CAPRE’s New Jersey Apartment Summit Preview: “We’re Late in the Cycle but We’ve Been Late in the Cycle for a While”
JERSEY CITY, NJ — Adam Altman is one of three founding partners of The KABR Group, an opportunistic buyer of real estate and debt. The KABR Group specializes in acquiring assets from special servicers, financial institutions, and global and regional banks. The KABR group has current holdings approximating 3,000,000 square feet of office space, 3,000 rental units, over 500,000 square feet of retail and industrial space, and is in the process of developing over 1,000,000 square feet of multifamily and retail space in the Jersey City market. In addition, the firm has purchased and worked through hotel debt and broken condo properties. Mr. Altman is also involved with the management and leasing of the properties post-acquisition. Adam will be a featured speaker at CAPRE’s upcoming New Jersey Apartment Summit. In advance of the event, Adam shared some of his latest observations from the trenches with CAPRE.
Altman: We are seeing that rents have been climbing across our portfolio in the Northeast and Southeast. In our New Jersey portfolio, specifically Bergen County office, and multi-family rents remain strong. We’re focused on trying to find new opportunities to purchase, which has been tough lately, as a result of very low interest rates coupled with being pretty far into the economic cycle and the need for large funds to deploy capital in certain markets.
CAPRE: How would you characterize the market right now?
Altman: The multi-family New Jersey Gold Coast rental market remains strong. There are virtually no rent concessions, the cap rates at which multi-family properties are trading in New Jersey are at record lows. And that’s good for owners. You can attribute those prices to compressed interest rates, rental regulations in New York pushing buyer to New Jersey, and the overall perception of stability within the asset class.
CAPRE: Do you think we’re due for a slowdown? What will happen to the multi-family scene if that happens?
Altman: You know, multi-family is a pretty stable asset class, and yeah, we’re late in the cycle but we’ve been late in the cycle for a while. New York City multi-family, retail and condos are all having very significant issues. The retail and condos headwinds are secular and supply driven but the multi-family weakness is driven by politics. New Jersey hasn’t suffered from those same headwinds as it relates to multi-family. If rates stay low, it will continue to buttress multi-family apartments, and I think they will stay low.
CAPRE: What are you looking forward to about CAPRE’s New Jersey Apartment Summit in December?
Altman: I think it’ll be interesting to see how the institutional community is responding to the lack of new starts gold coast starts in NJ as a result of no PILOT programs. And the employer tax – how other landlords feel that’s impacting their desire to build there.
CAPRE: Are any sub-markets heating up or cooling down at the moment?
Altman: Well most of the markets are constant forces – pretty static. I don’t expect to be blown away by something new, TOD remains hot. Technology and The things that the municipality can focus on to create more connectivity are interesting including across the Hudson.
CAPRE: Before our last apartment summit, we were hearing about Empty Nesters leaving New Jersey to get closer to the City. Is that still happening?
Altman: Well, it’s not just empty nesters moving back to New York City. That’s happening for a lot of people who are more affluent. But really it’s not about the City specifically – because people who want a shift in a lifestyle are also moving to areas within New Jersey – to New Brunswick, Harrison, Jersey City, Hoboken, Weehawken – that are more transit-oriented. Those areas still have downtown settings – Fort Lee, Englewood offer the ability to walk to a bar or a park or a restaurant in their downtown areas. They’re expanding the light rail in Bergen County to Ridgefield Park and into Englewood, and I think that will be a game changer for northeast Bergen County.
CAPRE: What is the biggest change over the last year?
Altman: Not much has changed to be honest. People are a bit more pensive and restrained. The firms who know what they’re doing are continuing to do it, so it’s a tough space to break into if you don’t have a lot of capital or local expertise. A year from now, I think rates will remain low, and we have to hope that some of the headwinds that New York City is facing will not come across the river. If we don’t institute some of the same confiscatory policies as New York City to penalize landlords, then New Jersey multi-family can probably remain but thrive as a result.
CAPRE: Thanks for your insight, Adam. We’ll see you in December in Jersey City.
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