I wonder about the number of people who want to pay >$500K++ for a condo in JC as I walk around and look at all of the new construction. My take on it is that relatively free development is the non-coercive means of providing more affordable housing.

I'm sure that many buildings will end up as rentals but let's face it - more supply = lower cost.

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The housing slow down is referring to sales, not necessarily rentals. There aren't less people who need places to live, there are simply less prospective home owners.

I suspect that some of the buildings that might have been conceived as condos will flip to rentals before it is all over.

Believe me, I worked for a fairly large real estate developer in NYC a few years ago. Once the demand for more rentals (versus condos) rises in the city, so will the rents themselves.

It will still be cheaper to rent a place over here.

Jersey City developers defy housing slowdown
A dozen rental and condo projects under way downtown; projects increase off the waterfront

By John Celock - The Real Deal - New York Real Estate

There may be a drop in the real estate market, but the news hasn't hit developers in Jersey City. Jersey City is on track to become New Jersey's largest city, overtaking Newark, before the end of the decade.

City officials can point to at least a dozen new development projects currently under construction in its downtown. This is in addition to major development projects under construction along the entire "Gold Coast," the string of communities on the west bank of the Hudson River across from Manhattan, which are adding several thousand more condo and rental units to the mix.

David Barry, president of Applied Development Company, is currently working on several projects in Jersey City that will add almost 4,000 rental, condominium and townhouse units to the waterfront. These include the Columbia Towers, a rental building slated to open in June 2007 that will be adjacent to the Grove Street PATH Station; Port Liberte, a mixed-use waterfront community near the Statue of Liberty; and the Liberty National Golf Course condominiums.

"Jersey City is the most dynamic market in Hudson County," said Barry, who also works in Hoboken and other areas. "It's on its way to being a true 24-hour city."

Port Liberte, which has sold half of its planned 1,800 units to date, is a mix of townhomes and condos abutting Liberty State Park and the Hudson River. Barry noted that the community differs from most of the new waterfront developments in its size. The buildings are relatively low, while most new projects in Jersey City are larger, usually topping off at 25 to 50 stories.


Weighing a housing glut

With the downturn in the housing market, including throughout northern New Jersey, some have questioned if Jersey City and the Gold Coast can maintain the rapid building that has defined the area. James Hughes, a housing economist at Rutgers University, said that while the Gold Coast may be exempt from the housing decline, he does question whether all of the units planned will actually be built.

But Jersey City Councilman Steven Fulop is more sanguine.

"It's a unique market dynamic," said Fulop, who represents the downtown and waterfront districts. "We are somewhat insulated from what else is going on in the housing market."

Fulop points toward the still-rising housing prices in Manhattan (where inventory is nonetheless piling up) as a benefit to the Jersey City market, along with his community's close proximity to Manhattan. He noted that the development market has changed scope in recent years, with more apartments being designed for families rather than singles. While development is up, Fulop sees areas where Jersey City can improve itself.

"What we need to do better is marketing," he said. "People across the river don't know what is going on here."

He had proposed earmarking funds from a recently passed hotel tax in the city for tourism and marketing programs, similar to ones New York City has implemented, predicting a spike in interest from potential residents. On Sept. 13, the City Council voted to dedicate the money from the tax, which was opposed by the development community, to property tax relief.

Maria Pignataro, spokeswoman for Jersey City Mayor Jerramiah Healy, questioned Fulop's call for increased marketing, noting that the city has several programs currently under way.


Development beyond the waterfront

The building spree in Jersey City is not limited to the waterfront. New development has taken hold in the Bergen/Lafayette neighborhood, just south of Liberty State Park. And increasing debate exists on the development of land along the Hackensack River at the city's western edge: should the use be residential or industrial?

Exeter Properties has been focused on several projects in the inland parts of downtown, primarily centered in the Hamilton Park historic district, several blocks in from the water. Eric Silverman, the company's president, said Exeter has two projects currently in the works in Hamilton Square -- the development of the Schroeder Lofts and the conversion of the former St. Francis Hospital into 225 apartments along with ground-floor retail space.

With the hospital conversion slated to be completed in either late 2007 or early 2008, Silverman said his company is currently searching for stores to occupy the retail space. A national coffee chain is close to signing a lease, and Exeter is in the process of negotiating with several restaurants and a health club.

"It's a real neighborhood," Silverman said of his interest in the Hamilton Park neighborhood. "It is sterile living in some of the waterfront areas. Here, you feel like you're a part of a community. It is one of the best urban neighborhoods in New Jersey."


Tax breaks fuel building

Tax abatements have been credited with helping fuel the surging development in Jersey City over the past decade and a half.

Abatements bring tax breaks for a 20-year period that are tied to annual revenue for rental projects and are set at a locked-in rate for condos, which allows developers to not pass on property tax hikes to tenants and to owners.

Now there is debate over whether the practice should continue to the extent it has already been used.

Councilman Steven Fulop has issued calls for the city government to grant fewer abatements than it has in recent years. (At times, Fulop has been the sole vote against granting certain residential abatements.) He said that with the city's increased development, abatements are not needed on every project.

Fulop noted that the division of abatement funds directing this revenue solely to the city, rather than to the county or the schools, is one of his main problems with their use.

"We are moving toward a family environment and you are seeing more families on the street," he said. "You shortchange the schools and county with this."

Maria Pignataro, spokeswoman for Mayor Jerramiah Healy, said the mayor is generally in favor of tax abatements in the city, but reviews each on a case-by-case basis. She said that Healy believes the abatements are beneficial to the city's treasury and can be used to spur development in the parts of the city that have not been developed as much as the waterfront.

"The mayor feels tax abatements bring in ratables for the city," Pignataro said.

David Barry, president of Applied Development Company, one of Jersey City's largest developers, said tax abatements have been beneficial to the development community and to his projects.

But Barry also said he would like to take the abatement program out of the hands of municipal government and place it with the state. He said this would allow for an equitable system to be developed amongst communities, rather than a different policy in each community.

In addition, he said it would take the issue of abatements out of the local political arena, which he said can sometimes kill a planned abatement if community groups oppose it.

"New Jersey is a home-rule state and it's a patchwork of local concerns," Barry said. "It is not efficient."


Condo builders pushing north to Palisades

With growing development of New Jersey's Gold Coast rapidly taking up the available waterfront land in prime areas like Jersey City and Hoboken, developers and residents are beginning to increasingly look north for new rentals and condominiums.

Port Imperial is the largest project on the Palisades waterfront, stretching from the northern border of Hoboken up to West New York and Guttenberg, encompassing 200 acres in all.

Roseland Property Company has taken the lead on the project, which started in 1991 and is still under development. Portions have also been sold to homebuilder K. Hovnanian for development.

According to Andrew Miller, a vice president with Roseland and Port Imperial project manager, the development started as a way to transform brownfields lining the water to new housing alternatives to Manhattan. The original development built several hundred condominium and rental units lining the water and has grown with the addition of more units, along with multimillion-dollar townhouses.

"Hoboken and Jersey City have reputations and they are known," said Miller. "Port Imperial is the diamond in the rough. It is becoming an established community on a daily basis.

To compete with his neighbors to the south, Miller said that Port Imperial will be gaining more retail space in coming months, including 130,000 square feet of retail in the West New York part of the development. The new condos in this portion contain a Starbucks that opened on Sept. 18, along with an A & P supermarket and a Ben & Jerry's. In addition, a new ferry terminal to Manhattan has been built along with new stations of the Hudson-Bergen Light Rail system.

"We are rounding out the place to be self-sufficient," Miller said. "You won't have to trek to Edgewater for stuff."
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