"This was a historic fourth quarter for our firm as the multifamily investment market rallied, clearly demonstrating that apartment-rental buildings are far more resilient than any other real estate class, including office, retail and industrial," Ken Uranowitz, Gebroe-Hammer's managing director, tells GlobeSt.com. "Based on these closings and current deals in the pipeline, we expect this trading velocity to continue into 2010."
According to Uranowitz, multifamily investments are favored by local savings and loans and community banks, which have emerged as the leading lenders in today's economy. This is primarily because apartment buildings are considered to be a less volatile investment risk due to the basic need for housing. In addition, the rental pool remains consistently strong. Uranowitz adds that he has also seen buyers who do not require financing, opting instead for 1031 exchange deals and plunking down all cash.
"For the past 12 to 18 months, potential first-time homebuyers have been rendered inactive by high rates of unemployment and a lack of income stability. It will take some time for any noticeable improvement, not just in real data, but more importantly, from a psychological vantage point," he says.
In the largest recent transaction, Gebroe-Hammer represented the buyer, an unnamed long-time client, in the acquisition of two luxury garden-apartment-rental communities in New York's mid-Hudson Valley. The firm identified the well-maintained, amenity-rich properties and negotiated the sale of all 1,196 units.
In New Jersey, investors are targeting existing small-to-mid-sized properties in Bergen, Hudson, Essex and Union counties because of their consistently high occupancy rates and proximity to mass transit and large employment centers, including New York City, Newark and Jersey City.
"This area, from stable urban strongholds to high-barrier-to-entry suburban markets, is becoming more fertile in terms of multifamily activity," Uranowitz tells GlobeSt.com. "With new construction of apartment units virtually non-existent, due to a dry pipeline of development financing as well as open space initiatives, the supply of for-sale apartment buildings cannot keep pace with investor demand."
Market highlights include three separate transactions involving a total of 179 units in the heart of Hackensack; Elizabeth, near Kean University; and Tuckerton, which is 18 miles north of Atlantic City. The firm's brokerage professionals also orchestrated the $9.75 million trade of a nine-building, 144-unit portfolio in Hudson County.
"In the first half of 2009, when the recession was really taking hold, there were a lot of buyers and sellers sitting on the sidelines not knowing what would happen in our specific market," Uranowitz relates. "Would there be a bloodbath? Would we see tremendous foreclosures—people losing properties left and right? But by the second half of 2009, owners began to emerge from hiding and saw that the sector was, in fact, going to hold its own, and will continue to stay steady. This is the reason there's been a tremendous velocity of deals closing."
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