After decades developing in Jersey City, Panepinto Properties has made community-driven development abroad a priority.
It has been 40 years since Joe Panepinto Sr. opened his first office building in Journal Square and his firm, Panepinto Properties, has been a mover and shaker in Jersey City since.
But the road for Panepinto, like many other Jersey City developers, has had its twist and turns. Where at one point, the developer believed Journal Square would continue to be the hub of Jersey City, time has allowed for him to make the transition into downtown.
And as developers have come and gone from the city, Panepinto continues to stay true to his community-oriented, family-centric development model.
Here he discusses what it means to reach the four-decade milestone, where his firm is going, and how he believes Jersey City will continue to mold itself to meet the growing demand of those who want to be to be in the New York metro.
NJBIZ: Describe what it was like being in Jersey City in the late 1970s.
Joe Panepinto Sr.: Right where we’re sitting right now (Harborside Plaza 10) were all abandoned railyards. That was in the 1980s and 1990s. I started developing in Journal Square first because Journal Square was the hub of the commercial district because the waterfront had deteriorated to abandonment. My first project was a small little office building I built for my own law office and title company. That was in 1977. And that is when I formed Panepinto Properties. I bought it in a foreclosure auction and designed and built it. I owned the building until about three years ago.
NJBIZ: Seeing as how the development in Jersey City has taken off disproportionately in the waterfront and not so much in Journal Square, what do you think was the impetus to start developing downtown?
Panepinto: The focus shifted to the waterfront when the large railroads that owned all the vacant lots in the waterfront were sold at auction. They were in foreclosure. It was the Pennsylvania, the Baltimore and Ohio railroads. In fact, I went out to Ohio to bid on a piece of property that right now, the entire LeFrak property sits on. I owned, with a local company, 27 acres. You can read about the first parking lot I opened. That was on the [LeFrak] property that we bought at auction for $80,000.
NJBIZ: What happened after you purchased that property?
Panepinto: What I first did was, I established the waterfront as a destination for the ferry service, which is really what prompted the development [downtown]. At the time, the city did not want to have parking lots along the waterfront because they didn’t want to become a parking lot for New York City.
Then, Mayor [Gerald] McCann wanted city development. The ferry service attracted companies that now saw the benefit of relocating in New Jersey because of the tax structure, the utilities were less expensive and the commute was a lot less. That spurred the development down here in the ‘80s. Then, the major companies started to get involved. Hartz Mountain is one of the original people down here developing. Then, Cali [Construction] came before it was Mack-Cali.
NJBIZ: This was also when development began to really pick up steam in the downtown as a whole, right?
Panepinto: [Things] did start moving. Joe [Barry of Ironstate Development] was the first one in 1998 to open the first apartment building that we finished in 2000. It was The Gotham.
NJBIZ: And you have been doing projects with them since?
Panepinto: Columbus is our signature project right now. I bought that property in 1998. And I brought the Barrys in. Right now, we have five buildings on the site. It’s almost 1,500 units of housing, hotel, 1,000-car parking garage. It’s a community within a community.
NJBIZ: Who else, would you say, are the original developers of Jersey City?
Panepinto: The Stern family, Leonard Stern [of Hartz Mountain]. In 1984, and we finished in 1988, the ADP Building [in Journal Square]. That was a spec building with no tenants. We spent $30 million building that building and it was totally occupied before we finished it. Because we were on a PATH station and at that point the Port Authority had just put the communications in the tunnel that allowed for communication to Wall Street. So, ADP took the whole building because that is where they processed all the Wall Street techs. It was off the grid in New York, so if there was a problem it wouldn’t affect their business and it was a big success.
NJBIZ: At what point did you start seeing a value in doing multifamily and hospitality?
Panepinto: I always shied away from doing multifamily. My specialty was retail stores and office. The reason for that, especially in the early days, late ‘70s, early ‘80s and ‘90s, [were] rent control issues; dealing with family issues was difficult at that time. I really segued into the retail. From 1977 until 2000 I really had no residential development. And last year, we opened 3 Journal Square. We actually started Journal Square in 1982 and finished the first building in 1984. We started the next building with Hartz in 1986 and finished that in 1988. And the third building just got finished now, 35 years later. That building was fully occupied in less than seven months. And the same thing happened at 70 Columbus and 50 Columbus.
NJBIZ: Having developed for so long, what do you think needs to happen for Journal Square to take off?
Panepinto: What needs to happen is what is happening [at the waterfront]. You have to reach critical mass. And that is not just when you have an apartment building and an office building. You also have insularly services, the restaurants and shops, the small club scene. Something that attracts the community and makes it a 24/7 community. That is what is happening in downtown Jersey City. That will eventually happen in Journal Square. We will be much better in the next 10 to 20 years than we were the last 40 years.
NJBIZ: What does that actually mean for developer like you in the long run?
Panepinto: If you have good product and the market is right, and you do your clients and your customers a service, you’re never going to lose money. And that is what is happening here. All of a sudden, people are gravitating, not only from Brooklyn and Manhattan, but from San Francisco and other areas. They come to Jersey City because they want to work in the New York metropolitan area. Five or even six years ago that was unheard of.
NJBIZ: You also have started doing work in South Korea. Having had many decades now in residential, office and a little bit in hospitality, what led Panepinto Properties to South Korea?
Panepinto: in 2005, we were approached by a few South Korean companies about investing here in the U.S. They were putting a fund together with some of their major companies, Daewoo Engineering and Samsung. We were raising a few hundred million dollars to develop here in New Jersey. Then we had the crash. In fact, I was in South Korea with my son at the time. We had finished all the documentation and that’s when the bottom fell out of the economy. Everything was put on hold. After about six months, Daewoo Engineering contacted me and said “Look, we have a project in Korea that we think you could give us some ideas on. And it’s not dissimilar to the Jersey City waterfront.” It was all railroad landfilled. In this case it was marshland and they were building a new airport and I got involved working there and I got involved developing a very large project there.
NJBIZ: Did you also start with an office building?
Panepinto: We did residential there. It was 1,700 apartments and 600 of what they call “office-tell.”
NJBIZ: Where does starting Panepinto Galleries in 2013 and your recent donations fit in the picture of future of development for you?
Panepinto: It is an important part of what we do. I did nonprofit housing in Journal Square. And I do that pro bono. I don’t charge when I do that. That is something that is going to be my focus as my children and my sons-in-law start running the company. I will be doing more charitable work and that will be my focus. But it is an important part. What do you think makes New York City great? They have corporate citizens that really look after the community. We don’t just take money out of the community. And that was the same approach in Korea. That’s why Korea approached my son and me to do the next phase. They saw what happened in the downturn and other developers ran out of the country. We stayed there, we kept out office and it works. Now, it has slowed down again because of political issues. [Our site] is 25 miles from the North Korean border. It’s a long-term play.