EAST BRUNSWICK, NJ−Homeownership in New Jersey has fallen by 10% since 2005. About 65% of households do not currently include children under age 18. The need for more rental housing is critical to meet rising demand, says residential market analyst Jeffrey Otteau.

Yet, Otteau said at NAIOP's public policy symposium in New Brunswick earlier this month, the resistance to multifamily development remains staunch in many suburban towns and large-lot zoning for big homes still prevails.

“Towns are, for the most part, misinformed about the merits of the rental housing type,” Otteau says, expanding his remarks for GlobeSt.com.

Suburban resistance has traditionally been based on concern about potential added burdens to local school systems. However, “the traditional linkage no longer applies,” says Otteau, whose East Brunswick-based Otteau Valuation Group analyzes contract-sales statistics and other housing data to produce a monthly report for subscribers. Otteau also holds regular seminars for brokers and is a frequent speaker on commercial real estate topics.

Suburban towns have been slow to pick up on the "renters-by-choice" population, Otteau says. Young professionals and empty-nesters can help revive a town's economy, while exerting virtually no pressure on school systems.

“Our first task is to understand that yesterday's benchmarks and standards are no longer valid,” Otteau said at NAIOP's gathering. He urged town planners to embrace new realities and consider the opportunities, making the following points:

Commercial property in many municipalities is oversupplied, and town tax bases have eroded. New development will occur only in places that allow multi-family development; companies are not investing in communities with zoning that prohibits rentals or smaller-lot single family housing for their employees.

Transportation options are crucial. Today in New Jersey, a majority of residential building permits are issued in places with train stations, but there are still many under-utilized rail stations around the state

The revival of small and large places such as Hackensack, Bloomfield, Somerville, Newark and Camden depends on well-planned business districts that include housing near the center.

Instant Insights /

Note to Suburbs: Make Way for Rental

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