Land constraints have kept Northern New Jersey out of the overbuilding trap that captured other major markets across the country. Even along the Hudson Waterfront in Jersey City, Hoboken, Weehawken, West New York and Edgewater, which was the state's epicenter for new housing during the housing boom with approximately 25,000 new for-sale and rental units delivered over the past decade, there is limited issue with shadow inventory.

Off the waterfront, there have been only a handful of large rental communities delivered annually, with a similar number currently under construction.

But one multifamily developer that continues to break ground is locally based REIT Avalon Bay, which owns 170 communities, for a total of 50,000 apartments, from Virginia and Boston to Seattle and Southern California. According to vice president of development Ronald Ladell, the REIT recently broke ground on a 180-apartment community in West Long Branch as well as an apartment complex in Northborough, MA.

This year, the company is planning to break ground on Wesmont Station in Wood-Ridge. Avalon struck a deal with master developer Somerset Development to build over 400 apartment homes and upwards of 25,000 square feet of retail.

But the company does have some clear advantages, such as a total market capitalization of $6 billion in low leverage. "Other developers are going to be pressured because of capital issues," Ladell says. "And some other multifamily developers are building for-sale product, which is still under severe pressure." He adds that both multifamily for-sale and rental are still pressured by the lack of employment. "But GDP growth is up slightly and most economists say that jobs follow three to four quarters after increases in GDP. So by the middle of this year we should start to see employment growth, which will help all asset classes in the real estate industry."

One thing that separates multifamily rental from other asset classes is that it has the ability to access capital or debt through government-sponsored entities Fannie Mae and Freddie Mac. In April, Avalon did a finance deal of $740 million, under a 6% interest rate, with Fannie and Freddie. "By doing that borrowing, we were able to keep a lot of capital available and continue building out all of our projects, as well as propose additional developments for at least the next two years, without going back to the markets," Ladell says.

The company is also keeping busy on the acquisition side. The developer formed its second investment fund over a year ago, raising more than $300 million, some of which is Avalon's own money. "The fund can be leveraged up to around $1 billion, and that vehicle is used solely to acquire apartment properties we did not build," Ladell tells GlobeSt.com. "The challenge with investing those dollars today is that there's still a pretty good separation between the bid and the ask price, so we're waiting for that to become a bit more aligned." He adds that the company's first fund was of similar size and was fully invested over two years ago.