ELMWOOD PARK, NJ-The supply of market-rate units in northern and central New Jersey will increase by more than 2,400 this year, the real estate investment firm Marcus & Millichap reports, and yet rents will rise and vacancy rates will continue to be very tight.

In its second-quarter report, the California-based firm says that the Garden State will see overall vacancy of about 3.5 % through the end of the year. In northern New Jersey, vacancy is predicted to be 3.2%, while in the central part of the state apartment vacancies will run about 2.8%.

In South Jersey, vacancies will decrease, and the rate is expected to fall to 5.3%. In 2012, roughly 2,415 market-rate units will be delivered to the Garden State, increasing stock by 0.6%,” says the report from M &M, which is headed in New Jersey by regional manager Michael Fasano. “Northern New Jersey will gain over 1,150 apartments, while builders deliver 945 units to Central New Jersey.”

Inventory in less-developed South Jersey will grow by only 317 market-rate units. At the same time, rents should reach all-time highs this year, based on data gathered through the end of March. Asking rents will jump 3.5% to $1,366 per month, while effective rents rise 4.0 % to $1,311 per month. Leasing incentives, which have become sparse or non-existent in Hudson and Bergen Counties, will average about 19 days of free rent in the state, according to M & M.

Last year, asking rent was up 2.3 % and effective rents rose 2.7 %. In northern New Jersey, Morris County had the lowest vacancy rate at the end of the first quarter: 2.2 %, with an average effective rent of $1,179. Bergen County had the highest effective rent, $1,518; the vacancy rate was 3.4 percent.

The volume of multi-family building sales increased 20% over the 12 months ending in March, according to the report. The median price of properties sold was up 20 %, also, to $85,000 per unit. The total dollar amount of deals more than doubled over the previous 12-month period, as institutional investors snapped up large, Class A properties in sought-after areas.

“The low interest rate environment and increased financing capacity ignited deal flow,” according to M&M.