Somerville's real estate market is demonstrating remarkable strength, with significantly lower vacancy rates for both apartments and offices compared to the broader Somerset County area. A recent analysis presented to the Borough Council highlights the town's successful redevelopment and its appeal to a key demographic, positioning it as a standout performer in New Jersey's property landscape.
According to real estate consultant Jeffrey Otteau, founder of the Otteau Group, Somerville's strategic revitalization has created a uniquely desirable environment. This has resulted in a tight commercial and residential rental market, even as the surrounding county experiences rising vacancies. However, Otteau also cautioned that evolving social trends could present future challenges for the town's vibrant restaurant scene.
Key Takeaways
- Somerville's office vacancy rate is 3%, significantly lower than Somerset County's 5% average.
- Apartment vacancy is decreasing in Somerville while increasing across the county, indicating strong demand.
- The 35 to 44 age group makes up 19% of Somerville's population, compared to the New Jersey average of 12.5%.
- A consultant warned that declining alcohol consumption, which has hit an 86-year low, could impact Somerville's numerous restaurants.
- Senior housing is identified as a major future growth opportunity for the borough.
Apartment and Office Markets Show Robust Health
A detailed analysis of Somerville's real estate sector reveals a market that is not just stable, but actively outperforming its regional counterparts. Jeffrey Otteau, a leading real estate economist, presented data to the Borough Council that paints a picture of high demand and low supply in both the residential and commercial sectors.
The apartment market in Somerville remains exceptionally strong. "While vacancy rates are rising in Somerset County, they are falling in Somerville," Otteau stated, describing the borough as having "a very strong apartment market." This divergence indicates that Somerville is a primary destination for renters in the region, even with rental prices being comparable to the rest of the county.
By the Numbers: Vacancy Rates
Office Space: Somerville's office vacancy rate stands at just 3%, which is among the lowest in the entire state of New Jersey. This contrasts sharply with the Somerset County average of 5%.
Apartments: Vacancy rates for apartments in Somerville are on a downward trend, bucking the county-wide trend of rising vacancies.
The commercial office market tells a similar story of success. With an office vacancy rate of only 3%, Somerville stands out as a highly sought-after location for businesses. This figure is substantially better than the 5% average for Somerset County. Otteau emphasized that these low vacancy numbers are a direct consequence of the borough's long-term redevelopment strategy.
Redevelopment and Demographics Fueling Growth
The core reason for Somerville's real estate success can be traced back to its focused redevelopment efforts. These initiatives have transformed the county seat into a location that offers a unique and attractive lifestyle, which in turn draws in a specific and economically valuable demographic.
"Somerville offers a lifestyle which is not reproducible in a lot of other places," Otteau explained to the council, crediting the borough's planning for making it a "vibrant and desirable place to live."
This desirability is reflected in the town's population data. In New Jersey, individuals between the ages of 35 and 44 constitute 12.5% of the population. In Somerville, that same age group accounts for a much larger share, at 19% of the local population. This demographic is often in their prime earning years and actively seeks walkable, amenity-rich communities, a profile that Somerville now fits perfectly.
The Impact of Strategic Redevelopment
Over the past two decades, Somerville has invested in creating a mixed-use downtown core, promoting pedestrian-friendly streets, and encouraging the development of modern residential units alongside retail and office spaces. This has created a self-sustaining ecosystem where residents can live, work, and socialize without heavy reliance on cars, a key factor in attracting younger professionals and the 35-44 age demographic.
The success has made Somerville a "first choice" for many apartment dwellers in central New Jersey. The town's ability to attract and retain this key demographic is a primary driver of its economic vitality and the strength of its property market.
Future Challenges and Emerging Opportunities
Despite the positive current outlook, Otteau cautioned the Borough Council that continued success is not guaranteed and that new challenges are on the horizon. He pointed to broad societal shifts that could impact Somerville's economic formula, particularly its heavy concentration of restaurants and bars.
One of the most significant trends is a change in consumer habits among younger generations. "Young people don't drink," Otteau noted, highlighting that alcohol consumption in the United States has reached an 86-year-low. He attributed this decline to a combination of factors, including a greater focus on health, the economic pressures on younger people, and the increasing use of cannabis.
This trend poses a potential threat to Somerville, which Otteau said has more restaurants per capita than any other town in New Jersey. Many of these establishments rely heavily on revenue from liquor sales. As consumer preferences shift, these businesses may need to adapt their models to remain profitable.
Key Demographic and Social Statistics
- Childless Households: Nearly three-quarters (75%) of Somerville's households are childless.
- Birth Rate: The national birth rate has declined dramatically in the 21st century, impacting long-term demographic trends.
- Alcohol Consumption: Now at its lowest point in 86 years, signaling a major shift in social behavior.
Looking ahead, Otteau was hesitant to provide a concrete forecast for the real estate market, citing the "stressful, unpredictable times" of the current economic climate. He did note that expected interest rate cuts from the Federal Reserve could cool real estate price appreciation over the next five years, though he did not foresee a dramatic change in the strong rental market.
However, he did identify one clear area for growth. Otteau described senior citizen housing as a "significant opportunity" for Somerville. With an aging population across the country, providing suitable housing options for seniors could become a major new driver for the borough's continued development and economic health.
