By Joshua Burd
A garden-style apartment complex with more than 150 units has changed hands in central New Jersey, in a deal arranged by Gebroe-Hammer Associates, capping a year in which the firm brokered nearly $1.5 billion in multifamily investment sales.
The undisclosed community, which is in the vicinity of both New Brunswick and Somerville, was among 84 residential properties that traded in 2022 in transactions completed by the Livingston-based firm. Those sales involved 7,149 units, with most falling into the workforce housing and value-add categories.
“Historically able to withstand the test of any economic cycle — even severe recessionary periods — multifamily is continuing to demonstrate a level of stability steeped in its most-favored CRE investment vehicle status versus other real estate sectors,” said Ken Uranowitz, Gebroe-Hammer’s president. “While there is most certainly a ‘normalization reset’ in multifamily values and rents following a pandemic-fueled surge of both, occupancies along the New Jersey-Greater Philadelphia MSA and New York State corridor are among the strongest in the nation.”
The brokerage team said the recently traded Central Jersey property was 97 percent occupied at the time of the sale, the terms of which were not disclosed, with upside potential through kitchen and bathroom renovations. The complex has an abundance of on-site amenities and provides residents with access to the downtowns of New Brunswick and Somerville, Bridgewater Commons and higher education institutions, along with local cultural, entertainment and sports venues.
Gebroe-Hammer’s overall $1.47 billion deal volume in 2022 included 46 trades spanning 1,937 units in northern New Jersey, equating to more than $432 million in value, according to a news release. Meantime, the firm brokered 13 deals across 1,283 units in Central Jersey for a combined $307.6 million, along with 25 sales in the greater Philadelphia region comprising 3,929 units for a total of nearly $733 million.
The activity points to what the firm feels will be sustained demand for multifamily investment properties, especially for existing assets in the Class B and C sectors that are often primed for modest to upscale renovations.
Those upgrades range from updated kitchens and bathrooms on turnover to the addition of community amenities, such as exercise rooms, outdoor cooking areas and dog parks.
“Our typical sellers fall into two categories,” said David Oropeza, an executive managing director with Gebroe-Hammer, “the first being second- and third-generation owners who recognize the time is right to dispose of their multifamily assets and the second being a private equity group or institutional investor nearing the end of their hold period with a significant number of units already renovated and the potential for continuation of in-place renovations as well as market-rent maturation under new ownership.”
According to Uranowitz, the Federal Reserve’s historic run of interest rate hikes in 2022 pushed some deals to the sidelines. But he expected multifamily to regain traction — as it did when investors and borrowers adjusted to the pandemic — barring any unforeseen geopolitical events or a deeper economic decline.
“In a market where pandemic-induced supply-chain shortfalls and municipality delays have heavily impacted new-construction multifamily deliveries, value-add repositioning product tops the majority of investor lists,” said Joseph Brecher, also an executive managing director. “Thanks to Gebroe-Hammer’s decades-long client and investor relationships, and our market specialists’ in-depth knowledge of their respective submarkets, multifamily assets — particularly those in desirable locations with a workforce-housing value-add component — are garnering significant interest among local experienced investors.”