Apartment seekers beware: N.J. rents are about to rise.

Marcus & Millichap Real Estate Investment Brokerage Company recently released its Apartment Research Report for the Northern New Jersey market, which indicates that multi-family investment values will he steady in the near term and are expected to increase in the long term for the local market.

"Market conditions remain strong in Northern New Jersey despite a sluggish employment market," said Mitchell R. LaBar, senior vice president and managing director of the firm's New Jersey office.

"Rent growth has been among the nation's strongest, a trend that is expected to continue for the next year, and apartment property prices are up significantly."

Following are some of the most significant aspects of the report:

The Northern New Jersey economy is forecast to create 28,000 jobs in 2004, an increase of 1.4%.

In 2003, the region is expected to add 11,000 jobs, a gain of 0.6%. As of the third quarter, the region is on track to meet this forecast, with an estimated 8,000 jobs added.

The trade, transportation and utilities and the financial activities sectors accounted for half of the gains.

In 2004, the Northern New Jersey multi-family market will receive 2,500 new units, up from the 2,250 units expected to reach completion in 2003.

The Newark MSA will be home to approximately 1,000 new units in 2004, following virtually no new construction in 2003, but some of those units are age-restricted housing.

The Hudson waterfront will record fewer completions in 2004, with just 700 units anticipated for the entire Jersey City MSA.

Vacancy is forecast to reach 4.8% by year-end 2003 and 5% by 2004.

Vacancies in Hudson county rose substantially, from 5.6% in 2002 to an estimated 9% in the third quarter.

The tightest submarket was Passaic county, with vacancy at 2.7%. Apartment vacancies in Bergen county have ticked up slightly in 2003, rising by 40 basis points, from 4.2% in 2002 to 4.6% as of the third quarter.

Rent growth has been strong to-date in 2003 and is expected to persist in 2004 as vacancies remain within normal operational levels.

Through the third quarter, asking rents rose by 2.5%, to $1,071 per month. Effective rents are lagging slightly, with growth estimated at 2.2% through the third quarter. The Hudson county submarket currently boasts the highest rent growth, with rents expected to rise by 3.2% in 2003.

Sales velocity has been slow in 2003 but the median price per unit is $59,000, up from $45,000 in 2002.

The scarcity of transactions is likely caused by owner/investor uncertainty over geopolitical events and the strong sales volume of the past few years.

Multi-family investment sales in Northern New Jersey are typically concentrated among Class C properties, as is the case in 2003. The increasing median price reflects investor appetite for these assets.

The median price per unit for Class C assets climbed from $44,600 in 2002 to $58,700 in 2003, in part based on larger properties sold this year but also due to increasing values.