LIVINGSTON, NJ—Gebroe-Hammer Associates says the stars are aligning for a blowout year in multifamily transactions. The firm recently had a two-week period with more than $165 million in sales.

Extremely favorable demographic and employment trends, coupled with sustained rent and valuation appreciation, are driving historic multifamily trading along the New Jersey/Pennsylvania corridor, says Gebroe-Hammer.

At the mid-year mark, the firm says its transaction pace will surpass last year's performance.

“On the heels of a 'for-the-record-books' 2014 in the multifamily investment sector, 2015 continues to exceed expectations in terms of occupancy rates, rent growth and trading velocity, which is traditionally slower in the first months of any new year,” says Ken Uranowitz, Gebroe-Hammer president, who predicts the current pace will pick up through year-end and beyond.

In a recent two-week timeframe, the firm says it booked more than $165.8 million in sales involving 912 units. In addition to one of the largest multi-family transactions recorded to date this year ($113.5 million sale of Short Hills Club in Springfield and Franklin Manor in Morristown), Gebroe-Hammer tells GlobeSt.com exclusively that these transaction include three separate Plainfield trades ($5.6 million) encompassing 67 units; 87 units ($8.7 million) in Brick; 32 units at Fairway Mews ($1.94 million) in Warren County; and 15 units ($1.55 million) in Jersey City.  

During the past six months, the firm has arranged 51 trades totaling 3,049 units.

“Every urban and suburban municipality in and around top-performing cities like Manhattan and Philadelphia are highly desirable multifamily investment markets due to the strength of their tenant pool, sustained population growth and proximity/connectivity via mass transit to employment centers,” says Gebroe-Hammer managing director Joseph Brecher.

Strong fundamentals and investor appetite also are feeding property and rent appreciation of existing apartment buildings – the sector's “bread and butter” assets – from Northern New Jersey to Philadelphia. A majority of these properties are at a point in their life cycles where they are poised for or have undergone recent value-add renovations.

“There is a high concentration of post-World War II-era apartment buildings in this geographic region that make up multifamily's enduring core stock and leave little open space for new ground-up development,” says David Oropeza, managing director. “As a result, these class B and C assets record historically strong occupancy rates. They also offer rent growth/property repositioning opportunities associated with investor-implemented upgrades to kitchens, baths and flooring.”      

One key driver of activity has been the age 25-34 young adult demographic, says Uranowitz.

“This age group has been and will continue to be crucial to multifamily performance,” he says. “Millennials have made a comeback and their numbers will continue rising for the next several years. This, along with a sluggish single-family housing market, will keep demand high for multifamily units.”

Millennials and their propensity to shun single-family homeownership coincides with a housing market that is expected to remain weak for some time, Uranowitz says.

“Rising home prices, albeit slow, and the inevitability of rising interest rates will only lower affordability for families struggling to meet today's lending standards, leaving no other alternative but to rent,” he says.