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Demand for Multi-Housing in New Jersey to Increase Along with 2015 Job Market

Tuesday, February 24, 2015

Home to a highly skilled labor pool, more than 50 Fortune 500 companies have operations in Newark. Employment and Population Totals During 2014, job growth moderated but it is expected to pick up the pace during 2015 as the metro area is expected to produce 14,300 jobs, or 1.4 percent growth, highlighting demand for multi-housing buildings in New Jersey. This trend is expected to continue through 2016 as the metro area is forecast to produce 17,900 jobs, or 1.8 percent growth.

"Other parts of Northern New Jersey are experiencing growth, and Newark won’t be far behind,” according to Axiometrics. "Job growth has been rising in the greater New York area, and the economy is demanding highly skilled workers these days. Look for Newark to make significant strides forward in 2015."

New Jersey Multi-Housing Development

New apartment supply reached 3,526 units in 2014, and Axiometrics is expecting nearly double that number – 6,776 – for delivery in 2015, showing the healthy growth of multi-housing buildings in New Jersey. Despite an increase in new supply, apartment market fundamentals are expected to remain stable during 2015.

Multi-Housing Building Occupancy and Absorption

Newark’s multi-housing building occupancy reached 97 percent in 2014 according to Axiometrics, 80 basis points (bps) above the 1999-2014 average of 96.2 percent. The occupancy rate is forecast to be 96.5 percent in 2015. At 2,329 units, absorption/demand was nearly 1,000 units below new apartment supply in 2014. Demand is expected to fall short of the new apartment supply until the end of 2016.

New Jersey OccupancyNew Jersey Completions and Net Absorption 

Rental Rates for Multi-Housing Buildings

Newark’s annual effective rent growth was 1.6 percent in 2014, 50 bps below the 1999-2014 average effective rent growth of 2.1 percent. Axiometrics forecasts effective rent growth to strengthen and rise above its long-term average (2.1 percent) for the next five years. Effective rent growth in 2015 is expected to be 2.7 percent.

 New Jersey Rental RatesNew Jersey Annual Rental Rate Growth

Contact HFF New Jersey for more information regarding multi-housing properties on the market in this area.

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