Northern New Jersey Rent Growth Has Moved Above the U.S. Norm
While occupancy in Northern New Jersey’s apartment market almost always is very tight, the area has a tendency to underperform many other locales in terms of rent growth. Right now, however, there’s notable momentum in apartment rents.
Mid-2012 performance results show effective rents for new leases in Northern New Jersey – defined by MPF Research as the Edison and Newark metros – climbing 4.7 percent annually. That rate tops the national norm of 4 percent.
Particularly helping the current performance, the Somerset County submarket, inclusive of spots like Bridgewater, Somerville and Franklin Township, is posting a double-digit annual rent growth pace. Annual rent growth is around 7 percent in Essex County, while most other portions of the region are registering rent growth in the range of 4 to 5 percent.
At 96.7 percent, Northern New Jersey’s strong occupancy performance bodes well for further increases in apartment rents. More than anything else, however, what seems likely to impact rent growth potential here is whether or not there’s wage inflation, and that could be shaped by evolving characteristics of the employment base more than the absolute number of job additions.
Northern New Jersey basically isn’t adding any new jobs on net right now. But wage stats look somewhat better than the stagnant job count would suggest, because expanding industries like health care, business services and finance tend to pay as well or better than downsizing sectors such as local government.
Shifts in employment base composition actually are an important factor to consider in the apartment market outlook in slow-growth economies all across the country. As in Northern New Jersey, there are other spots where the performance of the apartment sector depends more on adding the right kind of jobs than on adding jobs in total.
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