Over the past quarter, New York’s rental vacancies reached a three-year low. Less than two percent of the city’s apartments are available, and rents are skyrocketing as a result.
Analysts at the commercial real estate services firm Marcus & Millichap now predict, “As demand for apartments remains intense in New York City, landlords will boost rents to new highs.
“Young professionals will target resort-style communites near the PATH in Jersey City where rents are nearly 30 percent cheaper than comparable units in Manhattan,” says Marcus and Millichap.
“Families facing forecloseure, or seeking larger, more affordbale living space will also migrate across the Hudson to high end rentals in Weehawken and Hoboken.”
Already, average asking rents in Manhattan have risen by 3.5 percent over the second quarter, to $3,719 a month.
Anticipating an exodus of apartment hunters from Manhattan, developers are scrambling to construct luxury properties just outside the Big Apple, in places like New Jersey’s gold coast and southern Connecticut.
By the end of this year, over 1,150 market-rate apartments will be introduced to the Northern New Jersey market, according to Marcus & Millichap.
At Lincoln Harbor, a mixed-use waterfront development in Weehawken, Hartz Mountain Industries and Roseland Properties are at work on the Estuary, a collection of three low-rise rental buildings set around a landscaped courtyard.
The buildings will offer a rooftop deck with a pool, a children’s playroom, a Wii game room, and a golf simulator, among other amenities.
Carl Goldberg, a managing partner at Roseland, expects New York City commuters to flock to the Estuary when it opens next summer. And he is confident that Manhattanites will be drawn to River Trace, a high end rental development Roseland is constructing about a mile north, near the Port Imperial Ferry Terminal.
“One of the reasons, clearly, is shortage of quality rentals [in Manhattan] at reasonable prices,” Goldberg said.
Recently, ground broke on a parking garage near the Port Imperial terminal that is expected to spur further luxury development in the area.
“I cannot emphasize enough how important this project is for the future of the waterfront,” said Weehawken Mayor Richard Turner. “Without this project, you either have no parking or no future development, and successful development is crucial for Weehawken.
“The parking garage project is expected to create between 250 and 350 construction jobs and 30-to-40 permanent jobs in our community. It will also add $1.2 million in revenue to our township budget that is sorely needed in today’s economic climate.”
Port Imperial and Lincoln Harbor are a five-to-ten minute trip from midtown — the Estuary is located right by the entrance ramp to the Lincoln Tunnel, and the Lincoln Harbor ferry terminal is nearby — but Hartz and Roseland are banking on projects further inland drawing Manhattan commuters, too.
About 20 minutes west of the city, on a riverbank opposite the Meadowlands Sports Complex and the American Dream mall in Secaucus, the partners are completing a luxury rental development called Osprey Cove, which is slated to open next month.
Rents for the four-story building’s studio through two-bedroom units, which come with washers and dryers, bamboo wood flooring, and access to a club room and a park with a dog run, range from about $1,525 to $2,680 a month. Two bedrooms with a den are being listed for up to $2,845.
Goldberg expects the building to draw apartment hunters priced out of the gold coast, as demand rises for rentals along the river.
“Rents won’t be quite as high as on the Hudson River waterfront,” he said. “Some locations on the waterfront have rents in excess of $40 a foot. By New Jersey standards, that’s a significant rent.”
Even farther from the five boroughs — in urban pockets of Fairfield County, Connecticut, as well as the city of New Haven — demand for luxury rental housing is also on the rise.
Over the past year, 280 units came on the market at Crown Point at the Reserve, a development in Danbury. And the 165-unit first phase of Lockworks at Yale & Towne, a rental community in Stanford with a rooftop pool, fire pit, billiards room, and movie theater, opened last fall.
One bedrooms start at $1,950, two-bedrooms at $2,605, and three-bedrooms begin at $3,320.
Online marketing materials emphasize the development’s bargain prices, describing it as “a brand new apartment complex with all the amenities you would expect in Manhattan, without the Manhattan cost.”
The site of a former lock factory, Lockworks is one of several developments in Harbor Point, a mixed-use waterfront community. “As a commuter region, New Haven-Stamford apartments continue to beneﬁt from employment outside of the market, including Hartford, New York City and Westchester County,” the M&M report explained.
A total of 5,100 rental units are planned for the Fairfield County market, according the report, with 500 expected to be introduced by the end of the year.
And further north in New Haven, which is seeing growth thanks to a stable job market in the area, over 2,000 units are being planned. Manhattan, which has over 10 times the population of New Haven, has only 2,100 rental apartments in the pipeline this year.
“Unfulfilled demand for rental housing persists,” the Marcus & Millichap report explained. “With its strong demand proﬁle, investor interest in downtown New Haven assets remains keen.”