JERSEY CITY, NJ-About 1,840 apartment rental units will be completed in New Jersey by year’s end, with the majority of them to be delivered in Jersey City, Marcus & Millichap notes in its third-quarter report.
This means supply will “modestly outpace demand” this year, says M&M. The Elmwood Park-based investment advisory firm predicts vacancy will tick upward by 30 basis points to 3.8%.
“Though it’s increasing, the area’s vacancy remains well below the national average of 5%,” M&M reports.
Tight vacancy and higher rents at the new units will generate a 3.9% rise in average rents in the state, the company says; the average rent will go up to $1,820 per month in 2013. While Hudson and Bergen counties have the highest rents in the region, Passaic County is showing a marked increase.
In Passaic, landlords are currently pushing rents up aggressively due to high demand and limited new supply, according to M&M’s analysts. In the 12 months previous, rents had dropped 7.3%.
Overall, job growth is a positive indicator for the apartment market, according to M&M. Northern New Jersey employment will grow 1.6%, rising by 30,000 positions. “The traditionally higher-paying office-using jobs are growing at a faster pace than the national average,” said the report.
“Job growth has not dramatically impacted wallets, however, as the median household income has barely increased during the past year,” M&M said.
“Home prices, meanwhile, have increased and, with rising interest rates, the ability to purchase a house will become more difficult,” the report continued. “An expanding employment base and declining home affordability has boosted apartment absorption.”
M&M said that the influx of new units this year will not hurt operations at older properties, but might cause fluctuating demand at apartments built since 2000.