Multifamily Building Boom Poised To Transform New Jersey’s Northeast Morris County

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Apartment Stock Expected To Increase by 42% As Obsolete Offices Are Redeveloped

Northern New Jersey’s urban cores, namely Greater Newark and Eastern Union County, tend to garner the most headlines for their massive transit-centric development projects. Yet as CoStar’s construction data reveals, suburban areas can grab their share of the new development spotlight as well.

The epicenter of multifamily development activity lies west, in quiet Morris County, specifically the Route 80/287 Corridor in the northeast part of the county. Home to suburban enclaves such as Parsippany, Mountain Lakes, and Boonton, this area’s apartment stock is expected to see the most growth in Northern New Jersey over the next two years.

Northeast Morris County’s existing inventory of apartments is around 8,300 units, less than a third of the metropolitan leader Greater Newark’s 29,300-plus units. Overall construction activity has been muted here between 2020 and 2022, with no notable supply additions or large swings in tenant moves. While new completions were nonexistent in 2022, construction has since kicked off on almost 2,900 units, the highest-ever tally for the area in a single year.

 

The promise of high returns has attracted developers in droves, as it always does. Northeast Morris County had among the highest annual rent growth for apartments and the lowest average vacancy in the entire metropolitan area over the past three years. The pipeline now has 3,500 units under construction, representing 42% of existing inventory, the highest level in Northern New Jersey.

Beyond addressing a housing shortage, the large number of new projects currently underway are tangentially helping to address the region’s beleaguered office sector. In total, of the eight apartment development projects with at least 100 units, half are redevelopments of demolished offices. PARQ Parsippany and The District at 15fifteen are by far the two largest examples, with 600 and 498 future units, respectively.

Investors backing these projects hope that what made these locations initially attractive as offices, mainly their accessibility to major highways and proximity to lively downtowns, will now help draw in apartment seekers. Yet current demographic trends suggest that competition for renters will be fierce and generous concessions will weigh on returns.

 

The large injection of new apartment supply is expected to have a profound impact not only on the fabric of the local communities but also on the area’s occupancy. CoStar’s models, under a base case scenario that utilizes existing population growth forecasts, expect a large deficit in demand for these new units. Vacancies are projected to surge to 10% by the end of next year, settling at almost double the metropolitan area’s 5.4%, which will put pressure on rents and, ultimately, profits. Bets on the suburban lifestyle may ultimately prove to be winning plays for the developers backing these projects, but will likely require a bit of patience first.

Article courtesy of CoStar