Page 33 - RENJ June 2021

markets in New Jersey and may
hurt urban areas if office space contracts. As tenants demand
new buildings, new construction will increase and this will help construction jobs. The increase in housing prices across the board will bolster multifamily building rents as younger people will be priced out
of purchasing new houses. There is less of a general desire among young people to buy homes as they want
to remain flexible so new housing developments may become build-to- rent developments.
LUDIVINE O’TOOLE
SENIOR DEVELOPMENT DIRECTOR AVALONBAY COMMUNITIES (WESTFIELD)
While facilitating the relocation of workers to the New Jersey suburbs, the workplace
shift into a
hybrid model
accentuates
the need for
decentralized
developments
where residents
can live, work
and play. Apartment layouts are getting a bit larger to accommodate an office space and direct entry products are being considered more often. Co-working spaces are being offered as an amenity to residents who want a satellite office which
is not home, but not far from home either. Flexible schedules mean
more time and demand for great amenities in good neighborhoods
and communities. In this post- COVID environment, the New Jersey suburban multifamily sector is poised to continue to perform well.
On the operational side, the rise of e-commerce is forcing developers to streamline package management from the installation of smart
and restricted access points for delivery drivers (such as Amazon Key) to the secure storage of the parcels in package lockers and oversized package rooms (including refrigerated spaces for food items) and the safe retrieval of packages
by residents. During the pandemic, residents have enjoyed unlimited access to food and grocery deliveries and this new consumer habit is
here to stay. Developers need to rethink building access points to deliveries and short-term parking management to provide the best resident experience and avoid traffic congestion.
RENNI TRINH
ASSISTANT PROJECT MANAGER MARCH ASSOCIATES (WAYNE)
Early in the pandemic, many city offices closed which initially caused delays in getting
building permits.
Most residential construction projects had begun to
halt as they
were deemed
nonessential.
As the pandemic went on, multifamily development quickly picked back
up, but the demand for material has caused shortages amongst the industry as suppliers are not able to ramp up production quickly enough to meet the new need. Not only has this shortage in materials put pressure on the industry but the rise in cost for key construction materials such as steel and lumber have caused developers to re-strategize on opportunities that once made sense. Any existing construction may still be ongoing, but there has been a pause in new builds as developers continue to look to secure financing. Especially in the multifamily sector, it’s difficult for developers to absorb the increased cost of material and still remain profitable.
Not only has the pandemic affected the construction of multifamily development, but it will ultimately affect future designs and layout as people are rethinking the space in their home. The increase in working remote have and will continue to shape buyers’ demand for specific amenities and space allocation.
NICHOLAS MINOIA
FOUNDER AND MANAGING PARTNER DIVERSIFIED PROPERTIES (MONTVILLE)
Despite the myriad of challenges posed by the pandemic, New Jersey’s
multifamily sector continues to innovate and position itself for continual growth in the coming years. We are amid
a transitional
phase, where landlords and developers must take a new approach to satisfy the needs of tenants in a post-pandemic world. Transit-oriented, urban-centric development is taking somewhat of a backseat as people continue flocking to suburban areas with premier educational and retail
services. As remote work gains traction, I anticipate an industry- wide focus on increased apartment sizes to accommodate in-home office, workout and deck spaces. On- site gyms will be of less importance compared to pools, patios and pet-friendly spaces. As health and wellness remain at the forefront
of everyone’s minds, state-of-the- art HVAC systems will continue to be vital. Additionally, contactless delivery systems built to handle the increase in online shopping will also no longer be optional, but a necessity.
DONALD M. PEPE
PARTNER, CHAIR, COMMERCIAL REAL ESTATE LAW GROUP SCARINCI HOLLENBECK LLC (RED BANK)
I am glad you included the plural ‘impacts’ because the pandemic
has had multiple, overlapping negative impacts affecting virtually every segment of the market.
From a development perspective,
the approval process has slowed dramatically. In some municipalities, it is taking up to 180 days to get a hearing date scheduled on even simple applications. While not likely a
REALESTATENJTM 31 long-term problem, it will take time to
clear the backlog, causing delays on new construction starts. For projects currently under
construction,
pandemic-
related material
shortages and
the concurrent
price increases
on lumber
and steel are
delaying project completion dates and adding as much as 30 percent
to the bottom line. Filling out the trifecta, rents are down 25 percent throughout Hudson and Bergen counties, and competition for tenants is fierce, with multi-month rent incentives increasingly the norm. In short, proformas in the multifamily market are getting pinched from every direction. RE
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