Through June, cities and towns across the state issued permits for multifamily projects that call for more than 3,400 new units, up 55 percent from the same period last year, according to data compiled by the Department of Community Affairs. The uptick marks the second straight year-over-year increase after the totals plummeted from 2007 to 2009.
The data also show that about 1,200 units were authorized by new permits in Hudson County, accounting for nearly a third of the statewide total for the first six months of 2012. That activity was concentrated in Jersey City, West New York and Weehawken.
The new construction, which is dominated by rental projects, is being fueled by a “confluence” of market conditions that have stayed strong, said Carl J. Goldberg, managing partner of Roseland Property Co. Most importantly, developers still see the demand for apartments that can “create a complete lifestyle” for tenants by offering strong amenities, proximity to mass transit and retail in urban settings.
But strict mortgage criteria and the large down payments being required by banks also give renting a continued edge over buying, Goldberg said. Whether the pace of new construction continues is “really a key question, and I haven’t seen any sign of it yet.”
Roseland has several properties in Jersey City, Weehawken, West New York and Morristown.
Smart developers always are looking for signs the market is becoming overbuilt, he said, “but the fundamentals continue to be very strong.” He pointed especially to continued growth in Jersey City and other Hudson River communities in support of Manhattan business.
“It’s hard to imagine the trend reversing itself,” said Goldberg, whose firm is based in the Short Hills section of Millburn. “Every time we are a little concerned, we are pleasantly surprised by the rates at which we lease new buildings as soon as they’re open.”
New Jersey’s pipeline of multifamily and mixed-use construction has been evident by demand for the state’s Urban Transit Hub tax credit. The Economic Development Authority, which administers the program, recently set aside another $100 million in credits for residential development, helping the agency consider several projects with applications already in the pipeline.
Department of Community Affairs spokeswoman Lisa Ryan noted that in the 1990s, multifamily or mixed-use construction accounted for about 15 percent of all new housing authorized. Today, that percentage is closer to half.