KRE Group’s Jeff Persky: Renovation May Be a Winning Strategy, But You Just Can’t Renovate Fast Enough

NEWARK, NJ — The first round-table discussion at CapRE’s 2018 New Jersey Apartment Summit was a broad discussion of the New Jersey multi-family arena. Moderated by David Wolfe, Managing Partner at Skoloff & Wolfe, P.C. the panel featured the insight of numerous local insiders about the state and future of the New Jersey multi-family arena. Below, we highlight a brief snippet in which Wolfe asked one of his most active panelists, Jeff Persky, Executive Vice President at the KRE Group, to provide some candor on the Garden State.

“So turning to Jeff, you guys are both active in multiple markets,” remarked Wolfe. “Both in the gold coast and then throughout the suburban markets. So I’d love to get a bird’s eye view on the current state of the market.”

Jeff Persky, Executive Vice President, KRE Group

“I tend to agree with Adam [Altman, co-panelist and Managing Director, Partner, KABR Real Estate] in that I think the demand in Jersey City is still good,” replied Persky. “It’s not as good as it was. Maybe it’s a little bit of an anomaly, it’s only occurred in the last 4-6 weeks. Our buildings are slowing down a little bit. But we’re still not experiencing any vacancy. You know, with our portfolio in Jersey City, we are is looking at maybe 1% vacancy, and our rents are stable. I think they flattened out a little bit, but again, I don’t know if that’s a long-term trend or if it’s just a function of the season.”

According to Penrsky, Jersey is set to benefit from activity in New York City. “With CitiBank moving to TriBeCa and Google moving to TriBeCa, I think we’re going to be the beneficiaries of it,” he predicted. “We obviously are very bullish. We just started a 70-story building in Journal Square. We’ve got another 50-story building being built out now, so we’re in it. you don’t stop a building in the middle. So we’re very bullish. In the suburban markets, I think we are experiencing the same thing. We’re seeing that rents have flattened out a little but but the demand is still there. We’re not seeing any great vacancy. We’re also on a program where we have been purchasing existing B product and renovating it. we’ve been able to really increase the rents on the renovated apartments.”

“The issue for us is that you can’t renovate them fast enough,” he explained. “Because if you buy 130 units, it doesn’t mean they’re all vacant. And in new jersey it is very difficult to move tenants out. So it’s a slow process. It’s a program that we’ve undertaken which we think will be successful, but it’s really a time game, to see how quickly we can relocate the tenants and renovate the apartments and upgrade them to a different standard. But overall we are still very bullish, we are still active in the market. We are site-planning many projects in various communities, both on the Waterfront and in the Suburban markets.”

For more coverage of this panel, check out earlier CapRE Insider Reports: