GOOD A$ GOLD?

COAST IS CLEAR
But builders switching from condos to rentals

Monday, December 31, 2007
By KEN THORBOURNE
JOURNAL STAFF WRITER

The subprime mortgage meltdown. Jacked up oil prices. Rising inflation.

Fuhgeddaboudit - at least according to some of the most successful developers along the Hudson County waterfront.

According to them, the Gold Coast has been remarkably insulated - so far - from the stiff economic winds that have battered other parts of the nation. The reason is our proximity to New York City, the strongest market in the country, developers say. And the fact that Wall Street bonuses - led in large part by record payouts at Goldman Sachs, which has more than 3,500 employees in Jersey City - were up an estimated 14 percent didn't hurt either.

But it's not all good news.

Several builders said they are switching projects from condos to rentals, which are considered a safer bet in a shaky market.

Sanford Weiss, developer of the 120-unit Cliff Lofts on Paterson Plank Road in the Jersey City Heights near Hoboken, made the switch from condo to rental.

"We decided to make it rental because of the economic climate," Weiss said. "In a better economy we would go condo. It's a gut feeling. Rentals are a safer way to go in uncertain times."

And just as the red-hot Manhattan market is helping Hudson County, the sinking housing market elsewhere in New Jersey and the nation is at least causing some ripples here.

"Considering the way the rest of the nation has badly slumped, Jersey City and the rest of the Gold Coast has remained reasonably strong," said James McCann, a prominent real estate attorney. "But there has been so much bad news around the country, it has given buyers a reason to pause."

And if empty-nesters are having a tougher time selling their sprawling suburban homes in a tightened credit market, the smaller, spiffier condo units in Hoboken or Weehawken will have to wait, said James W. Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University.

"You do have international dollar demand bolstering Manhattan and pushing up prices. People who are priced out of Manhattan will spill over to the Hudson River Gold Coast," Hughes said. "However, it's not realistic to make the assertion that the Gold Coast market is immune to the problems that are afflicting the rest of the country."

Dean Geibel, president of Hoboken-based Metro Homes, is experiencing the extremes of the New Jersey real estate market. In Jersey City, his company is building the 444-unit Trump Plaza Jersey City, which, he said recently, is 80 percent sold.

On the other hand, Metro Homes abruptly stopped work on "La Esperanza," a 224-unit luxury high-rise the company is building in Asbury Park, citing the effects of the national mortgage crisis.

Jersey City Redevelopment Agency Executive Director Robert Antonicello sees a silver-lining in the subprime mortgage meltdown.

In Antonicello's view, the mortgage crisis helps hold down the cost of real estate, especially off the waterfront, which will create opportunity for low- and moderate-income buyers. "People who have good credit and have been saving for just such a time like this can step in and find a good deal," Antonicello said.

The good times are apparently still rolling at the Beacon in Jersey City, the off-the-waterfront conversion of the old Jersey City Medical Center into the high-end condo complex.

"We have hit 90 percent sold and we raised prices in June," said George Filopoulos, president of Metrovest Equities, Inc., the developer of the Beacon.

Roughly 300 units have sold at the Beacon's Rialto and Capital buildings, where prices range from the high $300,000s for a 1-bedroom unit to the low $500,000s for a 2-bedroom; and another 103 units at the recently-completed Mercury go on sale next month.

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