LIVINGSTON, NJ-Multifamily trading throughout Northern New Jersey was robust in the first half of this year, indicating this segment of the commercial real estate industry has rebounded as investors and owners step off the sidelines, finds locally based Gebroe-Hammer Associates. Case in point: the firm racked up more than 33 transactions for more than $120 million and a total of 1,889 units.
“Multifamily investing has gained even greater velocity in the past six months because investors, who circled the wagons at the height of the recession, finally realized that the expected bloodbath and price plunge never materialized,” Ken Uranowitz, Gebroe Hammer’s managing director, tells GlobeSt.om. “Investors want to take advantage of low interest rates and don’t want to miscalculate the next uptick in the economic cycle.”
Uranowitz also notes that from a property owner’s perspective, looming increases in the capital gains tax are a strong catalyst for selling at this time. “With the residential home sale market still in the doldrums, in-place renters who were once potential homebuyers are staying put and rising foreclosures are creating additional rental demand, firming up occupancy rates,” he relates.
But New Jersey is a unique marketplace in terms of multifamily dynamics. According to Uranowitz, private individuals or families hold the majority of these properties for many years and continue to grow their portfolios from generation to generation.
And while the number of single-deal transactions exceeding $15 million have been limited to only a handful, small-to-mid-sized properties in New Jersey’s most densely populated areas are in short supply and high demand. Throughout the Hudson/Essex/Union County corridor, Gebroe-Hammer closed a total of 23 deals exceeding $47.54 million. Located in Bayonne, Elizabeth, Irvington, Jersey City, Newark, North Bergen, the Oranges, Union City and Weehawken, the properties ranged in size from 11 units to 81 units. “The existing stock of class B and even class C properties has always been, and continues to be, the multifamily investment engine since this class type is usually held for a shorter period of time--resulting in an increased amount of trades,” Uranowitz tells GlobeSt.com. “These types of buildings can offer value-add repositioning opportunities through upgrades and refurbishments.”
Although the multifamily housing market has weathered the economic downturn better than its office and industrial counterparts, there has been an influx of distressed debt opportunities in the past six months. Between March and June, Gebroe-Hammer negotiated seven note sales for 761 units totaling $48.9 million on behalf of several major banks.
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