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Multifamily Rents Trump Amenities

WOODBRIDGE, NJ- Effective rents may start to grow once jobs losses stop, but probably not until the second quarter of 2010.

By Alyson Grala | Updated on January 29, 2010

WOODBRIDGE, NJ-Although fundamentals in Northern New Jersey’s class A multifamily market have suffered due to financial layoffs and pharmaceutical mergers, landlords are still able to keep vacancies in the low to mid-single digits by providing concessions–anything from rent, security deposits and amenity fees.

And as more tenants turn cost conscious, the importance of competitive rent is overweighing amenities and convenience. According to Mark Scott, president of Commercial Mortgage Capital, most developers agree that the market is not strong enough to start raising rents. “The issue is not really raising the top-line rent; the issue is that we have concessions in the market. There are up to two months free rent in certain markets. The concessions are unbelievable.”

He adds that effective rents may start to grow once jobs losses stop, but probably not until the second quarter of 2010. “When that occurs, then we may start to see an easing of the rent concessions–two months free rent goes down to six weeks–and effective rents start to grow,” Scott says.

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