Jersey City's Housing Boom Expands

New Residential Construction Has Spread to Downtown and Journal Square

The Wall Street Journal
By Roland Li - Sept. 21, 2014 10:57 p.m. ET

Jersey City's residential construction boom is spreading beyond its waterfront area to neighborhoods farther inland where planners and developers have long dreamed about building with little to show for it until now.

In August, for example, Kushner Real Estate Group and National Real Estate Advisors broke ground on the first of three planned towers at a giant development in Journal Square, known as Journal Squared, which will have a total of 1,840 units and 36,000 square feet of retail. Builders are currently excavating and underpinning the project's foundation.

"We really believe in the market," said Jonathan Kushner, president of Kushner Real Estate Group, citing Jersey City's transit options and growing night life.

Also in the Journal Square area, renters will soon start moving into Kennedy Lofts, a converted office building. There is already a waiting list forming for the units?which run from $1,500 a month for a studio to $2,100 for a two-bedroom, says Heriberto Camacho, with Keller Williams City Life Realty.

Other Journal Square projects are close to moving forward. A venture of developer Kenneth Pasternak and Kushner Cos.?a different branch of the Kushner family?are planning to convert the building that used to house the Jersey Journal, into a mixed-use project including rental apartments.

That same group also is purchasing a huge site across the street from the Journal building. It is approved for a tower that could soar 60 stories.

"We see some of the same dynamics of Brooklyn here at half the price point," said Mr. Pasternak, whose real-estate company is named KABR Group.

Overall, Jersey City is seeing a record level of new apartments being built. There are 5,609 units this year under construction in the Journal Square and downtown areas compared with 3,009 last year and 5,122 in 2008, which had been the peak year until now, according to statistics provided by the mayor's office.

Jersey City is being bolstered by its proximity and convenient transit options into Manhattan, including the ferry and PATH train. Also, like many other urban areas throughout the country, Jersey City is attracting young people as more rural parts of the state have shed jobs and lost population, said James Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University.

"Millennials don't want to work in suburban office campuses," said Mr. Hughes. "They want edgier environments."

Until recently, the Jersey City waterfront area, and its downtown just to the west, was the prime beneficiary of the Manhattan spillover effect. Developers have built thousands of apartments and millions of square feet of office space to house Wall Street titans like Goldman Sachs Group Inc. and J.P. Morgan Chase & Co.

New towers are being built near the waterfront by developers including the Kushner-Pasternak group and a venture of Ironstate Development Co., and Mack-Cali Realty Corp. CLI +0.47% Numerous new restaurants and bars are popping up in the downtown area including Barcade, an offshoot of the Brooklyn pub, and Thirty Acres, run by a former chef of popular noodle restaurant Momofuku.

"Even 12 months ago, you didn't see the activity in the street that you do now," says Anthony Carrino, whose family is converting the Telco building into 16 loft apartments and two restaurants featuring chef Dale Talde.

But in this boom, development also is spreading inland to neighborhoods that used to be associated more with urban problems than upscale eateries.

One reason for this is that Jersey City Mayor Steven Fulop, who assumed office last year, has made it a priority to attract more development in areas outside the waterfront. He overhauled the city's tax-abatement program by creating a tier system that restricts the length of tax abatements to a maximum of five years for waterfront developments.

More-inland Jersey City neighborhoods can have tax abatements lasting up to 20 years, while new properties in the Journal Square area can have abatements lasting up to 30 years. "We've been proactive in encouraging people to invest in other parts of the city," Mr. Fulop said.

Jersey City neighborhoods that are further inland also are benefiting from an expanding arts scene. Earlier this year, city officials said that AEG Live, a company that books talent, will manage the Loew's Jersey Theatre overlooking Journal Square and that $30 million to $40 million would be spent to overhaul the aging venue.

Mana Contemporary, in converted factory and warehouse space that is off-the-beaten path in Jersey City, also has created a buzz in the arts world. It is a 2-million-square-foot complex of artists, studios, galleries and exhibition space that was developed by Moishe Mana, who is best known for his moving and storage businesses.

In August, Jersey City developer the Shuster Group opened leasing at the Art House, a 119-unit building with paintings for sale displayed throughout the hallways, in the historic Powerhouse Arts district. The building is close to 50% leased, with rents starting at $1,995 a month for a studio.

"There's a lot of forces bringing new population into the area," says Eyal Shuster, founder of the Shuster Group.

Corrections & Amplifications

Kushner Real Estate Group and National Real Estate Advisors broke ground on the Journal Squared project. An earlier version of this article incorrectly stated that the venture included National Realty Advisors. (Sept. 23, 2014

http://online.wsj.com/articles/jersey ... g-boom-expands-1411354679

People complain about the avalanche of future riders on the PATH with the residential towers but we should keep in mind the commercial end of the story with companies relocating/expanding. There is quite a bit of reverse commute actually now from NYC and people just commuting locally. I know of 2 friends whose office has relocated in DTJC, one of them just bought here. Another friend of mine also living here now walks to PH for her new job. None of them impact the legacy JC to NYC traffic.

JSQ properties near the PATH have already doubled in the past year. So glad I bought cheap right before the duilding madness, win!! win!!

These buildings in the article alone will add 6780 units to DTJC not too mention the additional units being added up-stream in J Square. It's going to get scary at Grove St PATH not to mention what this will do to Newport PATH riders who already are suffering from the crowds who get on the trains before them. At some point this will start to hurt the marketability of these new buildings if people are complaining loud enough about the PATH. We'll see soon enough!

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For buyers, sure. Most renters are not necessarily planning on staying long-term.

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Possibly, but a neighborhood like JC is having people move in because they expect it to keep improving. Not as many people would be attracted to DTJC if you told them we'd have the same restaurants and stores 5 years from now. More people mean better amenities and more things to do.

Isn't the alternate that if all of this additional capacity didn't come online, then prices would be even higher? Why shouldn't the theory be that prices are increasing at a lower rate because of the new construction?

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As others have already indicated, and explained, this is simply a misunderstanding of supply/demand economics. You should only expect lower prices if demand remained constant, or if it increased at a rate below that of supply.

The historical evidence from the past 10 years is quite clear. Prices in downtown continue to rise despite the many, many buildings that have gone up. In fact, rental rate increases have accelerated over the past two years. New construction in downtown JC is now commanding similar rates as some of the desirable areas in Brooklyn. I have been looking at the market a lot lately, and DTJC is NOT cheap. Not as it used to be when compared to Manhattan, or the popular areas in BK.

Check out the Telco Lofts rental rates. Or, 18 Park. None of the available "large" units in 18 Park exceed 1000 sf, and they go for ~$3,500. Warren at York was similarly priced, or even higher.

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Our rents and condo prices are where Manhattan was 10 years ago. If you want to see where rents and housing prices will be 10 years from now look across the river. The big banks and REITs would not be loaning money to all the developers if they thought prices would fall.

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Exactly.

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ahal wrote:
Why would it push prices and rents higher? Wouldn't it be lower? Increasing supply would put downward pressure on price.



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The OP was probably referring to the fact that the more developed the neighborhood becomes (and with it restaurants, etc.) the more sought after the place will be, driving up the rents everywhere in the vicinity. Having lived here for over 10 years, I can say that this has been the situation so far at least.

Increasing supply only puts downward pressure on price if demand slows or remains constant, but in reality demand is (for now) at least surpassing supply. Until and unless demand dries out, rents throughout downtown will generally continue to rise.

Why would it push prices and rents higher? Wouldn't it be lower? Increasing supply would put downward pressure on price.



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They're all timed almost perfectly. Warren at York was all but done leasing when 18 Park opened. 18 Park will be all but done leasing when 110 First opens. 110 First will likely be close to done leasing when 70 Columbus opens. Etc.

These buildings are leasing at an amazing speed. I hear 18 Park has already leased almost half of their units.

I'm excited about these buildings planned for the lot across from Amiya, near the water:
http://www.mack-cali.com/development-urban-ready-living

The architects are from Amsterdam:
http://www.concreteamsterdam.nl/

70-90 Columbus


160 Morgan Street


110 First Street

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who wouldn't want to live in soho west or hoboken heights

Please someone explain what is attractive about Cast Iron Lofts -- so much so that Cast Iron Lofts #2, #3, and #4 are in the works.

If half of these projects are completed it will push RE prices and rents much higher.

Would like to know from the city/Fulop how they intend on handling the urban planning given this news. The PATH trains
are currently at capacity and they have reduced the frequency with which they run over the decade I've been here. If they don't intend on upgrading or increasing trains, this will lead to commuting chaos once all of these buildings are occupied. Not to mention, where are the schools and public facilities that should be built to support the growth of the city?