As we wade into 2023, multifamily-focused investment brokerage Gebroe-Hammer Associates is out with a look back at 2022’s successes and a glass-half-full perspective for the year ahead.
According to a Jan. 18 announcement from the Livingston-based firm, multifamily assets will continue to demonstrate stability during this period of economic “normalization,” and following more than $1.47 billion in sector sales, Gebroe-Hammer projects healthy investment growth in the coming months.
“Historically able to withstand the test of any economic cycle – even severe recessionary periods – multifamily is continuing to demonstrate a level of stability steeped in its most-favored CRE investment vehicle status versus other real estate sectors,” President Ken Uranowitz, who has spent his entire 48-year brokerage career with Gebroe-Hammer, said in a statement. “While there is most certainly a ‘normalization reset’ in multifamily values and rents following a pandemic-fueled surge of both, occupancies along the New Jersey-Greater Philadelphia MSA and New York State corridor are among the strongest in the nation.”
To close 2022, Gebroe-Hammer said it finalized the trade of a more than 150-unit garden apartment complex and the sale of an over 200-unit suburban apartment complex in the Greater Philadelphia MSA. Throughout the year, the firm said its sales were concentrated in three areas of the state: North Jersey, Central Jersey and the Philadelphia MSA (including Burlington, Camden, Gloucester and Salem counties in New Jersey).
In 2023, Gebroe-Hammer said its market specialists anticipate continued demand for existing properties, in particular, in the value-add Class B and Class C sectors, which it said are most favored during economic cycles. These “bread-and-butter” and non-Class A properties, the firm said, traditionally encompass workforce housing that is primed for renovation. And over the past 12 months, a significant percentage of the firm’s sales involved these kinds of assets, according to Gebroe-Hammer.
13 deals, 1,283 units, $308 million
25 deals, 3,929 units, $733 million
“Our typical sellers fall into two categories: the first being second- and third-generation owners who recognize the time is right to dispose of their multifamily assets and the second being a private equity group or institutional investor nearing the end of their hold period, with a significant number of units already renovated and the potential for continuation of in-place renovations as well as market-rent maturation under new ownership,” said Executive Managing Director David Oropeza.
Uranowitz said he expects a strong finish later in 2023, “as the ‘dust’ begins to settle” and barring unforeseen geopolitical events or further contraction of the economy, and that ultimately “multifamily will regain traction.”
And while strides have been taken to speed up the development process, present delays have helped to propel such non-Class A value-add sector properties.
“In a market where pandemic-induced supply-chain shortfalls and municipality delays have heavily impacted new-construction multifamily deliveries, value-add repositioning product tops the majority of investor lists,” said Executive Managing Director Joseph Brecher. “Thanks to Gebroe-Hammer’s decades-long client and investor relationships, and our market specialists’ in-depth knowledge of their respective submarkets, multifamily assets – particularly those in desirable locations with a workforce-housing value-add component – are garnering significant interest among local experienced investors.”