“Units are getting a little bit bigger to accommodate the changing renter,” says Russell Tepper, senior managing director – Northeast, Mill Creek Residential Trust. “The audience is the same, but their desires are changing a little bit. They are thinking about staying renters longer than anticipated, so we build communities to meet that need.”

Meanwhile, the mix of investors fueling the growth of multifamily development has shifted in the past five years.

“We're still seeing the demand for multihousing investments from institutional groups, from the private groups,” says José R. Cruz, senior managing director, HFF. The buyer pool has changed dramatically since 2010, he says.

“You'd see more of the pension fund advisors, the insurance companies,” he says. “These deals were trading at six-and-a-half caps, six caps, and we'd have 10-12 buyers.” Today, the buyer pool has moved to funds and private groups, because cap rates have moved to the 4 to 4-1/2 range, he says. “It's still a buyer pool that is deep enough, but it has changed.”

Tantleff says that when it comes to urban core developments, she is focusing on western submarkets within Jersey City, because she thinks the more popular areas like Journal Square have become overpriced. She also likes Bayonne, where some new development has begun. “I think they have a tremendous opportunity to be what Jersey City was and is,” she says.

Investors are looking at incomes and growth to identify areas where they want to invest, says Cruz. “A lot of the capital earmarked for Plainsboro to New Brunswick, it's town-specific, asset-specific, and even intersection-specific,” he says. “I think that's going to continue. Buyer pools will become more selective, and they will focus more on those aspects.”