Market Overview

The Company is located at 4 Essex Avenue, Suite 202, in Bernardsville, NJ. Bernardsville is a good example of a suburban infill market we target. Located approx. 35 miles west of New York City, Bernardsville has direct public transportation to New York City via a NJ transit service line. It also boasts the 10th highest per capita income in the state. In our estimation, it is a suburban infill market that has experienced and will continue to experience an increase in population, resulting from a changing shift in demographics, technology and value.

  • There is a demographic shift in Generation Z where they are the least likely to believe in the ideal of owning a home
  • This group carries high amounts of student debt, which makes it harder to afford a home
  • There are indications that Mixed-Use Communities that are walkable, are the biggest unmet desire in the housing market
  • Recent shifts in technology, including the 5G network will allow for people to work anywhere in the world. This will cause a shift out of urban centers into suburban markets.

Demographic Shifts

Currently, the largest demographic in the United States are the generation classified as Generation Z – defined as those being born between 1996 and 2010. This demographic makes up 25% of the US population, making them a larger cohort than the Baby Boomers and Millennials The oldest of this generation are in their twenties and starting to enter the real estate market. Their concerns, and beliefs are radically different than generations before:

  • Generation Z is the least likely to believe in the ideals of the American dream.
  • They carry high amounts of student debt, with 46 percent feeling concerned and burdened by it.
  • Because most lived through 9/11 and all have lived with terrorism, they have more feelings of being unsettled and insecure.
  • With lower rates of teen pregnancy, alcoholism, and drug use, this generation is more risk adverse.
  • They have seen an unprecedented amount of technological change.
  • They are heavily reliant and consistent users of technology, such as cell phones and tablets.
  • They are more educated, more underemployed, and more culturally diverse than generations that have come before them

We believe this demographic is more value conscience than previous, desiring a mixed-use community lifestyle filled with high-end amenities with an embedded technology infrastructure. Points of affirmation are, the high amount of current debt held towards education; which in regard to their lifestyle will translate to lower leveraged home purchases or, more likely, high value rentals in these types of communities. Similarly, their heavy reliance on technology translates to communities with heavy emphasis on amenities and experiences. And we believe these types of communities will provide the most value in suburban markets, where value can still be achieved compared to current over developed urban markets.

Most importantly, there are indications that these types of communities are the biggest unmet desire in the housing market. According to a nationwide report called Who’s On Board 2014 the biggest desire among young professionals is to live in a mixed-use community. The New York City-based nonprofit TransitCenter surveyed more than 11,000 people in 46 metropolitan statistical areas spanning the US geographically. Thirty-nine percent of respondents currently live in mixed-use neighborhoods, but Fifty-eight percent would like to do so. Nationally, the gap in unmet demand approaches 60 million people.

Technology

The future promises a confluence of emerging technologies that will change how Americans live. The most influential is the proliferation of 5G technology. 5G marks the start of a new, intelligent world, with all things sensing, all things connected and all things intelligent. In the very near future, self-driving cars will communicate through the 5G network — and traffic jams, accidents, and parking problems will become a thing of the past. Groceries and other purchases will be carried to us through the air by drone, arriving in our hands within minutes. The blind will perceive the world using assistive technologies. In short, 5G will be the portal to the digital world for everything and every person.

As a result, people will be able to live in areas that are not in close proximity to their place of work. Therefore, the current trend of people congregating around urban centers will begin to dissipate as people will be able to live and work from anywhere in the world. This shift will see a rise in populations moving to suburban centers where value is greater.

Value

As demographic shifts take hold and technology begins to create innovative economies and opportunities, Americans are shifting away from urban areas to the suburbs. Newly released census data for the first seven years of this decade signal a resumption of the population dispersal that was put “on hold” for a good part of the post-Great Recession period. The Census Bureau’s annual county and metropolitan area estimates through 2017 reveal a revival of suburbanization and movement to rural areas along with Snow Belt-to-Sun Belt population shifts. In addition, the data show a new dispersal to large- and moderate-sized metro areas in the middle of the country—especially in the Northeast and Midwest. If these shifts continue, they could call into question the sharp clustering of the nation’s population—in large metropolitan areas and their cities—that characterized the first half of the 2010s.

These suburbanization trends, while not yet at levels of the early 2000s, seem to be associated with recent improvements in the economy and housing market that have lifted the constraints to suburban relocation among potential movers, including young adult millennial households. There is reason to believe the trend is likely to continue. It suggests that the steady improvement in the economy and the housing market in more places, along with changing residential preferences, may be prompting employers and job-seekers to take a new look at areas that were growing before the Great Recession.4

Therefore, we believe our mission and vision is therefore in-line with future trends and developing and repositioning suburban in-fill markets to facilitate a mixed-use community lifestyle will bode well for our investors.

“We need more business and civic leaders to join us in promoting policies to unleash America’s full potential. Policies that incentivize investment in underserved communities, including… Opportunity Zones in the new tax reform law, can encourage support for parts of America that continue to struggle with poverty and job growth.”

Jamie Dimon
Chairman & CEO, JP Morgan Chase
Axios.com Op-Ed, 3/21/18)