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From Factories to Financial Services
A New, White-Collar Jersey City
by Diane Greer
New York’s once-derelict neighbor across the Hudson is in the middle of a re-building Rennaisance.
After losing much of its heavy industry and 30% of its population after World War II, Jersey City is enjoying a renaissance. In the past two decades the city has added 18 million sq ft of office space and almost 12,000 residential units along the Hudson River and downtown.
Another 4,300 residential units are under construction and 8,900 units are approved for development citywide. Three office towers with more than 3 million sq-ft of space and two hotels are also planned.
As prices rise along the waterfront, development efforts are expanding westward.
“The waterfront is what everyone focuses on,” says Dan Frohwirth, Jersey City Economic Development Corp.’s director of real estate. “But there are a tremendous number of projects moving west, from Journal Square to Greenville.”
Road to Redevelopment
Proximity to Manhattan, great transportation and low real estate costs are the factors reversing Jersey City’s fortunes, but there’s more.
“It was the timing that really allowed Jersey City to reposition itself,” says Bob Antonicello, executive director of the Jersey City Redevelopment Agency.
Prior to redevelopment, a wasteland of derelict railroad tracks, warehouses and piers obstructed the waterfront. Planning to reclaim this vital asset began in the 1970s, but it took a $40 million Urban Redevelopment Action Grant from the Carter administration targeted at redeveloping the Newport area “to push us over the top,” Antonicello adds.
The city was also fortunate that abandoned rail tracks occupied the land along the Hudson River, Frohwirth says. “We built the first three Harborside buildings without moving residences, which made it less politically contentious,” he says.
Newport & the Waterfront
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| The Aquablu, located in the Newport Complex, will feature 363 rental apartments in a 31-story, 490,000-sq-ft tower. |
The bulk of the investment in Newport came from New York-based private investors, the LeFrak Organization and Melvin Simon & Associates. “Mel Simon and Sam LeFrak had the vision to see this was a tremendous opportunity,” says Jersey City’s Mayor Jerramiah Healy.
Today LeFrak’s vision for Newport, a master-planned, mixed-use community, is a reality. The 400-acre site features over 4,600 apartments in 10 residential high-rises, 5 million sq ft of office space in eight towers, a 190-room hotel, two private schools and 2 million sq ft of retail.
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| The 22-story Westin Newport Jersey City waterfront hotel will include 429 guest rooms, a conference center, 10,000sq-ft ballroom, banquet facilities, fitness center and 5,000-sq-ft restaurant. |
Construction of the “mini city” continues. LeFrak recently finished the 438-unit Shore Condominium Residences, which are made up of two towers, one 24 stories and the other 34. Next door, the Aquablu, a 31-story steel and glass tower atop a masonry base, is under construction and will include 363 rental apartments, says Anthony Scavo, LeFrak’s vice president of construction. Completion is slated for January.
Another hotel, the 22-story, 429-room Newport Westin Jersey City, is rising next to the Newport Mall. Future plans call for another 4,500 apartments and 2 million sq ft of new office space
South of Newport, two iconic names are adding an element of panache to development projects. The Trump Organization of New York is building Trump Plaza Jersey City with Metro Homes LLC of Hoboken, N.J. Phase one of the development is a 55-story tower with 444 residential units. A second 50-story tower will house 418 units.
Meanwhile, Pritzker Prize-winning architect Rem Koolhaas of the Holland-based Office for Metropolitan Architecture is designing the $400 million Koolhaas Tower at 111 First St. Developed by two New York-based firms, the Athena Group and BLDG Management, the ??-story, 1.2-million-sq-ft glass tower will feature 80,000 sq ft of retail space, 250 hotel rooms and about 500 artist lofts and condominiums.
Athena’s first residential project, the “A” condominiums, is located across First Street. Completed in December, the 34-story high-rise’s 250 units are 95% sold, says Louis Dubin, president of the Athena Group. He attributes the success of the project to the incredible location, great transportation and good value.
Dubin says he is able to sell his units for less than half of what buyers pay for comparable units in Manhattan. “New Jersey is under a different collective-bargaining agreement with the unions,” he adds. Lower labor and land costs translate into building costs that are 40% lower than in New York City.
Site preparation is also under way for Athena’s first rental project at 110 First St., a 36-story high-rise housing 452 units in 600,000 sq ft. Dubin estimates rents at the complex will be 40% less than Manhattan.
Nearby, developer K Hovnanian, Plainfield, N.J., recently broke ground on a 48-story residential tower at 77 Hudson St. The $92 million project will feature 420 condominiums. [See related feature in this section].
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| SK Properties recently completed Grove Point, across from the Grove Point Path Station. The complex includes a 30-story, 450-unit rental tower, an 11-story-67-unit condominium, retail and parking. |
A half mile inland, SK Properties, Bridgewater, N.J., completed Grove Pointe in August. Located adjacent to the Grove Street Path station, the mixed-use building includes a 30-story, 450-unit rental tower; an 11-story, 67-unit condominium building; 20,000 sq ft of retail and a 535-car garage. Rental units boast a 95% occupancy rate and only two condominiums remain unsold, says Jonathan Kushner, SK partner.
At Liberty Harbor North, a community along Tidewater Basin overlooking Liberty State Park, S/K is partnering with Applied Development Co., Hoboken, N.J., to build a 347-unit rental apartment. Phase two of the project, a 501-unit building, will break ground in 2009. Several other buildings are planned.
“We have almost 5,000 apartments on the drawing boards,” Kushner says.
Waterfront Office Space
Over the last 20 years, Jersey City has grown from almost no Class A office space to the 12th largest Class A market in the United States, according to Healy. “We have a bigger downtown than Denver as far as office space,” he says.
High prices and few large blocks of space in Manhattan have forced tenants to look elsewhere for space, says Craig Eisenhardt, CB Richard Ellis senior vice president. Many have turned to the Jersey City waterfront, now dubbed Wall Street West.
Rent differential can be $30-40 per foot, Eisenhardt says. Tax credits provide additional financial incentives.
Vacancy rates hovering around 7% and a scarcity of office space on the waterfront is spurring developers to plan new projects. Goldman Sachs, New York, received approval in September to construct a 30-story office tower at 50 Hudson St. Lefrak is planning new office buildings in Newport, but Scavo says he does not anticipate construction starting before 2009.
The Jersey City Planning Board has approved two towers, each over 1 million sq ft, on Hudson Street and Harborside Plaza and is considering proposals for two additional Harborside buildings.
Moving West
As development explodes along the waterfront, prices are rising and development is moving westward, Healy says. Entities are now lining up to buy unused properties across from Jersey City. “Lots the city could not sell 10 to 12 years ago now have five to six bidders,” Healy adds.
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| Harwood Properties is building a 1,500-unit residential complex across from the Journal Square Transportation Center featuring a 58-story and 38-story tower sitting on a 7-story podium. |
Journal Square is the focus of several new development projects. Located just three Path stops from Manhattan, Journal Square is the historic commercial hub of the city and home to a transportation center with a major bus depot.
“To us, Journal Square is what Grove Street was four or five years ago,” Kushner says. “The transportation center is tremendous. Over 35,000 people pass through it each day.”
Later this year SK will start work on a 44-unit condominium complex near Journal Square, designed to attain LEED certification. Since Journal Square sits atop a bluff 390 ft above the river, even units on the lower floors will offer views of Manhattan and the river.
Jersey City-based Harwood Properties and Multi-Employer Property Trust, Bethesda, Md., started demolition of decrepit buildings on the east side of Journal Square to make way for a 1,500-unit residential complex consisting of 58- and 38-story towers atop a seven-story podium with 98,000 sq ft of retail space and parking. Occupancy is slated for 2010.
Northwest of Journal Square at 50 Dey St., adjacent to the Pulaski Skyway, Coalco New York and Credit Suisse are rehabilitating the 1-million-sq-ft American Can Co. building into 520 residential lofts, 25,000-sq ft of retail and a 300-car garage. Phase one of the project, known as the Canco Lofts, is converting 400,000 sq ft into 200 lofts with occupancy slated for the fall. The second phase, starting in 2009, will construct 120 units. Two additional phases will follow.
South of Journal Square, Metrovest of New York is converting the former Jersey City Medical Center, a cluster of art deco buildings listed on the National Register of Historic Places, into 1,200 condominiums, a public theater, retail shops, library and business center. To date, two of the 11 building have been completed. [See related feature in this section].
The Green Coast
Further west, redevelopment is underway on Jersey City’s western waterfront in the Bayfront area between Route 440 and the Hackensack River. A deal between the city and Honeywell International, Morristown, N.J., owner of the old industrial site, calls for cleaning up the chromium-contaminated soil and building 8,000 residential units, offices and retail space over the next 10 years, Healy says. Plans include extending the light-rail system to the new community.
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| AMB Property Corporation will construct an 878,000-sq-ft warehouse/distribution center on a brownfield site near Hackensack River. Cleanup of the contaminated soil is underway. |
Just as Jersey City’s east coast is know as the Gold Coast, Antonicello of the Jersey City Redevelopment Agency wants the west coast to be known as the Green Coast. To that end, Bayfront and other west coast projects will be built as green, mixed-income, transit-oriented communities. “We are taking some of the most contaminated land in the state and making it the most sustainable,” Antonicello says.
Remediation of the site will be completed in 2010 or 2011. Groundbreaking is slated for sometime in 2012.
AMB Property Corp. of San Francisco recently acquired a 50-acre brownfield site in the Hackensack Riverfront area to build the AMB Pulaski Distribution Center. The $??million, 878,000-sq-ft warehouse/distribution center will serve the nearby Port of New York and New Jersey and be designed to attain LEED silver certification. Cleanup of the site is currently under way.
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