersey’s luxury rental housing–financial services and pharmaceuticals–have shed workforce, landlords are reporting a slowdown in leasing activity and resistance to rent increases.” Concessions, he adds, have become more common and lease-up at new developments has slowed.

All of this has impacted multifamily vacancy and rental rates. After hitting a low of 2.4% in 2006, the vacancy crept up to 3.1% in 2007, and negative absorption numbers pushed it even higher last year. And while the annual vacancy rate for seven of the past 10 years has been below the area’s average for the past decade, 3.9%, Cruz expects the vacancy to continue to tick upward this year as employers shed more jobs.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2024 ALM Global, LLC. All Rights Reserved.