Morris County housing boom cresting, but not its commercial growth, report shows

Median home-sale prices in Morris County continued to approach $1 million in 2023, while applications for commercial properties have slowed, according to the county's 2023 Development Activity Report

The annual report indicates the residential "building boom" of recent years, fueled by towns required by the state to build more affordable housing, may be cresting, even as previously approved projects with hundreds of units can be seen rising now in Parsippany, Hanover, Montville, Lincoln Park and elsewhere.

The county's commercial real estate landscape, however, continued a startling transformation last year as developers demolished vacant office properties to make way for previously approved residential units, warehouses and retail-restaurant complexes.

"With limited available and suitable land for these expansive projects, developers are increasingly turning to the redevelopment of abandoned or underutilized properties for future projects," reads the annual report, released on April 17. "The shift towards remote work prompted by the COVID-19 pandemic has further accelerated the decline in occupancy of large office campuses, spurring their targeted redevelopment efforts."

Applications for commercial site plans have also dropped off since a significant spike in 2022 when the county Planning Board reviewed non-residential site-plan applications for 4,811,659 square feet of space. That number fell sharply in 2023 to 2,656,801 square feet, but was still significantly higher than from 2014 to 2021 when annual applications ranged from a low of 850,000 in 2016 to a high of 1.9 million in 2021.

"Robust" development in Morris County continues to be driven by three factors, said County Commissioner Stephen Shaw. A growing trend of people working from home, negating the need for office space, the need for towns to meet their affordable housing obligations and the "desirability" of Morris County, where interstates 80 and 287 intersect, are the driving factors, Shaw said.

"I'm in the building business and study this stuff quite often," said Shaw, a second-generation home builder and the county's representative to the North Jersey Transportation Planning Authority. "This redevelopment is meeting current demands."

Affordable housing

Residents of many towns have been angered by the sight of multi-story, multi-family dwellings replacing tight property lots or vacant buildings in their neighborhoods, and have expressed concerns about increased traffic, school enrollment and flood drainage.

What they often overlook is a state mandate requiring towns to build more affordable housing. The solution many towns look for is to attract developers willing to reserve 20% of their project for affordable housing to produce 80% at market rate.

Much of the new residential construction in Morris County and throughout New Jersey is the result of court-ordered affordable housing settlements with towns. The county Planning Board has already seen an elevation of multi-family unit applications. There were 3,232 multi-family unit applications in 2020 and 3,748 in 2021. But that number fell to 1,900 in 2022 and 1,023 in 2023.

Shaw said despite the decrease in 2022 and 2023, a new round of affordable housing requirements in 2025 will continue to generate more new residential development in coming years. Meanwhile, thousands of approved units are currently under construction throughout the county.

Home prices and rents rising

Some of that housing is also needed for a new round of urban migration to the suburbs that began during the COVID lockdown when people were looking for more open space to live in, Shaw said. That has opened up a market for new luxury housing. High-end units at the Parq residential complex off Parsippany Road, for example, were listed at $1.3 million.

So while new affordable housing units are now opening up in several towns, housing affordability continues to drive up sale prices. In 2022 (figures for 2023 not yet available), the median new single-family attached home sales price in Morris County was $815,832, while the median sales price for new single-family detached homes was $957,750.

Most of the proposed developments were luxury rentals that have projected rent levels higher than the median rent level for the county, the report states. The median rent for a two-bedroom apartment is $1,923. Approximately 43% of renters in Morris County are paying 30% or more of their gross income for rent.

Overall, the amount and type of applications put before the county Planning Board in 2023 was similar to the levels received in 2022, the report states. A total of 310 applications were received by the board in 2023, slightly more than 2022. New applications totaling 1,022 multi-family units were reviewed in 2023.

Wave of warehouses

Much of the recent commercial development and redevelopment in Morris County has been driven by the increased demand for warehouse space, the report indicates. The county Planning Board received 65 new non-residential site plans in 2023, a 22.6% increase over 2022.

The largest new project is a 585,000-square-foot warehouse facility that will replace the former BASF headquarters in Mount Olive. That same developer is also building a 200,000-square-foot warehouse near the BASF property.

In Roxbury, the Planning Board has been reviewing an application for more than a year to build a 2.5-million-square-foot warehouse on the site of the former Hercules munitions plant on Morris County's largest undeveloped property zoned for commercial use.

Smaller warehouses are planned for Parsippany, Denville and other Morris County towns.

"Everybody is doing their shopping online now and expecting their packages in a day or two," Shaw observed. "So more regional warehouse space is needed. That's what you're seeing going into these office properties."

Obsolete offices

Morris County's "Crossroads of North Jersey" location lured hundreds of Fortune 500 companies and other businesses to Parsippany to build or occupy new office space in the 1980s and 1990s. That same advantage has become a disadvantage in an age where those companies need less office space due to more people working remotely, especially after COVID.

Routes 80 and 287 intersect in Parsippany, which once boasted more office space than Newark. But with the modern workforce migration to home offices, those increasingly empty office buildings have become a crippling burden to the tax base.

"When you look at these complexes that have been vacant for 10 years," said Shaw, who now runs Shaw Construction out of a home office. "It's eerie when you drive through the parking lots and there's weeds coming up through the cracks."

The new county report focuses an entire section on what it identifies as Parsippany's "Campus Drive and Sylvan Way" office park, where "decreased utilization of the various properties provided an opportunity for widespread redevelopment in the area."

Several properties there have already been demolished, with several more projects approved in the area to replace office space with warehouses, multifamily dwellings and a Lifetime Fitness facility.

They include 690 multi-family residential units and at least 242,000 square feet of warehousing proposed just within that one aging office complex in Parsippany. Elsewhere in Morris County's largest municipality, proposals are in progress for an additional 1,555 multi-family residential units (including 370 for age-restricted and assisted living) and 416,886 square feet of warehousing, the report states.

Shaw expressed one caveat he learned during a recent meeting of the North Jersey Transportation Planning Authority. "Seventy-one percent of the new warehouse space produced in the region last year was built vacant," he said.

The complete 2023 Morris County Development Report can be viewed online at Morriscountynj.gov.

This article originally appeared on Morristown Daily Record: Morris County report shows median home-sale prices nearing $1 million