Russo Development has taken an $80 million refinancing package for Vermella at Garwood Station, a 296-unit luxury multifamily property in Garwood, N.J. JLL Capital Markets secured the financing from Northwestern Mutual.

The 10-year loan bears a fixed interest rate and is nonrecourse. The coupon rate is a low 2% and includes a nine-month forward component. This mortgage retires $65 million in construction financing the developer had secured in August 2019, county records indicate. The previous lender was Wells Fargo Bank.

Leasing at the property, located at 450 South Ave., began in November last year, with some residents moving into the community in January as construction work started to wind down.

The luxury asset has a mix of studio, one- and two-bedroom units and 40,000 square feet of amenity space, which includes a private yoga studio, a sports simulator, a game room, and a business center, along with a clubhouse with a media center. There’s also 19,500 square feet of retail space at the ground floor, which is slated to be home to a cafe and a restaurant, with other convenience stores planned.

Growing Suburban Demand

Northern New Jersey’s suburban areas are in the midst of a growth spurt, according to a third-quarter report from Marcus & Millichap. One clear indicator is vacancy: Although the market on the whole climbed 40 basis points during the year ending in June 2021, Union County — where Vermella at Garwood is located — stands out as a clear success. Multifamily vacancy within the county has already dropped lower than it was prior to the pandemic, down to a tight 3.2% in June.

Although the multifamily sector continues to gain strength across the quality spectrum, luxury communities seem to be faring particularly well. Yardi Matrix’s January multifamily report pegged rent growth in Northern New Jersey’s upscale sector at 10.4% year-over-year through January.

As renter demand and rents both climb, investment activity may moderate. With the Federal Reserve largely expected to increase rates — effectively increasing the costs of borrowing — investors may take a more cautious approach to investment in the market and, more broadly, nationwide.