When we hear about Jersey City nowadays, we often hear about it in the form of a groundbreaking or a ribbon-cutting ceremony. The city has seen rapid growth in the last decade and shows no signs of slowing down.
But for developers such as Ironstate Development and the Fisher Organization, Jersey City always has been a long-term play.
The Barry brothers, Michael and David, co-owners of Ironstate, have been developing in the city since the late 1990s, building more than 10 projects, and continuing to see unmet demand for housing.
“Jersey City is an incredible economic engine,” Michael Barry said. “It’s the largest city by population (neck-and-neck with Newark) and certainly by economics in New Jersey, and certainly New Jersey is a very robust state. From my perspective, it’s the economic engine of New Jersey. It’s obviously close to Manhattan. It’s transit, both from a public and vehicular transportation hub. It’s extremely desirable and robust.”
Most recently, through a partnership with Mack-Cali Realty Corp., the developers completed Jersey City Urby, a 763-unit complex, and the tallest building in Jersey City. The brothers are so confident that the future looks bright for Jersey City, they intended to break ground on another 760-unit tower within a year, Jersey City Urby II, and intend add another tower in two years.
Ironstate is also on track to complete the next phase of its Port Liberte development.
“(The skyline) is vastly different, and it’s wonderful to see and there’s been a lot of impressive architecture that has gone up,” Michael Barry said. “From my perspective, and I built it, I think Jersey City Urby is leading the skyline in wonderful architecture. But there’s been a lot of really well-planned, well-designed buildings that have gone up on the Jersey side of the river, and it gives Manhattan something impressive to look at as well. We’ve been looking at Manhattan for all these years, now they have something to look at as well.”
Ironstate is partners with KRE Group at 18 Park, 225 Grand and 235 Grand.
“From the commercial center, from a residential perspective, from an entertainment and recreational perspective, it has so much to offer that I see a tremendously bright future for Jersey City,” Barry said. “Demographically, there’s been a resurgence in urban living over the last two decades and I don’t see any change in that thought process and the fact that people would rather spend their leisure time close to where they work and fully enjoying being around their domicile, so it’s a wonderful place.”
For high-rise developers in downtown Jersey City, community amenities such as dining and entertainment, the price point and the connectedness to New York City always have been assets that make Jersey City a valuable investment.
The Fisher Organization saw the value to these assets as far back as 2003, when it completed the 65-unit complex Liberty Towers.
Principal Brian Fisher said being able to work with the city, and the value of land back then, is part of the reason why he and the Fisher Organization went from Manhattan to Hoboken and then Jersey City.
“Here we are, 15 or so years later, and you can still rent an apartment for just about half of what you can rent an apartment in Manhattan — and certainly a much nicer, more amenities, larger apartments than what you would get in Manhattan, Brooklyn or for that matter even Staten Island at this point,” he said. “We’re very pleased and we intend to continue to develop in Jersey City because it’s such a natural place for people who want to be in or around New York City.
“You have young people who can’t afford the rents in Manhattan unless they have three or four roommates. My own kids have that. And here you can actually have your own place in a beautiful building that you can be proud of.”
Vantage, Fisher’s latest development, at 33 Park, added an additional 448 apartments to the housing stock in the Waterfront and 5,290 square feet of retail space. The firm plans to break ground on another 452-unit tower, One Park, with an additional 9,037 square feet of retail space in the coming months.
“We love Jersey City; we intend to stay in Jersey City,” Fisher said. “We believe that the Waterfront, particularly, has such great value. We want to stay here and we think there’s still value to be added and we think there’s deals to be done. We’re very pleased about here.”
In the early 2000s, the firm began to see a value in condominium product along the Waterfront, too. And in 2005, it completed Liberty Terrace, a 119-unit condo project on the Waterfront that sold within a year. The success of that project would be outdone by Crystal Point in 2010, the firm’s second and most recent condo project in the city. It would sell out its 269 units in fewer than two years.
“Crystal Point is a magnificent condo that we did,” Fisher said. “It’s surrounded on three sides by water and it looks out to Midtown Manhattan. Our new one, Vantage, is a rental, but it has everything we learned about building a condo and we’ve incorporated that into our rental. So you can have condo living at discounted rental prices. It’s really something special.
“Fortunately, both of those are fully sold, but I wish we still had the apartments. Each one of those, from when we sold, probably went up 30 percent. It kills me, but that’s the business that we’re in.”
The resurgence of Jersey City has attracted some new players.
Ridgefield Park-based KABR Group sees becoming a true player in Jersey City as matter of understanding consumer wants, while approaching the business with as much data as one can possibly have.
In just 12 years, the firm has amassed an enterprise value of over $1 billion and has a combined $2 billion in projects, with an emphasis in Jersey City and Jacksonville, Florida.
“There’s certain axioms in real estate that are clichés, but they’re really true,” KABR Chairman Kenneth Pasternak said. “One of them, which is relevant to our conversation, is, ‘Location, location, location,’
“Another axiom, which is less repeated but important, is you want to build where people want to be. And they usually want to be, today, in two things: They want to be in regularly scheduled public transportation and they want to be near where they work. They don’t want to spend an hour in a train to get to work. They want to spend as little time as possible, and they’re willing to suffer with high rates of rent and small amounts of square feet to trade off of that.”
Pasternak, the co-founder of the former Knight Trading Group, has been in Jersey City studying the market for over 40 years, but said he really began to make aggressive moves in Jersey City in the mid-2000s.
“You always get during a trend an ‘aha’ moment,” he said. “That moment came when we started to look at buildings that were built in the early 2000s here, and all of them would lease up in half time. Like Avalon built Avalon Cover over here on Washington Boulevard; that was a late-’90s building. Every building that was built here, the lease-up and the rent rates were higher than the projections when they started it.”
With the completion of Trump Bay Street in downtown Jersey City — a joint venture with the Kushner Cos. — the firm is now betting strongly on the Journal Square neighborhood, where it is planning to build One Journal Square and 30 Journal Square, and recently acquired 26 Journal Square as a value-add play for office space.
“The leap of faith is mass transit, public transportation, being able to work even through the lifecycle of raising a family is here to stay,” Pasternak said. “If you don’t believe in that, you think it’s a fad, you wouldn’t build in Journal Square. You have to think if the housing demand continues over the rental and owner side around these public transportation hubs that are finite.
“We think that Jersey City’s value proposition is evolving a lot better, a lot faster than its competition, which is really Brooklyn and Queens.”
The second phase of Trump Bay Street, located at 65 Bay St., added 447 luxury units in downtown Jersey City. The firm’s next projects, One Journal Square and 30 Journal Square, will add an additional 1,500 units and 700 units.
“Today we own, between Kushner and what we own personally, we probably own 4 million square feet of entitlement,” Pasternak said. “That’s as much as 4,000 apartments, and they’re all within three blocks of a PATH station. And they’re generally in buildings that we can build enough of a critical mass where the building can be a destination.”
Pasternak believes the lower cost of construction, coupled with the transit and community amenities, is what is propelling the city forward.
“From 2002 on, I was watching these numbers, reading the press and I wanted to be here. In neighborhoods here, you have almost any esoteric service that you can think. There’s even five dog kettles or dog hotels that you can board your dog over the weekend. There’s a humongous one here near the exit to the tunnel. Those are all things that came to serve the community.
“When I saw those people coming in, and when I saw people that were getting sick of the prices in Brooklyn coming and opening restaurants here around 2010, 2011 and 2012, I started to accelerate my love for the area, so I started out cautiously with (65 Bay St.), and around 2012, I got very aggressive trying to buy a lot of entitlement.”
Pasternak said KABR is in a joint venture with Kushner Cos. for another 300,000-square-foot project in downtown Jersey City, Warren at Bay, with no plans of slowing down in both Jersey City and Hudson County.
“We’re actively looking at buying assets,” Pasternak said. “We’re probably buying five or six assets in all those Light Rail, as opposed to PATH, stops. High-density PATH, massive projects, we’re probably not looking to buy anything right now.
“There’s four buildings that have been opened in 2017: Urby, Trump, 3 Journal Square and KRE’s building (Journal Squared),” Pasternak said. “Now, the fifth one is Ellipse. All of them, in the pre-rent, are exceeding expectations. Our cost differential is 50 percent.”
And worth every penny, Pasternak said.
“All of our amenities, the modernness and functionality of our public transportation is superior to New York City,” he said. “PATH is a better train system than MTA subway system. Our proximity to Ground Zero, 14th Street, is better than most neighborhoods that we compete against.
“If you come from say, Atlantic Yards or Barclays, you pay about $20 per square foot more in rent. You have less services in the way or restaurants, dog groomers, etc. Parking is $500, not $260. A one-bedroom that is $3,000 here is $4,000 there. And it takes you 40 minutes on a train where the air conditioning is broken to get to 14th Street versus 17 minutes here.
“So, even though the market may be a little bit mature, Jersey City continues to win market share and if you look at the whole market, we’re such a small part even now, we continue to win.”
And KABR, Kushner, Ironstate and Fisher only represent a fraction of the overall development in Jersey City. Since 2010, the U.S. Bureau of the Census’ manufacturing and construction division has authorized more than 9,694 units to be built.