December 2005
In New Jersey, a boom focuses eastward
Lower sales prices and Manhattan views dot the Hudson River with new condo projects
By Alison Gregor
Development heats up across the Hudson: Jamie LeFrak at the site of the Shore Club Condominiums in Jersey City, across from Lower Manhattan.
Residential real estate developers are mining profits from New Jersey's "Gold Coast," where a building boom has conferred new cachet on a handful of Hudson River towns that have sometimes been overlooked. From Jersey City to Fort Lee, the riverfront communities across the Hudson from Manhattan are seeing new luxury development that competes with New York City projects loaded with amenities, but at half the price.
Developers say both condominiums and rental apartments are being snapped up. The Hudson Club at Port Imperial, a 344-unit condominium conversion in West New York, sold 50 apartments in its first week on the market in early November, said Beth Fisher, senior managing director at the Corcoran Group.
South of there, the Shore Club, being developed by the LeFrak Organization in Jersey City, moved 196 of 214 units in just over two months. The Beacon, a $350 million historical redevelopment project also located in Jersey City, slightly further inland, sold almost half of its 315 available units in five weeks, developer George Filopoulos, president of Metrovest Equities, said.
Buyers are responding to bargain-basement prices that are a subway stop away – at least in the Jersey City area, which is accessible by PATH trains that run all day.
"Jersey City got into the condo game a little later than the surrounding areas," Filopoulos said. "But you still have an opportunity to purchase an apartment at half of what it costs right across the river. As long as that remains the price point, I think all these projects slated for development will do very well."
The units being created in Jersey City and other Hudson County cities are mostly one- and two-bedroom apartments, along with a handful of studios, though the latter are typically more popular in Manhattan. There are fewer apartments with three bedrooms or more, though towns in formerly industrial parts of Bergen County are seeing the development of many townhouses as suburbanization spreads.
Besides The Beacon, which is pricing studios, one- and two-bedroom apartments from $300,000 to $700,000, there are several other projects in Jersey City, an urban area with a multitude of mass transit options and a commercial downtown viewed as an extension of Manhattan.
At the Zephyr Lofts in Jersey City, studios, one-bedrooms and two-bedrooms are asking about $500 a square foot, around half the price of new development in Manhattan. Similarly, at the waterfront project Port Liberté, also in Jersey City, 766-square-foot condos start at $345,000.
A loft rental conversion called 150 Bay Street recently opened in the Powerhouse Warehouse Arts District, a formerly commercial area being marketed to artists as Jersey City's Soho. Developer Jeff Gural, chairman at Newmark, said he's testing the market for rentals among the new wave of condominiums. "It's tough to do a rental, because Jersey City really doesn't give you much of an incentive tax-wise," he said. "New York City gives you much bigger real estate tax incentives to do rentals."
Condominiums are a different story. A partnership of the Athena Group and GoldenTree InSite Partners is doing a $110 million, 33-story condo project called "A" condominiums with about 250 units.
Louis Dubin, Athena Group's president and CEO, said cheap land costs make condo development lucrative. "The land cost is considerably lower across the river in New Jersey, by a factor of anywhere from two to four," said the New York-based developer. "And although the projects on the Jersey waterfront tend to be union, like in Manhattan, construction costs tend to be a little less.
"Our opening prices are going to be a little bit less than half of the median for a new condominium in Manhattan," Dubin added. "The median is about $1,100 a square foot, and we're opening at between $525 and $550 a foot. It's a great deal."
About half of the developers working on New Jersey's Gold Coast are from New York, and half are from New Jersey or elsewhere, said developer Jamie LeFrak of the LeFrak Organization, one of the coastal area's largest developers. There are some advantages to developing property in New Jersey.
"Because of the difference in the way zoning is handled, our zoning is per dwelling unit in Jersey City, not per floor-area ratio, so apartments tend to be quite large and very liveable," LeFrak said. "A one-bedroom apartment is more like 800 square feet, unlike New York, where you'd see 650 square feet."
Even so, New York City has a much better scheme for tax abatements, LeFrak said, not to mention that publicity for new projects is well above that seen on New Jersey's coast.
"Somebody puts up eight units in Brooklyn, and suddenly, Brooklyn is Versailles," he said. "In Jersey City, there's been luxury high-rise development since we started there in 1985, but it still typically gets passed over by the New York-centric media. In a funny way, the same thing tends to be true of New Jersey media, which view the state's own waterfront as an extension of Manhattan."
The media may not overlook New Jersey's Gold Coast for long. The quantity of new residential development is catching attention – and may be inflating prices.
"The big thing with the whole Jersey City market right now is new construction, which is, of course, driving up all the other prices," said Michael Miller, a broker with New Jersey Gold Coast Real Estate. But the upper end of the market is still a struggle, he says. "Our hardest sale, especially in Jersey City, is $1 million and above. If a client comes here looking for that, they've probably already looked in Manhattan and determined they like the Jersey City lifestyle."
That lifestyle still may be lacking in retail services, though developers are providing a lot of commercial as part of their residential developments. For instance, more retail of is needed in Paulus Hook, Jersey City's answer to Greenwich Village, Filopoulos said.
But buyers are still flooding into the area. They include not only young professionals and growing families priced out of the New York market. Many buyers are "empty nesters" from inland New Jersey and even other parts of the country, Filopoulos said.
Developers build for a view
The market for New Jersey waterfront development appears to be bottomless as long as a project can offer views of Manhattan's skyscrapers.
Whether residents are commuting to Downtown Manhattan from Hoboken or to Midtown from north of Weehawken, they all have unparalleled views of a world-renowned skyline. Now there's enough growth in the area that builders can design projects to attract specific groups of potential buyers, rather than putting up a riverview building and seeing who wants to look east.
"The focus of every building we've done is views, views and more views, because that's really what developers are selling," said Michael Gelfand, partner and head of residential design at architects Gruzen Samton LLP.
The firm, which has an office in New York, is working on a project in just about every town along the Gold Coast of New Jersey, Gelfand said. Among them are the Watermark, WCI Communities' 206-unit condominium on River Road in North Bergen, and Tarragon Corporation's 168-unit development One Hudson Park – the first new construction high-rise condominium to be built in Edgewater, just across the water from the Upper West Side and Harlem.
The latter is completely feng shui-inspired and intended to appeal to Edgewater's Asian community, which may indicate how much the Gold Coast market has matured, Gelfand said.
"Because the market has gotten bigger, these don't have to be generic buildings that appeal to anybody and everybody because these are pioneering neighborhoods," he said. "Now that demand has increased, you're going to see these buildings geared more toward specific demographics."
Along those lines, Florida's WCI Communities, which bills itself as the largest publicly-held developer of luxury residential towers, will be offering a resort-style development in the Watermark that appeals to the company's typical buyer – one located outside of the New York City metropolitan area, Gelfand said.
Michael Miller, a broker with New Jersey Gold Coast Real Estate, said that the large amount of residential development coming to the market on the Gold Coast has led him to caution investors.
"I tell them, especially those looking [in Bergen County], to look at things that have unique properties to them," he said. "I think it may become a difficult market if you buy a condominium that doesn't have anything unique to it, like a view of Manhattan or larger square footage."
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