Businesses in the New York and New Jersey areas are driving the economy in multiple aspects. When companies hire on new employees, these families need affordable housing. According to one report, the workforce is adding 29,000 employees this year, representing growth of 1.4 percent over last year. This is the largest gain in the number of jobs created since the year 2000. The leisure and hospitality industry is driving the growth, but education and healthcare have also boosted employment.
Professionals who are seeking housing that is easily accessible to the city of New York often look in Northern New Jersey, simply due to the costs. The New Jersey multifamily rental costs are often half of what they would be in Manhattan. Somerset County has an extremely low vacancy rate in multifamily units. The demand for rentals outnumbers the availability. Developers have identified the problem. Construction is beginning on 12,000 units in New Jersey to meet the growing demand.
One of the most exciting acquisitions is that of Castle Lanterra Properties, which is building a 224-unit at River Park at Raritan. Castle is planning to rehabilitate the property, and it secured funding to that end through Freddie Mac. The property is an excellent location and has a great potential to provide upside rents in a prestigious place, while still being much cheaper than the same place in New York.
River Park is just 60 miles for New York City and only 50 from Philadelphia, which means that it could draw new families who are working in either city. The River Park has easy access to the two main interstates as well as multiple retail centers and community amenities. There is a club room, heated pool, and fitness center within River Park at Raritan, plus outdoor facilities like a basketball court.
Castle is working with JLL Capital Markets to move forward with the project. Historically low interest rates make investing in the New Jersey commercial real estate market more attractive. The housing market does not show signs of slowing down. There have been four consecutive years of growth in the New Jersey rental industry. The CRE market is a safe place to invest and see a return on that investment. Quite quickly, once construction is completed.
In years past, the multifamily unit has not been the domicile of choice. Practically every financial advisor will tell people that it is cheaper and better for the future to invest in a family home. Yet, home ownership is much lower today than it was just a decade ago. One report suggests that young people, the millennials, just don’t have the money for the down payment.
Millennials are putting off buying homes. Whether this is due to a change in thinking, an unwillingness to buy a permanent home, or because of financial hardships, it’s increasing the need for multifamily units. New York City and Philadelphia continue to be a powerhouse in driving the economy in the region, which has made Northern New Jersey seem like a safe haven for investors in the CRE market.
