The vantage point from developer John D. Fio Rito's office inside the Baker Building is indicative of Jersey City's growth. Look to the right and you can see the contemporary steel towers populating the local waterfront and Manhattan's. To the unsuspecting eye, it appears to meld into one continuous skyline. To the left, you see the expanse of the city's mature western neighborhoods that could benefit from new development.
The Baker Building is an 83-unit residential apartment complex in the Bergen-Lafayette neighborhood, and Fio Rito, principal of Point Capital Development in Jersey City, took a real chance in developing on this particular site.
For starters, it was a former paint factory, with trash strewn about it, graffiti, and broken windows. Then there was a fire that caused significant damage. As part of the remediation there was a large heating oil tank and six smaller gas tanks that had to be disposed of. Fortunately, there wasn’t any soil contamination.
Across the street from his building is a dilapidated factory that used to process food additives. Up the street are older, row homes, and behind Baker are train tracks.
To many developers this might not be an ideal site to remediate and construct. Fio Rito ended up spending $19.85 million on the entire project. And while he pointed out that cost is “almost always the primary acquisition criteria” in these types of projects, there are also other factors he considers, including physical boundaries, competition, proximity to public transportation and gauging how the local community might respond to a new development.
“The previous structure was a textbook example of urban blight, and I thought my project would be well received by the community,” stated Fio Rito.
Fio Rito may have developed in what can be described as an “emerging neighborhood.” The concept takes on different meanings depending on the individuals. While Fio Rito believes the term emerging neighborhood is a bit of a misnomer, he does have a perspective on it.
“An emerging neighborhood to me means an area that has promise or potential based on a certain criteria, but that potential hasn’t been fully realized — and there’s some measure of uncertainty if or when it will.”
Of course when new buildings go up, a common criticism is that gentrification has set in and the new buildings leave behind the existing population. When speaking of the neighborhood where the Baker Building is located, Fio Rito dismisses the premise.
“If I was redeveloping existing housing stock then the gentrification critique might be accurate, but I’m demolishing vacant industrial stock to create new housing — no one is being displaced,” explained Fio Rito. “I’d go as far to say that by increasing the housing supply through new construction, I’m stabilizing or putting downward pressure on the pricing of historic housing stock.”
Jersey City’s renaissance along the waterfront has seen the state’s biggest developers involved in large-scale high-rise construction projects. And as discussed at the recent Jersey City Summit, and reported by NJBIZ, the city plans to continue development of downtown as an alternative to nearby Manhattan.
For its part, the city not only wants to attract would-be New York City commuters, but has also identified its longtime residents and affordable housing as a significant part of its administrative agenda.
“Developers should be approaching purchases and investment in projects with the understanding that Jersey City will require affordable housing or a substantial public benefit,” said Deputy Mayor Marcos Vigil. “It would be wise to explore the surrounding neighborhood, study the existing market conditions and connect with residents who already live there to understand their concerns.”
On a recent ride-along of the city with Vigil, his passion for Jersey City was evident as he pointed out numerous building projects west of downtown.
“Jersey City is more than the Hudson River waterfront or downtown, and the administration will give thoughtful consideration to incentivize the right type of project within emerging neighborhoods,” stated Vigil. “We expect to see more opportunities arise offering a variety of residential and commercial products at a more reasonable price than what is available along the Hudson waterfront.”
His boss, Mayor Stephen Fulop, was recently re-elected, and his administration will have an opportunity to influence development for years to come.
For those who might be critical of continuing development, the city’s population trend bares out the need. According to the Census Bureau, there were 264,152 residents in 2016, up 6.7 percent from the 2010 census figure of 247,597.
And there is anecdotal evidence to suggest it is more than just Wall Street types looking for affordable rent. Whereas, Fio Rito thought the Baker Building would attract mostly college-educated men working in Manhattan, there is a mixture of couples, roommate shares and families living there.
Fio Rito says the biggest obstacle in developing in an emerging neighborhood is financing.
“Convincing investors and lenders to follow you into an unknown or unproven market is a challenge,” he said. “It’s sometimes difficult for others to see past the existing conditions and grasp the vision of what could be.”
Other challenges in these types of projects, he noted, include timing and land speculation.
Fio Rito currently is experiencing these challenges with his efforts to develop the abandoned factory across the street from the Baker Building. And even with a proven track record in the neighborhood, “it’s been an uphill battle,” he said.