Essex County Multifamily Property Sales Report

Criteria for this Sales Report Includes: 

• 6+ Units
• Excludes Mixed-Use Properties
• Middle Market Properties ($800,000-$30,000,000)

The average sale price has been a very important measure for many investors as it is the true piece of information that is used when it comes to sales comparisons. With the exception of Newark, there has been a trend of declining average sale values over the past three years. This lift for Newark this year is caused by a few reasons. One is that because there are currently only four transactions within Newark in 2024, if one is sold at a high price, it is going to adjust this average significantly. This trend is expected to continue, due to brand-new developments finishing up, as well as the expected interest rate cuts.

For the purpose of this report, data highlighted is from four cities: Newark, Irvington, East Orange, and Montclair. These cities have the highest transaction amounts and sales volume. Additionally, neighboring markets are much wealthier and hold higher valued properties, which will skew results to a higher than average sale price.

Throughout the past three years, there has been a considerable drop in the sale price within Essex County as a whole. On the “Average Sale Price” graph, there is a slight discrepancy with this trend as Newark is the only town to note an increasing average sale price within the past year. Newark has shown very high demand over recent quarters, due to anticipated interest rate cuts, prime location to NYC, and new developments and higher-quality living becoming available.

Over this three-year period, the highest average sale price in Essex County was in 2021 when it reached $4,130,140 per property. Since 2021, the average sale price within most of Essex County dropped roughly 44%, with average sales going for just over $2.3 million. With Newark containing most of the transactions, it carries the average of Essex County to where it is now.

So, what is the true cause? Ever since rates have been rising since COVID-19, that has led to the cost of capital becoming increasingly expensive. Thus, there are less investors in the market willing and able to buy properties, decreasing the demand within multifamily investments.

The average price per unit over the past three years has been increasing, with an exception in 2023 where the average price per unit dropped roughly 12%. One metric that must be considered are bulk and portfolio sales. This is important because in those types of transactions, the price per unit is usually brought down, due to a lot of units within the sale. Additionally, sellers’ motivations and building quality play big roles in the price per unit. If a seller needs cash fast, they will accept a lower price for time efficiency. If the building is uninhabitable, sellers will typically discount the building in some form. On the bright side, since the drop in 2023, there has been a roughly 27% increase in the price per unit thus far into 2024 in Essex County.

Towns included in the “Other” category include the following: Nutley, Caldwell, West Orange, Cedar Grove, Livingston, Roseland, Short Hills, Verona, Millburn, South Orange, and Fairfield. One thing to point out with this category is that its average price per unit is substantially higher than all other townships, with Montclair being roughly $40,000 less at No. 2. These townships are much wealthier communities with a much higher median household income, in comparison to those like Newark and Irvington. Additionally, education and safety plays a big role within the price per unit, which favors those townships heavily. With that, these townships still possess the location and accessibility factor that makes Northern New Jersey a high demand market.

As shown in the bar graph below, Newark and East Orange are dominant when it comes to sales volume in Essex County within the past three years. Combined, they have totaled just under $650 million in sales, which is about 62.58% of total sales volume within Essex County since summer 2021. While these two towns are facing some high demand, there is a notable drop-off after East Orange. It is between Irvington and the “Other” category, with sales volumes around $152 million. This is a drop-off of roughly $126 million, showing how prominent the Newark and East Orange markets currently are. With the addition of new developments and renovated sites, an improvement in living conditions, and anticipated rate cuts, sales volume across Essex County is expected to rebound from this drought.

Total sales volume per year has faced some serious obstacles as interest rates over this period continued to rise. This caused many investors to hold back from purchasing any new properties, due to the high cost of capital and higher risk structure. Demand plummeted, going from $508.7 million in sales in 2021 to $71.5 million this year—a drop of about 85.94%. While market activity has been very slow over the past few quarters, an increase in activity is expected in not only Essex County, but nationally with rate cuts anticipated by year-end.

The graph shown below depicts the relationship between sales volume and the number of transactions on a yearly basis within Essex County. Both sales volume and the number of transactions have faced steep losses since 2022, which demonstrates the current climate of the multifamily market in Essex County. The number of transactions have dropped just over 80% since its height in 2022. The decrease, again, is almost all due to the rise in inflation and increased cost of capital.

In the pie chart below, it is notable to see how much weight each township holds over the past three years. As mentioned earlier, Newark dominates the multifamily market in Essex County as 40% of transactions over the past three years came from there. Additionally, we see that Irvington and East Orange are next up at 20% and 18%. In the previous page, East Orange had a much higher sales volume than Irvington. This goes to show that Irvington’s sales go for much lower than those in other townships in Essex County over this three-year period.

Note: The “Other” section has a considerable percentage compared to other towns. It is necessary to consider that it includes the transactions between 10 different townships, which are much smaller in terms of size, population, and supply.

Summary of Essex County Multifamily Property Sales

Towns with the Most Transactions in 2024

1. Newark: 8
2. East Orange: 5
3. Irvington: 4

1-Year Averages

3-Year Averages