New York's real estate boom crosses the Hudson
Jersey City, N.J.
IT'S ballyhooed as ``New York's New West Side,'' touted as ``the Gold Coast,'' and proclaimed the ``Left Bank of the Hudson.'' By whatever name, Lisa Armbrust considers the massive building boom on the New Jersey waterfront a splendid solution to expensive Big Apple rents.
``In Manhattan, I'd never be able to afford what we have here,'' she says. Ms. Armbrust and her roommates have just rented a spacious three-bedroom Jersey City apartment in a development known as Newport.
The World Trade Center and Greenwich Village are both one short subway stop away. It's just steps to a huge shopping mall slated to open in mid-October. And her 20th-floor apartment offers something none of her Gotham City friends can claim: a view of the Manhattan skyline.
``They're all pretty jealous of the setup,'' she says with glee. ``None of them have the space we have unless they're paying $2,000 to $3,000 a month.''
She and her roommates pay $1,650 a month.
At $10 billion, Newport is the largest project of its kind in the United States. But Newport is scarcely alone. There are 27 developments under way along an 18-mile waterfront strip opposite Manhattan. Builders hope Ms. Armbrust is only the first of many New Yorkers lured across the Hudson. In all, plans call for some 40,000 residences, 33 million square feet of offices, thousands of hotel rooms, plus shopping malls, parks, and marinas.
``This is one of the hottest, most dynamic real estate markets in the country,'' says Richard Kately of the Real Estate Research Corporation (RERC), a Chicago-based consulting firm.
As little as five years ago, most of this property strategically located just 5,000 feet from Manhattan lay fallow - a stretch of rundown railroad yards, rotting piers, abandon warehouses, and manufacturing plants.
``A land that time forgot,'' says James Hughes, chairman of the urban planning department at Rutgers University.
But the booming New York City-area economy has finally embraced the waterfront. Throughout the 1980s, New York's service-oriented businesses prospered. And New Jersey's suburban highways became magnets for corporations setting up computer facilities, clerical offices, and light manufacturing plants. But Hudson River sites felt the prosperity last, because it was a more difficult area to develop.
Isolated from retail stores and restaurants, developers had to adopt a city-within-a-city (residential, commercial, retail) concept. Although risky, it was crucial to making the projects marketable.
Still, ``before 1980, the market demand and job growth hadn't expanded enough to make feasible projects of this scale,'' says Dr. Hughes at Rutgers. But as nearby New York rents skyrocketed, the economics improved.
Many analysts consider Thomas Kean, the pro-business governor of New Jersey since 1982, instrumental in speeding development.
``In the past, public agencies were one of the biggest impediments to waterfront development,'' says Stephen Kukan, head of area development at Public Service Electric & Gas Company, the largest Garden State utility.
Now, with government and market forces on their side, developers are forging ahead, and both residential and corporate tenants are lining up. Although not yet completed, about 70 percent of the 1,500 Newport apartments are leased.
Bankers Trust has moved 1,200 employees into Harborside Financial Center in Jersey City. PaineWebber Inc. plans to relocate 2,500 employees into the residential and office complex known as Lincoln Harbor in Weehawken. NBC, pondering a move out of its Rockefeller Plaza corporate headquarters, is now looking at the feasibility of relocating to Newport or Harborside.
This building boom is not without risks or problems. As improvements are made, rents rise in surrounding areas. Low income residents and small businesses are displaced. And traffic is likely to increase.
``We're not quite the Los Angeles of the east,'' says Hughes at Rutgers, ``but congestion has become a problem throughout New Jersey. The tunnels to New York are already abysmally congested.''
Hughes figures more river ferries and a planned light-rail system along the waterfront will mitigate traffic problems. Since most residents won't have to leave the developments for recreation or shopping, that could reduce the potential for traffic tie-ups.
There are concerns, too, that this boom could create a real estate glut. Northern New Jersey already has nearly a two-year overhang of commercial space on the market.
``That's OK in a hot market,'' says Don Eisen, head of the New Jersey offices of Cushman & Wakefield, real estate consultants. ``But we've been in a strong market for the last six years. The economy tends to be cyclical. There will always be a time when things slow down.''
A recession could stall or shelve planned projects. Mr. Kately at RERC likens the Newport project to Chicago's mixed-use Illinois Center, which was begun in the 1960s.
``It's still under way, after 20 years. They just added a second hotel, another apartment building, and they're talking about an opera house. But there have been times when the economy softened and they weren't doing anything.''
Indeed, Newport is eight years from completion. And one is inclined to agree with developer Samuel LeFrak when he says, ``You haven't seen anything yet.'' He insists, ``Out of dilapidated railroad yards and broken piers we're making magic out there. Did you hear the talking elevators? This is Epcot Center. This is the experimental city of tomorrow.''
At the moment, that city has four apartment buildings up, a mall nearly completed, condominiums and offices under way, and some docks in the water. Parks and waterfront piers will probably be the last to be completed.
The grounds surrounding Lisa Armbrust's apartment are little more than a dusty, noisy 560-acre construction site. Rust-scarred yellow Caterpillar tractors groan loudly. Huge trucks rumble down newly laid streets.
The Newport vision: 10,000 apartments, condominiums, and town houses, 10 million square feet of office space, three hotels, a 165-store shopping mall (Sears, Sterns, and J.C. Penney have already signed on), a yacht club and marina with some 1,000 slips, a 36-acre park, and a public waterfront esplanade.
But Mr. LeFrak's obvious pride and joy will be a two-story ``entertainment pier'' on the order of Manhattan's South Street Seaport. In addition to shops and restaurants, plans call for an art museum, a historical museum, and a ``world oceanographic center.''
Just back from Paris, LeFrak says Jacques Cousteau has agreed to collaborate on the design. ``We're estimating 2 million to 3 million visitors a year,'' he states matter-of-factly.
Then, with the rising pitch and rapid cadence of a long-time promoter, LeFrak rattles off his view of the future: ``This will be the sixth borough of Manhattan. They'll be walking across the water to get here. Finally, we're going to give New York City something to look at on our side of the river.''