NEW BRUNSWICK—The multifamily asset class may be gettingoverbuilt, and developers should be thinking about how to react ifconsumers change the way they look at their shelter needs, saidmembers of the New Development, Redevelopment and Repositioningpanel at last week's RealShare New Jersey conference.

“There is going to be a point when multifamily becomesoverbuilt,” says Constantino (Gus) T. Milano,managing director, Hartz Mountain Industries. “Thefundamental question is whether people are changing the way theylook at shelter needs. Is luxury rental continuing as a long termcommitment or is it a trend that's coming to an end? Marketing hasbeen white hot in the state for a significant time.”

“A lot of driving force in the market is liquidity, and smallerplayers skew the market,” says Ronald Ladell,senior vice president, New Jersey, for AvalonBayCommunities. “Merchant builders are not really looking atthe issues of whether demand exceeds supply, they don't care, theybuild it and they're gone, unlike build and hold developers. Peopleare underwriting multifamily on a razor's edge, trending rents, andnot construction costs. They could get caught in the switchoverwhen the market changes.”