Some experts fear end of rental market boom

don smith/staff photographer

Construction on Park Avenue in Fort Lee. The Modern is the glass project; the other, in its early stages on the adjoining block, is Hudson Lights.

This week The Modern, a luxury high-rise apartment building perched near the George Washington Bridge in Fort Lee, is opening its leasing office. More than 2,000 potential tenants have already registered for notices regarding rental opportunities at the 47-story building.

The project's developer, SJP Residential Properties, put a banner up on the 450-unit property about five weeks ago, which drew the "unprecedented" response, said the company's president, Allen Goldman.

"We view the Bergen County market as having been underserved significantly," he said. "Look at Fort Lee and Hackensack. What is the housing stock? It's decades old."

The multifamily residential rental market is one of the hottest commercial real estate segments in North Jersey, with a swell of development planned and existing properties fetching top prices. In New Jersey, the multifamily market has accounted for a record 63 percent of the permits issued so far this year. Led by this rebound in multifamily activity, the state's builders are on track to start the largest number of homes since 2006, before the recession.

North Jersey has dominated the state's home construction market, with about 30 percent of building permits this year in Bergen and Hudson counties.

But some developers and housing experts are wondering when, and where, the bubble will burst.

"Any market that gets super hot eventually has got to cool off," said William Procida, founder and president of Procida Funding & Advisors LLC in Englewood Cliffs. "Construction costs being what they are now make it very difficult to make a multifamily ground-up construction even work anymore, and rents aren't spiking with them."

On the Hudson River's Gold Coast, which spans Jersey City to Fort Lee, 16,540 residential units are either under construction, proposed or in the planning stages, according to Cushman & Wakefield of New Jersey Inc. There are about 6,000 residential units set for Bergen County, according to Cushman's data.

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Some experts fear end of rental market boom