Northern New Jersey Multifamily Market Report
2024 Investment Forecast
Capital Drawn to Areas of Tepid
Development Amid Class A Supply Influx
Construction wave places pressure on luxury performance. Local Class A vacancy is likely to see a correction this year, prompted by the high volume of units slated for delivery. Still, demand in this segment has remained robust of late. Specifically, the top-tier metric fell well below the long-term average of 7.4 percent last year, despite downsizing in traditionally office-using sectors occurring throughout the region. With these employment trends expected to reverse course in 2024, gains in high-compensation industries should set an upper limit on luxury apartment vacancy. The market’s home price-to-income ratio also exceeds the national average, which restricts many higher-earning renters from homeownership. Despite the Class A sector’s ongoing challenges, conditions should remain much tighter on the other end of the spectrum. Entering 2024, the Class B vacancy rate has held under 5 percent for three consecutive years, and should hold around its long-term average of 4.4 percent. An affordability gap of roughly $900 per month between this segment and top-tier units should also help keep renters in place. Aiding matters, the employment base is anticipated to continue expanding this year, albeit at a more modest pace relative to recent years. Record staffing in the trade, transportation and utilities sector as of late 2023 also bodes well for mid- and lower-tier apartment demand.