The new Panasonic office tower rising along the Passaic River may be the most visible sign of Newark's development future, but retail and housing projects will be equally critical to breathing new life into the Brick City.
That was one message from commercial real estate insiders today at a development forecast hosted by the Newark Regional Business Partnership. With new office buildings for the electronics giant, Prudential Financial and others set to anchor the city's downtown, speakers and panelists touted a growing pipeline filled with other project types.
Spread across four projects, the city currently has 450 housing units under construction in the blocks surrounding its downtown, said Lyneir Richardson, CEO of the Brick City Development Corp. That will give the downtown "zone" about 2,000 total units, he said, but several other planned or proposed projects could bring that total to at least 3,000 by 2017.
Such efforts to add market-rate housing go hand in hand with new retail amenities, Richardson said. He ticked off a list of new and ongoing projects, including Dinosaur Bar-B-Que and the planned Joe's Crab Shack in the new Courtyard by Marriott, located a block from the Prudential Center.
"The next phase of Newark is about getting more people living and working downtown," Richardson said. By 2017, the city aims to have 5,000 new residents and another 5,000 new people working around its central business district.
Kate Coburn, a partner with the New York-based consultancy HR&A Advisors Inc., said the arrival of chains like Joe's Crab Shack and Starbucks inside the hotel signal that Newark is attracting a new generation of retailers beyond local businesses. But as the city builds a new retail base, developers must be careful to balance those new tenants with local merchants, who "make a project closer to the heart of the people that are there."
A key template for diversifying downtown Newark will be the $150 million Teachers Village project, which includes three charter schools, more than 200 apartments and 70,000 square feet of retail along Halsey Street. Ron Beit, the project's lead developer, said builders in Newark have "looked at plans around the country and around the world, and see what has worked and what hasn't worked in the last several decades."
"The one thing that is clear is (that) to have a 24-hour, seven-day community, you need all three food groups of real estate," Beit said, citing residential, commercial and retail. He said Teachers Village is using its schools as its commercial component, helping to activate the neighborhood, "so that overnight, you have this sustainable community."
Across all property classes, Newark and its host of development projects have been among the chief beneficiaries of state incentive programs, said Michele Brown, CEO of the Economic Development Authority. Under just the Urban Transit Hub program, the state's largest incentive, projects in the city have been awarded future tax credits totaling more than $450 million.
But the EDA's arsenal of incentives could be in line for a change, said Ted Zangari, the lead redevelopment attorney for Newark-based Sills, Cummis & Gross PC. He noted that Urban Transit Hub, its Grow New Jersey offshoot and two other programs would be refined and consolidated under a bill he expected to move through the Legislature starting next week.
Zangari said he "would like to think this bill will be on the governor's desk" by March 31. If signed, the law would replenish the state's offerings to businesses and give the state a "single program to market for that 20-second elevator pitch," similar to New York and Pennsylvania, he said.
The largest Urban Transit Hub recipient, Prudential Financial's planned office complex alongside Military Park, also was a key topic at the event. Heidi Learner, the chief economist at Studley Inc., said Prudential currently accounts for five of the 12 largest office users in a market that has seen little rent growth and trailed other urban centers in recouping "office-using jobs."
If the firm vacates its current space for the new 740,000-square-foot complex, Newark's office availability rate would increase from 19.4 percent to above 25 percent, she said, noting that office availability is at 17.4 percent nationally and 15 percent in downtown Manhattan.
But Jon Meisel, a managing director with Jones Lang LaSalle's New Jersey offices, seemed to for expanding the city's office market, noting that Newark's class A vacancy rate is the lowest in the state, and that 45 percent of its office stock was built before 1970. What's more, the new Prudential office would join projects like Teachers Village in "tying in" the city's higher education institutions to the downtown.
"Now you've created a new enclave," Meisel said. "You're starting to clean up the whole area behind Broad Street, right by Military Park. … All of a sudden you're coming out of the central core, and that's what spurs development."