CAPRE’s Northern New Jersey & Gold Coast Investment Outlook: NJ Set to Benefit from NYC Rental Regulations
JERSEY CITY, NJ – CAPRE’s Northern New Jersey & Gold Coast Investment Outlook kicked off with a bang. “Northern New Jersey & Gold Coast Development, Investment & Leasing Outlook for 2019: In What Submarkets, and How are Deals Getting Done in 2019?” was one of the premiere sessions of the summit, which featured the perspective and expertise of one of the most highly regarded New Jersey insiders – Jose Cruz, Managing Director at HFF.
“Today, we’re going to talk about the State of the market. And there’s no one better to ask than Mr. Cruz here,” began Moderator David Wolfe, Managing Partner at Skoloff & Wolfe, PC. “Maybe you could give us some idea on that, Jose, from your perspective, comparing the end of last year to where you think things are headed, as we get into the third quarter of 2019.”
“One thing that I think recently, and I mean very recently, has come up, is the creation of waves of regulations in New York City, and we’re still trying to figure it out,” replied Cruz. “But we all know that it is not great for New York investment and real estate there as it relates to institutional capital coming in.”
According to Cruz, most Garden State insiders think that this development actually is a big benefit for Jersey City. “For the Gold Coast, for Hoboken, for Bayonne, all the way up the waterfront,” he mused. “And eventually, into the suburban parts of New Jersey. So in terms of new and recent – and again this is in the last week – activity and news that we’re dealing with and getting our heads around, is the new rent regulations in New York City.”
“I think that, overall, we’re seeing the waterfront, specifically multi-family be very active today,” stated Cruz, matter-of-factly. “Buyers are coming out, not only out of New York City, but nationally. We’re seeing a lot of activity, whether it’s California-based, Chicago or Dallas, new capital is coming into the waterfront for all of the reasons we have talked about so many times here – the demographics, the product, the access to New York, the transportation, the new retail that’s coming. For all of those positives, we’re seeing the capital coming in.”
Cruz then said that, as a result of the new capital that’s coming in, he is seeing new players get more aggressive. “And pricing is being positively impacted — the cap rates that we’re seeing on Class A product, and even some of the Class B product, are in the 4 and a quarter range today,” he explained. “Which, look. We’re seeing interest rates at levels that I did not expect to see this year. But with those cap rates that are in the low fours, and in some cases even a little south of that, per-unit pricing, and I’m sure we’ll talk about this here today, is about $700,000 a door. That’s fantastic. It doesn’t seem to have a limit, and the cap rates are low, so it’s a good time to be an investor, and especially a seller.”
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