Get Ready for the New Wave

The New Jersey apartment market today bears some resemblance to the Texas oil market, circa 1980: it's all go-go-go. Developers are racing to produce the product—which in this case is multifamily rentals, most of it new construction. Capital is chasing the product, with nearly single-minded zeal. And consumers can't seem to get enough, even as prices escalate to unprecedented heights. (The statewide occupancy rate is over 96% by all accounts, and in the hottest waterfront communities, it is effectively 100%. The average class A rent is $1,973; in Hudson County, the monthly rent for a two-bedroom currently averages more than $2,600.)

At this point, questions have begun to surface, even among gung-ho developers and sanguine investment brokers: With 17,000 more units scheduled for delivery by the end of 2015, is the construction pipeline set to choke? What about the foreclosure properties now streaming steadily from the courts; could they still spurt like a geyser and overwhelm the rental market as many were predicting? And won't the urban areas in the state's northern half—some already among the most densely populated places on the globe—simply run out of attractive, buildable sites sometime soon?