NJ Market Update - August 2023

NEW JERSEY M A R K E T U P D AT E AUGUST 2023

Welcome to Berkadia’s ‘NJ Market Update’ newsletter, your go-to source for the latest developments, trends, and insights in the dynamic world of commercial real estate. In this newsletter, we aim to provide you with a comprehensive overview of the most significant happenings in the industry, keeping you well-informed and up to date.

Plans to Revamp Mall Parcels with New Apartments, Public Space Taking Shape Across New Jersey Real Estate NJ, June 29, 2023 “Redevelopment is coming to some of New Jersey’s largest malls, as owners and local officials weigh plans to add apartments, health care facilities and vibrant public spaces meant to infuse them with new foot traffic.

Proponents say the projects are essential to the long-term health of even the most successful assets. In other cases, they’re a potential lifeline to once-dominant shopping hubs that have become obsolete and seen their values plummet in recent years.”

Multifamily Insurance Rates Are Up as Much as 28% Globest, August 7, 2023 “As GlobeSt.com has previously reported, higher financing costs are not the only fiscal strain on CRE in general and multifamily specifically. Operating expenses have risen sharply and are unlikely to recede with a receding inflation tide. Prices will stay up.

That’s bad news for many operators because the increases pare away at net operating income, which puts pressure on debt service coverage ratio. That makes lenders uncomfortable and can derail attempts to refinance.”

Good news for renters: North Jersey is no longer hottest market in U.S. (Bad news: It’s No. 2) ROINJ, July 12, 2023 “There’s a 96.4% occupancy rate — and a 71% renewal rate. And, with an average of 14 potential renters chasing each available unit, it’s no wonder finding an apartment in North Jersey is so difficult. The only good thing you can say: It’s no longer the hardest spot in the country to find a place. According to RentCafe’s Rental Competitivity Report, which shows how easy or how hard it is for renters to find an apartment in America’s 137 largest rental hotspots, North Jersey has been dethroned. South Florida has taken over the top spot.”

Berkadia New Jersery Team

Market Update August 2023 |

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CRE Carrying Costs Are Nearly as Burdensome as Interest Rates Globest, July 21, 2023 “According to a Moody’s Investor Service report cited by Barron’s, overall expenses for CRE properties are up by more than a third between 2017 and 2022. Insurance is up 73% over the last five years, utilities are 40% more expensive, and property taxes and other operating expenses rose 27% and 29% respectively. And the lion’s share of these cost burdens, insurance, show little sign of retreating.”

Hudson Tunnel Project Set to Receive $6.88B in Federal Funding NJBIZ, July 6, 2023 “GDC says that it expects the remainder of the federal funding to become available to the project through the roughly $4 billion in Federal-State Partnership for Intercity Passenger Rail Grant Program, Rebuilding American Infrastructure with Sustainability and Equity (RAISE), and Consolidated Rail Infrastructure and Safety Improvements (CRISI) Grants that have already been applied for.

The organization added that, taken together through those different sources and others, the project is poised to have the federal funding it needs to undertake early work construction this year and major construction next year. Additionally, New Jersey, New York and the Port Authority have committed to fully funding the local share of the project.”

AvalonBay Marks Debut of 374-Unit Somerville Apartment Community Real Estate NJ, June 22, 2023 “Known as Avalon Somerville Station, the project at 22 Robeson St. is now open after breaking ground some two years ago about a half-mile from Route 206. The site is also 150 feet from Division Street, a thoroughfare in downtown Somerville, providing a key perk that the developer highlighted as part of a recent ribbon-cutting ceremony.”

NJ Town Ranked Best Main Street in America New Jersey Business Magazine, June 22, 2023 “The Port industry of New York and New Jersey accounted for nearly $15.7 billion in tax revenue, supported over 563,700 jobs, and was responsible for $47.2 billion in personal and $135.3 billion in business income in the region in 2022, according to a new economic impact study released today by Shipping Association of New York and New Jersey.”

Berkadia New Jersery Team

Market Update August 2023 |

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FEATURED CLOSINGS

531-533 NORTH 11TH STREET, NEWARK, NJ UNITS: 12 PRICE: $1,427,000 PRICE PER UNIT: $118,917 CAP RATE: 5.0%

$2,500

73-81 NORTH 7TH STREET, NEWARK, NJ UNITS: 33 PRICE: $4,300,000 PRICE PER UNIT: $130,303

123 MILLIGAN PLACE, SOUTH ORANGE, NJ UNITS: 21 PRICE: $4,100,000 PRICE PER UNIT: $195,238

NNJ Market Rent Per Unit & Rent Growth

16%

FORECAST

$2,450

14%

$2,400

12%

$2,350

10%

$2,300

8%

$2,250

6%

$2,200

4%

$2,150

2%

$2,100

0% Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 Rent Growth Y/Y

Asking Rent Per Unit

Effective Rent Per Unit Source: CoStar

Berkadia New Jersery Team

Market Update August 2023 |

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NEW JERSEY Investment Sales

Berkadia New Jersey Investment Sales, led by Nat Gambuzza, provides a depth of advisory and transaction services for income generating properties that is unparalleled in the industry. Their clients include private investors, partnerships, lenders and institutions of various net worth.

The team has specialized expertise and excels in the most complex transactions, including portfolio sales, distressed property sales, note sales and time-sensitive 1031 tax exchange transactions. Prior to joining Berkadia in 2022, the team worked at two otherwise national real estate investment services firms

Nat Gambuzza

Spencer Beriont

Trevor Fiebel

Tim Blashford

Senior Managing Director

Senior Director

Senior Director

Director

973.809.1755

908.328.4494

908.285.6921

201.396.6253

nat.gambuzza@berkadia.com

spencer.beriont@berkadia.com

trevor.fiebel@berkadia.com

tim.blashford@berkadia.com

Mike O’Reilly

Brian Antognini

Nick Balancia

Andra Theriot

Senior Financial Analyst

Senior Transaction Manager

Associate Director

Marketing Project Manager

862.309.5619

862.309.5618

908.642.1905

346.444.8972

mike.o’reilly@berkadia.com

brian.antognini@berkadia.com

nick.balancia@berkadia.com

andra.theriot@berkadia.com

Berkadia New Jersery Team

Market Update August 2023 |

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