As part of a continuing series with industry leaders, we are delighted to bring back, Adrienne Albert, the CEO of Marketing Directors. We last interviewed Adrienne on May 21, 2020 in the middle of the uncertainty of the pandemic. Many readers of the GRID Bits took comfort from the interview and seeing that the real estate world didn’t shut down during this difficult period. We wanted to catch up with Adrienne and her team this summer to get their insight on the market this year and going forward as we get back to normal.
Grid Bits: The Marketing Directors has been busy this last year. How would you categorize the high-end market for multifamily, rental residential housing today? Has it recovered completely from the economic shutdown in 2020?
Adrienne Albert: We have been fortunate enough to stay busy the last year! We opened and closed numerous projects entirely during the pandemic, including 45 Market in Morristown, One500 in Teaneck, Bay 151 in Bayonne, The Ashton in Jersey City. And other communities that launched pre-pandemic successfully finished during it, such as 770 House in Hoboken, Vermella Union, and The Mint in Rahway.
Now, the high-end multifamily market is strengthening and so are mid-level rentals. Demand is very strong and even exceeding pre-pandemic levels. Many of our properties are leasing at unprecedented rates, including Journal Squared which completed lease-up at over 150 leases per month. Net rents are still recovering to pre-covid levels, but gross rents are back to performing well and incentives are continuing to burn off from their highs. For example, RiverHouse9 opened in May with up to 3 months free and is now down to offering 1 month as prices have increased 13% since opening.
The condo market is also coming back to life. Jersey City condo activity has seen incredible activity in 2021. Closings surged in the second quarter following a first-quarter spike in contract activity, which remained high in the second quarter at a 96% increase year over year. NYC condo activity has been amazing as well with second-quarter closings up 51% versus last quarter and up 150% versus year over year. Contract activity remains high as well, even after a strong first quarter, with contracts up 23% versus last quarter and up 519% year over year.
“Many of our projects are leasing at unprecedented rates, including Journal Squared which completed leasing at over 150 leases per month.”Adrienne AlbertCEO of Marketing Directors
Net rents are still recovering to pre-covid levels, but gross rents are back to performing well and incentives are continuing to burn off from their highs. For example, RiverHouse9 opened in May with up to 3 months free and is now down to offering 1 month as prices have increased 13% since opening.
“The condo market is also coming back to life. Jersey City condo activity has seen incredible activity in 2021.”
Closings surged in the second quarter following a first-quarter spike in contract activity, which remained high in the second quarter at a 96% increase year over year. NYC condo activity has been amazing as well with second-quarter closings up 51% versus last quarter and up 150% versus year over year. Contract activity remains high as well, even after a strong first quarter, with contracts up 23% versus last quarter and up 519% year over year.
- The St.Regis Residences – Rye, NY – 95 Homes
- RiverHouse 9 – Weehawken, NJ – 313 Homes
- Crossings at Raritan Station – Raritan, NJ – 256 Homes
- Journal Squared 2 – Jersey City, NJ – 704 Homes
- One Ten – Jersey City, NJ – 238 Homes
- The Eddy – Harrison, NJ – 310 Homes
- The Atwater – Bogota, NJ – 273 Homes
- 210 Main Street – Hackensack, NJ – 126 Homes
- Hamilton Cove – Weehawken, NJ – 573 Homes
- Edison Lofts – Edison, NJ – 300 Homes
- Centurion Union Phase 2 – Union, NJ – 75 Homes
- Avenue & Green – Woodbridge, NJ – 232 Homes
Upcoming Properties Launching Soon
- Hunter’s Point South – Long Island City, NY – 283 Homes
- Stella – New Rochelle, NY – 294 Homes
- Skye Lofts North – Bayonne, NJ – 100 Homes
- 180 Morgan Street – Jersey City, NJ – 450 Homes
- Noma – Ridgewood, NJ – 39 Homes
- The Agnes 2 – Jersey City, NJ – 88 Homes
- Sawyer – Jersey City, NJ – 131 Homes
- Harrison Yards Phase 1 – Harrison, NJ – 261 Homes
- Citizen Linden – Linden, NJ – 234 Homes
- Citizen Bayonne – Bayonne, NJ – 651 Homes
- 88 Regent – Jersey City, NJ – 375 Homes
- 3 Acres – Jersey City, NJ – 600 Homes
- 351 Marin – Jersey City, NJ – 507 Homes
- The Rail at Red Bank – Red Bank, NJ – 57 Homes
Grid Bits: Not surprisingly, our approach to developing and marketing multifamily has changed because of the pandemic. What are some of the positive changes in terms of amenities and features you see enduring post-pandemic? How has it changed the way The Marketing Directors approach a new project?
Adrienne Albert: Generally, more individualized and less congregate spaces have dominated design during the pandemic. There hasn’t necessarily been a shift in actual amenities, more so the way those amenity spaces are programmed. Changes have been more focused on the separation of certain areas such as workspace given the remote work trend which will endure to some degree post-pandemic. Common outdoor space has always been a high priority for us at buildings and that will of course continue.
“Within homes, more attention has been given to the arrangement of workspaces, touchless technology, air and water filtration, antibacterial surface materials, and private outdoor space.”
Outdoor space was and will continue to be a popular home feature that many buyers and renters will look for, especially in suburban markets. Once people return to the workplace, we will return to amenities being the additive space to smaller homes. Some of the attention given to features related to the pandemic were already considerations in mind for easier living but their use or importance has just been accelerated, such as a focus on grocery delivery services or using personal smartphones to access apartments or amenity spaces.
“Lobbies were already being activated pre-pandemic with real uses instead of just seating and weren’t necessarily enhanced by the pandemic. (Work spaces, coffee bars, virtual concierges, transit screens, package rooms etc.)”
Grid Bits: You said last year that there was tremendous pent-up demand in the rental marketplace. That turned out to be spot on! You have had great success with projects this year. Would you say demand has snapped back to pre-pandemic levels? Where are we in the recovery?
Adrienne Albert: YES! Demand has snapped back and is exceeding pre-pandemic levels. 2021 has seen a major surge in activity that has increased throughout the year thus far. For example:
- Hamilton Cove in Weehawken, which opened right in the beginning of the pandemic, signed 94 leases in the first 3 months and has signed 154 leases in that same period this year, a 64% increase. We are nearly fully leased there now.
- 100 House, the second phase of The Enclave development in Jersey City, opened in September 2020 and was leased in approximately five months at a velocity of 26 leases per month. We are now doing double that pace at the third phase, One Ten, which has 238 homes and is now fully leased since opening in March.
- The Eddy in Harrison, which launched in February, has now leased 100% of its 310 homes and is averaging over 50 leases per month, nearly 4 times the velocity we achieved in Harrison 2-3 years ago.
- The Atwater in Bogota has leased nearly 75% of its combined 273 homes with strong leasing activity as additional residences have been released over time.
“Our condo project in Jersey City, 99 Hudson, made up an impressive 70% of new development closings and 7% of overall closings in Jersey City in the second quarter.”
We also completed a record sale for Jersey City when one of our penthouses sold for $3.9 million in March, which is extraordinary considering the housing market challenges over the last year.
“In terms of recovery, we are not fully there yet but we are close. The key is the return to work. We won’t see a drop in work from home but more of a gradual return to the workplace over time.”
As tenants and buyers return, they will seek housing closer to work and transportation. Hybrid work models will also allow renters to live further from the city but close to transportation in order to stay easily connected with the office.
Grid Bits: We are stunned with the success of Journal Squared 2 lease up. It flies in the face of all the fears expressed by many last year. What do you attribute this success to?
Adrienne Albert: Mostly due to the great location directly next door to the Journal Square PATH station and central location within the growing Journal Square neighborhood. The building offers great views and finishes and amenities, and our team has done a fantastic job there. We are by far the tallest building in the area at 68 stories and offer unmatched views. We leased all 704 homes in about 4 months since we opened the building in the spring. We are averaging 16% higher at the second tower versus what we accomplished at the first tower on a price per square foot basis, acknowledging that Journal Square is now a highly desirable location trading at a premium.
“We are averaging 16% higher at the second tower versus what we accomplished at the first tower on a price per square foot basis, acknowledging that Journal Square is now a highly desirable location trading at a premium.”
Grid Bits: You also had great success in the suburban markets like Ridgewood. Do you see the suburban market for multifamily rental housing continuing to grow? How important is rail to this market? Are the amenity packages the same? What is the spread in rents, urban to suburban? Is there a discount either way?
“The Benjamin was a huge success in a market that was relatively untested. The building was fully leased in under 2 months after opening and achieved rent as high as $5,000/month.”
We have been successfully leasing in areas ranging from 210 Main Street in Hackensack to Premiere in New Brunswick. And we are about to open a few other suburban projects: one in Woodbridge, NJ called Avenue and Green, one in Linden, NJ called Citizen Linden, and the second phase of Centurion in Union, NJ which we expect to be very successful as well. We expect suburban markets to continue to grow, especially in areas close to transportation.
“Renters seek proximity to transportation in suburban markets in order to stay connected with the city and nearby destinations.”
Amenity packages at suburban properties are in line with those in urban areas as no matter the location people want the convenience and lifestyle they offer. The spread in rents from urban to suburban can be as high as 50% but of course this is area dependent. The Benjamin, for example, had end prices comparable to Jersey City high rises, albeit with larger homes. While we have seen a trend toward smaller homes in the new development market, suburban properties still tend to skew larger with home sizes.
“Top properties in Jersey City are achieving close to $60/SF now whereas suburban markets further from the city are topping out closer to $40/SF.”
Grid Bits: I raised this concern before and I think it’s still a valid concern, are you concerned about the full pipeline we now have in many markets along the waterfront?
“We are not concerned about the full pipeline of projects along the waterfront. Most pipeline still hasn’t started construction so it will still take years for these developments to come to market.”
As more properties do come to market, we see them contributing to the growth of the wider area. If the demand so far in 2021 is any sign of what’s to come, these projects will see healthy absorption as projects that have opened recently along the waterfront have seen a lot of success.
- RiverHouse 9 in Weehawken is over 80% leased in just 4 months
- We fully leased the first phase of The Agnes on the West Side of Jersey City in just five months since it launched.
- We have seen strong activity across the Gold Coast including areas that hadn’t previously seen as much new development, such as Bayonne. Bay 151 in Bayonne was leased in about 10 months entirely through the pandemic after opening in May 2020.
- One500 in Teaneck, which isn’t along the waterfront but also in an area that hasn’t seen much development and was very successful. The property also launched in the middle of the pandemic in July 2020 and was fully leased in eight months.
There is demand not just along the waterfront but it is spreading further inland and the tide will help raise all ships.
Grid Bits: Finally, you are active in the New York City market, how is the New York housing market recovering? Is the Jersey market still the lower cost option to NYC or is Jersey beginning to look and act as a separate independent market and lifestyle choice?
Adrienne Albert: The NYC market is recovering well. Apartment occupancies have been rapidly strengthening in 2021 as many New Yorkers have returned, although not all are going back into the office. People are now able to take advantage of NYC’s abundance of food and entertainment options that weren’t available during the pandemic.
“Rents in NYC have jumped in the last few months with median asking rent increasing 4% and inventory decreasing 14%.”
Incentives are decreasing as well and we are seeing 1 month free replacement offers where 3 months free was previously common.
“The number of leases signed in the luxury market in Manhattan has tripled year over year in June as renters continue to take advantage of low prices.”
This is already an encouraging sign for the NYC market. As workers return to the office and children go back to school, the market will continue to strengthen.
Although Jersey should be an overflow from NYC, it suffered from not having a firm identity.
“Now Jersey City and much of the rest of the Gold Coast are residential destinations and do not rely on NYC. New Jersey benefited from the pandemic exodus from NYC as renters and buyers sought more affordable homes with larger spaces.”
The lifestyle they loved in NYC was shut down which took away their primary reason for staying in the City. Now that life is returning, the tenants and buyers are returning without any seemingly negative effect to the Jersey markets.