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Neighborhood watch As Newark’s core tightens, residential builders bring focus to its outer wards

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Treetop Development has repositioned some 1,200 units around Newark, says Adam Mermelstein.
Treetop Development has repositioned some 1,200 units around Newark, says Adam Mermelstein. - ()

Residential construction around downtown Newark is filling the spotlight these days, but new housing development beyond Broad Street has been alive and well in recent years — and is showing few signs of slowing, as developers find value in building in the outer wards.

Since the middle part of the last decade, developers have opened some 1,100 new residential units outside Newark's central business district, according to data compiled by the city. And there are now 526 units under construction, plus another 338 in the immediate pipeline.

While downtown projects aim to create a so-called 24/7 environment, construction elsewhere is as much about improving quality of life and keeping residents in the city, experts said. That's helped drive development projects in the outer wards, where citizens have a range of incomes and special needs, but an aging supply of residential space.

“It's important that the city promote ongoing investment in that housing stock,” said Michael Meyer, Newark's housing and real estate director. It's also vital for the city to have housing diversity, he added, “so generally, the projects we've supported in the neighborhoods are all different types.”

For builders and investors, the outer wards offer opportunities for multifamily rehabilitation projects. “You have better value in these markets than you do in the downtown,” said Josh Mann, a Millburn-based real estate attorney with Budd Larner PC. That's largely because of distressed debt situations with previous owners.

“People are starting to find value there, and people are starting to make those investments,” said Mann, who has been retained for a 270-unit rehab project in the city's Roseville section, northwest of the central business district. “To me, those sorts of investments are really a sign of what could be done profitably outside of the downtown.”

Such projects have been fruitful for Treetop Development, a Teaneck firm that's repositioned some 1,200 units around the Brick City. Adam Mermelstein, a managing member, said that has often involved “buying buildings that are 30 or 40 percent vacant and need a major capital infusion” directed at individual units and common areas that have fallen into disrepair.

The company has grown rents and nearly wiped out vacancy at properties in the North Ward and just south of downtown, in part by appealing to students and professionals who “want more of a neighborhood-type feel and kind of be away from it all, but still live within Newark,” he said. The renovated buildings also offer the spaces longtime residents seek.

“There are so many people that have grown up in Newark, or around Newark, that have a real love for the city,” Mermelstein said. “And the architecture is beautiful — it has really good bones — and these people, in an ideal world, would not want to leave Newark. So we're trying to provide housing that people can really feel good about coming home to.”

Meyer, the city's housing director, said “those sort of big multifamily projects can really define a neighborhood, for better or for worse,” so reinvestment and sound management are “central to preserving the housing stock.” The city's construction data do not include such rehabilitation projects.

Drawing new ground-up development to the city's outer wards has at times gone hand in hand with demand for affordable and special needs housing. Help USA — a 27-year-old group that develops housing for the homeless and low-income populations — opened its first Newark building in 2010, a 51-unit project in the North Ward.

The New York-based organization is now building its third project in the Brick City, this one on Broadway, and is seeking financing for its fourth, CEO Tom Hameline said. As in other cities, the efforts have required creative financing formulas, relying on low-income housing tax credits, other government programs, and funding from organizations run by the likes of Jon Bon Jovi and Brad Pitt.

But while it can be tricky to make the numbers work, Hameline said “the nice thing is that in Newark … we've also provided a community development function.” Soon after Help USA's first building opened in the North Ward, about four other projects could found in a two-block radius, he said.

“We're pleased to have a sort of marker project,” Hameline said. “It sort of signals to other people that you could do something in that neighborhood.”

Developers outside the downtown may find patience is another key ingredient. Mermelstein said Treetop has rehabilitated several former federally subsidized housing projects in the city, mostly in the South Ward, which “has not seen the same type of growth and improvement that some other areas in Newark are seeing right now.”

But he and his team also “recognize it's a slow process, and Newark is a big city.”

“We're sort of betting on the North Ward and the Central Ward to have growth over the next several years, and then hopefully thereafter it will spread to the other wards within Newark,” he said.

E-mail to: joshb@njbiz.com
On Twitter: @joshburdnj

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