Page 16 - RE-NJ March 2022

14 MARCH 2022
In today’s booming multifamily sector, it doesn’t take much to find the “value” in a value-add deal.
At least, that’s according to industry insiders who say that investor demand for so-called workforce housing shows no signs of fading
in the year ahead — amid the continued need for moderately priced apartments in key markets such as New Jersey.
“I’ve never seen such lucrative transactions in such a short period
of time as I’m seeing now,” said Nat Gambuzza, a Saddle Brook-based broker and senior vice president with CBRE. “This is especially true in
value-add deals where the buyers are finding that they don’t even have to do that much work — maybe a coat of paint, not a full kitchen remodel — and are still finding demand from tenants at higher rents than they anticipated.”
Value-add deals and workforce housing remain the primary focus after pent-up demand from 2020 carried into 2021. Capital is still chasing a limited number of potential deals.
What’s more, according to Eric Harvitt of Keasbey-based Landmark Cos., the market is buoyed by renter renewal rates that “are high and
getting higher. We used to have about 30 percent to 40 percent churn on renters, but now it’s closer to 20 percent.”
“Demand is off the charts for workforce apartments,” said Harvitt, principal with Landmark, which owns about 3,200 units. “Properties are going up everywhere in an effort to solve the affordable housing situation, but those market units
are mostly A-level units. Workforce housing, in particular, is through the roof.”
He said, when renewals come up, he doesn’t raise the rent to market rate, especially for his steady residents and
those who have lived at the property for a while. He is raising them for new tenants.
“And of those who complain about the rent hikes, we find that they then go out and look around and usually come back to realize what we’re offering is more than fair,” Harvitt said.
Ken Uranowitz, president of Gebroe- Hammer Associates, said the Livingston-based brokerage firm in 2021 marked the best year in its 47- year history — closing more than $2 billion in sales.
“The coming months of 2022 are expected to bring much of the same: continued deal flow and capital
RENTAL RUSH
Investors chasing value-add apartment deals, as demand for workforce housing swells
By Paul Bergeron
Multifamily investment sale volume in northern New Jersey totaled $5.45 billion across more than 750 transactions, according to data from CBRE, the highest ever. A team led by CBRE’s Nat Gambuzza brokered 46 transactions last year for a combined $547 million, including the sale of 88 Woodland Road in Short Hills.
velocity that will
feed record demand, especially among private and institutional investors, funds and lenders,” he said.
“In this post-pandemic rebound, where inflation is pushing rents higher and tightening occupancy levels, I have never seen this much demand for multifamily in my career.”
He added that: “a few quarter-point (interest) rate hikes are not expected to dampen investor demand anytime soon.”
Gambuzza experienced similar good fortune and expects it to continue. In 2021, northern New Jersey saw its highest multifamily transaction volume ever at $5.45 billion and more than 751 transactions. Of that, his team did
$547 million and 46 transactions.
“We expect 2022 to
Courtesy: CBRE