NJ Market Update July 2023

NEW JERSEY MARKET UPDATE

landlords, warn of development slowdown

Real Estate NJ, June 12, 2023

The state’s commercial real estate industry is pushing back on a new ordinance in Newark that aims to limit rent increases at new, non-rent-controlled apartment buildings, arguing it will stifle development and the creation of affordable housing — while openly doubting its legality.

The ordinance, which the city council adopted last week, imposes fines of up to $1,200 for each unit in which a landlord raises rent by more than 5 percent in a single year. The measure applies to properties that are not subject to rent control laws — which equates to 30 percent of the city’s rental housing, including all new construction — and defines such increases as “unconscionable,” citing language that appears in a state anti-eviction law.

The Real Story Behind Those Rising Rents

Multifamily Executive May 2, 2023

After adjusting for inflation, effective asking rents tracked by RealPage grew 1.2% annually during that period. This is actually less than the average 1.6% annual rate for the preceding five years. Real rent growth—the amount that rent growth exceeds inflation— has decreased in recent years. It has even turned negative in some high-cost coastal markets and for smaller unit types.

Watchdog sues Newark, Jersey City landlords over housing discrimination claims

New Jersey Monitor, April 27, 2023

A housing watchdog group has sued 26 landlords and brokers in Newark and Jersey City, alleging they illegally refuse to lease apartments to people who use government-subsidized vouchers to pay rent.

The Housing Rights Initiative, a New York City-based nonprofit, filed a complaint in state Superior Court Wednesday asking a judge to declare the landlords, brokers, and companies that employ them in violation of New Jersey’s Law Against Discrimination. That law prohibits discrimination based on source of income.

The group began investigating housing voucher discrimination in the New York metropolitan area in 2017 after receiving complaints from prospective renters, the group’s founder and executive director Aaron Carr told the New Jersey Monitor.

‘Indistinguishable from rent control:’ Critics expect legal challenge to Newark law penalizing

Welcome to Berkadia’s ‘NJ Market Update’ newsletter, your go-to source for the latest developments, trends, and insights in the dynamic world of commercial real estate. In this newsletter, we aim to provide you with a comprehensive overview of the most significant happenings in the industry, keeping you well-informed and up to date.

restaurants — could be coming to Ironbound

ROINJ, June 8, 2023

Those wondering what possibly could replace the iconic Iberia Tavern & Restaurant in Newark — and the 5.2-acre lot it was on — may be in for a stunning surprise. A transformative mixed-use property — one that aims to bring up to 2,500 units of multifamily housing, numerous Portuguese and Brazilian restaurants and a mini city square that will re-create those found in Europe — is one step away from filling that spot in the Ironbound, according to the attorney who represents the buyer of the property, Sinai Equity Group.

Newark to Penalize Landlords of Non-Rent Controlled Buildings Who Impose “Unconscionable” Rent Increase

Newark NJ, June 7, 2023

“Newark faces a crisis of affordability. The value of property in Newark is increasing rapidly. Landlords are charging rents of over $2,000 for one-bedroom apartments in areas where they were just $750 five years ago. 30 percent of the rental housing in Newark is not under rent control, and there is presently no penalty for how much a landlord can increase those rents,” Mayor Baraka said. “The Unconscionable Rent Increase Ordinance is one important step that we have taken toward keeping Newark affordable. It’s not the only one, but it’s a big step toward continuing to be the kind of culturally and economically diverse city that makes Newark so special.”

Here are the 13 towns with the highest property tax bills in NJ

App.com, June 6, 2023

The towns with the highest average property tax bills in New Jersey are predominantly in Bergen and Essex counties, through three municipalities at the Jersey Shore also made the top 14: Rumson, Deal and Mantoloking. Driven by salary increases to teachers, police officers and other types of public workers, “taxes are going up faster in the last four years than they were going up the prior four years,” said Egea.

NJ Town Ranked Best Main Street in America

New Jersey Digest, June 7, 2023

Just seven years ago, downtown Metuchen experienced a 20 percent vacancy rate as it faced departing businesses and a declining appearance. Today, the two-block streets fill with thriving businesses, annual celebrations, and a loyal community thanks to eager volunteers. “Shop Local” is its motto, encouraging visitors to support the hard-working residents of the town.

Transformative property — with 2,500 units of multifamily, city square and numerous

Jersey City approves eviction defense program paid for by developers

The Real Deal, June 15, 2023

The measures create a new Division of Tenants’ Right to Counsel in the city, headed by an attorney licensed to practice in New Jersey who will be charged with implementing the right-to-counsel program by Jan. 1, 2026. Officials estimate that the new fees, once fully rolled out, could generate $4 million annually for the program, which would fund legal representation for 1,500 residents and provide legal consultations for any others facing eviction.

Scotch Plains Leaders Takes Historic Leap Forward in Downtown Redevelopment

Scotch Plains New Jersey, June 14, 2023

After an extensive evaluation and review process of 11 proposals conducted by the Township’s RFQ Project Team, Woodmont Properties has been selected to fulfill the vision of hundreds of Scotch Plains residents who shaped the redevelopment plan. Click here to read the recommendation report. “This is a historic moment for Scotch Plains,” Mayor Josh Losardo said. “This Township Council and Administration has been laser focused on making redevelopment a reality, finally, for our downtown. This is no longer just the same talk that we’ve heard for years. Together, working collaboratively with the community, we have pushed the ball across the goal. It is truly a proud day.”

RECENT ANNUALIZED INFLATION READINGS

JULY 2022 - MAY 2023

Inflation readings have come down consistently since the Fed began raising rates in March of 2022. We are still a long way from their 2% target. Will it happen naturally from here or will they continue raising rates until we get there?

Berkadia New Jersey Investment Sales, led by Nat Gambuzza, provides a depth of advisory and transaction services for income generating properties that is unparalleled in the industry. Their clients include private investors, partnerships, lenders and institutions of various net worth. The team has specialized expertise and excels in the most complex transactions, including portfolio sales, distressed property sales, note sales and time-sensitive 1031 tax exchange transactions. Prior to joining Berkadia in 2022, the team worked at two otherwise national real estate investment services firms

nat.gambuzza@berkadia.com

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