Ken Pasternak has spent more than 35 years in and around Jersey City, so you'd better believe he's seen plenty of “false starts” when it comes to real estate there.
That's not what he sees today.
His development firm, KABR Group, owns three sites in the city, with plans to build some 1,000 residential units. That's not to mention that it's under contract to buy a fourth that will more than double that pipeline.
“It's a big bet on what we think is happening in Jersey City,” Pasternak said. “And what will continue to happen.”
He jokes that the “secret is no longer a secret” when it comes to Jersey City, and he couldn't be more right. The state's second-largest city is in the midst of another building boom, one that stands to bolster its already thriving downtown and waterfront areas while bringing new mixed-use development to its inner neighborhoods.
Data from city officials show a pipeline of more than 28,000 residential units over the next 15 years, though some are projects that have been in the works for some time. Some 5,700 of those units come from sites already under construction, while the others are in various stages of planning.
It's a boom driven by the same things that helped reinvent Jersey City over the past three decades: a network of rail service that provides a quick trip across the Hudson River, with demand for lower-cost alternatives to New York City apartments.
“There's a lot of units coming online from other developers in the next 12 to 24 months,” said Richard Wernick, executive leasing director of the LeFrak Organization, which has developed the city's Newport section.
“But as long as you continue to have 1 percent vacancy in Manhattan, people are going to need somewhere to go.”
First-term Mayor Steven Fulop has added this wrinkle: a revamped tax abatement system that rewards construction in sections such as Bergen-Lafayette and Journal Square. And while that has reduced the tax breaks available for waterfront projects, it appears to have done nothing to stifle the appetite for development near the Hudson River.
It's why Fulop thinks Jersey City still has many more years, if not two or three decades, of development activity on the horizon, as long as the economy holds up during that time.
“There is still a lot to do here,” said Fulop, who took office last July. “So I would probably say we're in the fourth or fifth inning.”
Developers say the rest of the game will involve new frontiers — with Journal Square at the top of that list.
The former commercial epicenter of the city has suffered decades of decline and was overlooked by the building booms of years past, but now has active construction and a pipeline of high-profile projects.
In the meantime, builders in Jersey City say they're seeing a shift from a bedroom community to a more complete city with amenities to occupy its population. Zoning changes in 2011 expanded the city's “restaurant overlay zone” downtown, leading to the opening of 11 new eateries in and around the area since then.
And data from the city show a pipeline of nine new restaurants, including high-end establishments such as Porta of Asbury Park fame.
“They're names that could be anywhere,” said Pasternak, a former financial trader who co-founded Jersey City-based Knight Trading Group. “Those are the things that were always missing from (the city) for the last 35 years — people who were entrepreneurial on the retail side, whether it was restaurants or services or selling things like clothing. … And that's all starting to come at scale in Jersey City.”
The growth comes amid efforts such as a plan to revitalize the historic Loew's Jersey Theatre in Journal Square. Under a recent deal with promoter AEG Live, which will manage the entertainment house, Jersey City will spend $30 million to $40 million to renovate the venue by 2016.
But pushing the boundaries beyond downtown and even Journal Square will depend on the ability to expand existing infrastructure. Fulop cites the idea of a new PATH stop on the city's western edge, specifically between Harrison and Journal Square on a stretch where the trains run above ground. While he said it's still only a concept for now, he called it “our biggest ask and the biggest priority from the Port Authority in our relationship.”
“The reason it's so important is because of what we've learned from Journal Square and Grove Street — that if you have mass transportation, PATH or light rail, development comes,” Fulop said. “It's really as simple as that.”
The same thinking is behind the city's approach to an eight-block swath near the Hoboken border, just north of where cars exit the Holland Tunnel.
The city is hearing proposals for about eight “substantial projects” in the area, Fulop said, and it's now trying to determine how to use “density bonuses” paid by developers to fund a new NJ Transit light rail stop.
If any of that new infrastructure becomes a reality, it will add to a city that developers say is more connected than ever before.
David Thom, LeFrak's executive vice president of design and development, said, “Jersey City is interesting because you have a town that was sliced up in various ways by road and rail infrastructure for a long, long time.”
He noted it's unusual to have a city's financial district, its civic buildings and its traditional shopping district all in separate parts of town.
The LeFrak Organization would know. For many years, the firm's Newport development was relatively isolated at the northern end of the Hudson waterfront.
But “as the transit improves, and as the development sites continue and the empty lots disappear,” and assets such as an upcoming bike-share system come online, “it is exciting to see all these places knit together and start to collectively create those opportunities the mayor was talking about,” Thom said.
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Even with the high-end, highly amenitized apartments that continue to pop up in Jersey City, the contrast to Manhattan is staggering. Ken Pasternak, chairman of the firm KABR Group, said rents for Manhattan’s high-profile Hudson Yards project start around $75 to $80 per square foot, compared with $36 to $44 per square foot in Jersey City’s Gold Coast.
At the end of 2013, average rents for Hudson County apartments were $2,650, according to the real estate research firm Reis Inc. That’s well above the North Jersey average of $1,568, and the rate has grown almost every quarter since bottoming out in 2009.
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