NJ Biz: New Jersey’s Cities are on the Rebound

Manhattan’s proximity drives Hoboken, Jersey City, demand while some markets lag

By EVELYN LEE

The nascent housing rebound is playing out differently in New Jersey’s cities: While established urban residential real estate markets are seeing an uptick in occupancies and rental rates, more unproven markets will have a longer road to
recovery, experts said.

“New Jersey’s urban areas are very disparate areas,” said John McIlwain, senior fellow for housing at the Urban Land Institute, in Washington. While some cities are doing well, “there’s places like Trenton and Camden, which are challenged and have been for a long time.”

Among the strongest-performing urban housing markets are those located close to Manhattan. “We’re seeing a tremendous amount of resurgence in the urban housing markets along the Hudson River waterfront,” said Carl Goldberg, managing partner at Roseland Property Co., based in the Short Hills section of Millburn. Roseland recently opened the Monaco, a 524-unit residential tower in Jersey City, which rented more than 40 apartments in its first 15 days, and is now renting more than 20 apartments per week, Goldberg said. “That kind of absorption is almost unprecedented,” he said. Because residential construction dropped off sharply during the recession, demand now outweighs supply, he said.

“In general, the primary markets accelerate first, then they start pulling the properties a little bit further afield,” said David Barry, president of Ironstate Development Co., a Hoboken-based real estate developer.

“Certainly, in Hoboken, Jersey City, we’re already seeing strengthening,” Barry said. The rental recovery in those cities is already occurring, with occupancies in those cities running at 98 percent, compared to levels “in the low 90s” in 2009, he said. Concessions also have largely disappeared, he said.

The for-sale condominium market in those cities, however, will lag rentals, since greater job growth and rental rate appreciation will need to occur for condominium demand to increase, Barry said, predicting “a modest year, because there’s some inventory that needs to be absorbed.”

Urban housing demand is largely being driven by a younger demographic — people who are in their 20s and 30s and working in more entry-level jobs, Barry said. In many cases, they also grew up in a town in the general vicinity of that city, people who move to Hoboken or Jersey City, for example, often are from northern New Jersey. “People go to places they’re comfortable with,” he said.

Proximity to New York is a high driver of demand, but so is access to mass transit, Goldberg said- “If people move into urban communities, they want to greatly diminish the use of their car.”

While “places like Jersey City and Hoboken are coming back” because of their location advantage, a strong rebound in those areas isn’t likely until next year” McIlwain said. The housing market remains very weak nationally, though Manhattan is faring better than the rest of the country, he said.

“When prices start to rise again in Manhattan, that pushes people out,” he said. “People will be looking for more attractive and more affordable alternatives.”

As better-known residential markets like Hoboken and Jersey City begin to strengthen — and get more expensive — “people will start to look at less-established markets to get more space for less money,” Barry said.

According to Goldberg, secondary urban housing markets in New Jersey are priced at about 60 to 70 percent of what Hudson riverfront properties command.

One such market is Harrison, where Roseland and Millennium Homes built River Park at Harrison in 2008, and where Ironstate is currently constructing its first project in the town, the 280-apartment Harrison Station, with completion expected in September.

“Harrison is where Jersey City was 15 years ago,” said Barry, noting that in the mid-’90s, when Ironstate built its first project in the latter municipality— Portside at Paulus Hook — the new development was surrounded by industrial buildings. Today, Harrison Station is going up in the same predominantly industrial area as River Park, the only other major residential project to be built in the town in recent years, he said.

“I’m very confident Harrison has all the characteristics of an area that is going to be immensely successful,” he said. “It’s unbelievably connected to all these employment areas,” in Newark, Jersey City and Manhattan, that can be accessed in a 15-minute PATH ride. But if Ironstate’s project is considered a first step,
“Harrison needs to take six or eight or 10 more steps to get to where it needs to be,” he added. That’s “going to play out over the next 10 or 15 years.”

While Manhattan is seen as a strong driver of urban housing markets in northern New Jersey, it has less of an impact on New Jersey cities farther south. Long Branch, where Ironstate is building the master-planned community Pier Village, “is a slightly different equation, because there are subpockets of employment” in Middlesex and Monmouth counties, Barry said.

In New Brunswick, meanwhile, the residential market “has sustained itself over the last recession,” partly because of its more localized drivers of demand, said Christopher J. Paladino, president of New Brunswick Development Corp.

New Brunswick has “a bit of an artificial market” because of Rutgers University’s location in the city, he said. “The student housing market is not dramatically impacted by economic cycles.”

The city also didn’t see significant layoffs from the university and its other major employers. Johnson &Johnson and the Robert Wood Johnson University and St. Peter’s University hospitals- Still, the local housing market did weaken somewhat in the downturn: although occupancy rates have largely held steady, for-sale condominiums are now priced at about $150,000 below their peak, and rental rates also have declined, he said.

Devco is constructing 200 rental and for-sale units at its Gateway project, adjacent to the New Brunswick train station. “We’re looking to try to facilitate a longer-term living commitment to the city than your average renter,” Paladino said. The strategy is to price condos at levels that are attractive to a younger couple, where “she may be a young physician at the hospital, and he
may be an administrator at the university,” he said.

While cities like Newark may have a geographic advantage over New Brunswick in being closer to Manhattan, “we’ve had a 10-year headstart” on non-Gold Coast cities, building more than 1,000 new rental and for-sale units in the past eight years, Paladino said.

In does such as Newark, Elizabeth, Rahway, Trenton and Camden, “residential development is still in the pioneering stages.”

In Newark, “it’s going to take some years and hard work” for a recovery to take hold, McIlwain said. There’s a lot of issues it’s still working through.” And Camden as a whole “is still financially struggling and has a long way to go.”

Overall, growth in New Jersey’s urban areas has been occurring at a slower rate than it did in the 1990s, he said. “The future of urban areas in New Jersey is mixed,” McIlwain said. “There will continue to be empty nesters and young professionals moving into urban areas,” he said. “There will also continue to be families with kids moving out to the suburbs.” That will likely create a net loss in the state’s urban populations, since the new households living in the cities will be much smaller, and some urban housing markets could have more units built than people moving in, he said: “That will be a trend that will continue.”

See the full clip here: NJ Biz – New Jersey’s Cities are on the Rebound

Home is Where the Art Is

Barry and his wife have lived in their two-floor penthouse at the Sovereign with their three children, ages 15, 13 and 11, for the past three years. Previously, the family lived in another building in Ironstate's The Shipyard, the redevelopment of the former Bethlehem Steel shipyard into five buildings, comprising about 1,200 residential units and ground-floor retail space along the Hoboken waterfront. (Photo courtesy of NJ Biz)

Real estate developer enjoys MANHATTAN views, modern art in his living room

by Evelyn Lee

The colorful “Free Beer” sign at the entrance to the living room in David Barry’s Hoboken penthouse is just the start of things to come in this space filled with striking visuals.

Barry, president of Ironstate Development, also based in the Mile Square City, is an avid collector of contemporary art, an interest he makes abundantly clear on the walls of the room.

“I like art a lot,” said Barry, 45. “It resonates with me emotionally. … There’s something about art that’s more engaging, and you see it in different ways, depending on what your mood is, what the light is.”

Prominently displayed above the fireplace — across from windows with sweeping, panoramic views of Manhattan — is a piece that was part of the “Pictures of Junk” series by Brazilian artist Vik Muniz.

At first glance, the work appears to be a Renaissance oil painting of Apollo and Daphne, but upon closer inspection, the figures actually are composed of pieces of junk carefully arranged on a warehouse floor and photographed from above, said Barry, who has been collecting for about 10 years.

Inside a recess along the same wall is a series of images relating to “On the Waterfront,” the 1954 Marlon Brando film that was shot in and around the docks of Hoboken. “It was kind of cool to be able to have some Hoboken references” in the living room, said Barry, who purchased the work by Drew Heitzler, at Renwick Gallery, in New York.

On another wall, behind a grand piano that belonged to the grandfather of his wife, Kyra Barry, hang a pair of magenta and gray paintings Barry commissioned artist Sarah Crowner to create. “I felt like this room needed a little bit of pop,” he said. “We wanted something that was a little bit abstract, that wouldn’t compete with this,” he added, gesturing toward the views of Manhattan.

(Photo courtesy of NJ Biz)

As for the “Free Beer” painting, Barry said, that was done by a Danish art group called Superflex as part of a project that involved publishing free recipes for beer. “It was more their social viewpoint that everything should be open-sourced,” he said. “If you have a formula for technology or a recipe, it should be shared with the world, because that makes the world better.”

Barry also happens to like beer, he added with a smile, and “1 thought it was a little funny and humorous that when you walk into this nice apartment, the first thing you sec is ‘Free Beer.'”

Although his wife also is an art lover, “we don’t have exactly similar tastes — but similar enough that we can find a lot of crossover,” Barry said. “I like things that are a little bit crazier and more aggressive. She probably generally prefers things that are a little bit calmer and more abstract.”

Barry likes to work with the same galleries for art acquisitions, such as Renwick, Nicelle Beauchene and Hasted Kraeutler, in New York. “I’m not so much into random galleries,” he said. “I like to have a little bit of reference.” He also travels with Kyra and four or five other couples every year to Art Basel Miami Beach, an art show where Barry usually acquires new pieces.

Barry said he doesn’t always know where he will hang a new piece of artwork in his home. “I just buy it if I like it, and then I try to figure out where to put it.”

Barry grew up in Maplewood, and later lived in New York for several years, during and subsequent to attending Columbia University. But after his children were born, he wanted his home to be closer to the office. “I’m very busy, I work a lot,” he said. “It really is nice for me to literally be 10 blocks away, to be able to come home at a moment’s notice.”

Unlike their last home, the Barrys, current apartment was custom designed by architect David Collins, who previously worked on Avenue, a restaurant located in Ironstate’s Pier Village development in Long Branch.

“My family and I decided that we would get some more space and do an apartment that really reflected our lifestyle,” with a contemporary feel, a lot of natural materials and plenty of outdoor space, Barry said. “We transitioned into a real home.”

See the full clip here: NJ Biz – Home is Where the Art is