The extremely tight 171,600-unit Central New Jersey apartment market had the seventh lowest vacancy rate among the top Reis markets in the second quarter of 2012, at just 2.8%. The rate was down 20 basis points from the prior quarter despite the completion of the 192-unit Vue (150 market rate) in New Brunswick in May and the 31-unit 550 Cookman Avenue in Asbury Park in April. The Class A rate was 3.1%, unchanged from the prior three quarters, while the Class B/C rate was just 2.6%, down 30 basis points. The overall rate was still 2.8% in August according to Reis.
Reis predicts strong demand for the rest of 2012, with the annual net absorption total at nearly 1,700 units, the most since 2005. Demand is expected to be nearly as great the following two years. The firm, meanwhile, tabulates another 568 units under construction for later in 2012 and 915 for subsequent delivery. The largest project expected to complete by year-end is the 176-unit Wellness Plaza, also in New Brunswick. The vacancy rate is forecast to fall to 2.5% at year-end 2012 and 2.1% at year-end 2013 before leveling off.
Rent gains continue to accelerate. In the second quarter the average asking rent increased 1.0% to $1,194 per month and the average effective rent rose 1.2% to $1,165 per month, bringing the year-over year gains to 2.3% and 3.1%, respectively. The Class A asking average was $1,429 per month, up 0.5% for the period, while the Class B/C asking average is $1,074 per month, up 1.3%. Overall rents had increased 0.4% by both measures by August, and respective increases of 3.0% asking and 3.9% effective are forecast for all of 2012. Subsequent annual increases are expected to be even larger, peaking at around 6.5% in 2015.
Marcus & Millichap predicts a vacancy rate of 3.5% in the overall state of New Jersey for year-end 2012, down 40 basis points over the year. The state’s average asking rent is forecast to rise 3.5% to $1,366 per month.