The Real Deal New York

Residential towers coming to Jersey City’s Journal Square

December 20, 2007 03:44PM
By John Celock

Jersey City is beginning to look inward. As the city sometimes called
“New York’s Sixth Borough” grows, it is expanding westward from its
waterfront. As part of this trend, developers are turning their eyes to
Journal Square, a historic neighborhood located three PATH stops from
Manhattan. A hub for the city’s burgeoning Indian American community,
Journal Square is filled with small shops and low-rise buildings — but
two planned residential towers will set a height record not only for
the city, but for New Jersey overall.

A middle-income area of the city — named for the Jersey Journal
newspaper, which has been headquartered there since 1912 — Journal
Square has also been attracting growing commercial interest, as demand
for Class B office space for back-office operations rises.

In the past, Journal Square had not seen the same boom as the city’s
waterfront, which is dotted with luxury condo and office towers, or
downtown, which has attracted new shops and cafes as well as residents.
However, with prices going up on the waterfront, and land running out,
Journal Square, historically a retail and commercial center, is
generating more interest.

“There are a lot of people looking for close proximity and larger
spaces for less money,” Lynda Lee, a sales associate with DJK
Residential, said. She noted that she has been doing more work in
Jersey City as young professionals look for lower prices than those
they find in Manhattan. “It’s 11 minutes from the city, and for a lot
of New Yorkers, it feels like they never left Manhattan,” Lee said.

“They are running out of property on the waterfront,” added Lowell
Harwood, managing partner of Harwood Properties, which is developing
the new complex. “The cost is higher on the waterfront.”

Harwood Properties is planning a two-tower, 1,500-unit residential
complex, with 150,000 square feet of retail space, slated to start
construction in the first quarter of next year. According to Harwood,
the project will consist of a 60-story and 40-story tower on top of a
seven-story parking deck. The 60-story tower will stand taller than the
Trump Organization’s much-heralded condominium project in the
Powerhouse Arts District along the Hudson River.

Currently, Journal Square is a relative bargain as existing condos run
approximately $300 a square foot, while Jersey City’s waterfront has
been selling at roughly $500 a square foot for new construction.
Manhattan condo prices, by contrast, ran nearly $1,350 a square foot in
the third quarter, according to numbers from Miller Samuel appraisers.

One-bedroom rents in new construction on the Jersey City waterfront
average $1,600 a month. Harwood has not yet announced whether units in
the new complex will be for rent or for sale.

Yeon Benkovitz, a real estate agent with American Homes Realty, said
that she is seeing more clients willing to look at Journal Square. She
said the demographic that had been looking at the waterfront five years
ago has been turning its head toward Journal Square in recent months.
This includes young professionals, young married couples and suburban
empty nesters.

Harwood identified all of these groups as key demographics he hopes to
lure to his project. He also said that transit options played a key
role in his selection of the site, along with the historic aspects of
Journal Square. The neighborhood has long been known as Jersey City’s
transit hub, with a PATH Station providing service to both Lower
Manhattan and Midtown, along with a New Jersey Transit bus depot
providing service to the rest of northern New Jersey.

The project will sit across the street from the PATH station and steps
from the bus depot. It will be sited on a bluff high above Jersey
City’s downtown, with Manhattan and Hudson River views from each unit.

Harwood plans to start demolition on the project in January, with
groundbreaking slated for March. Completion is scheduled for the summer
of 2010. Building amenities will include a fitness center, residential
courtyard, rooftop pool, child care and a playground — amenities that
are lacking in many of the existing buildings in the neighborhood.

Architect Bruce Becker of Becker and Becker Associates, the designer of
the Octagon on Roosevelt Island, said the design will incorporate the
existing historic elements of the neighborhood such as the Loew’s
Jersey City Theatre. That approach is similar to what the firm did with
the Octagon, where it incorporated historic elements from an old mental
hospital into a modern luxury building.

Plans for the complex’s retail component include recruiting an upscale
grocery store, a Starbucks, a bank and several restaurants. There have
also been recent talks about bringing a Staples to the area. There are
currently no large bookstores and upscale grocery stores in Jersey
City, though there have been unconfirmed reports that Whole Foods will
be opening a store in the Jersey City waterfront district.

Harwood said that while service retail, such as banks and dry cleaners,
will be brought into the new complex, he does not want it to be a main
aspect of the site.

On the commercial front, the financial services clearing operation
Pershing LLC has been a longtime presence in Journal Square. The square
had been a commercial center since the newspaper moved there in 1912,
but fell behind the 1990s boom when new Class A office buildings
sprouted along the waterfront. In recent years, six Class B buildings
have been constructed and rehabbed, and are being marketed for the back
offices of financial services companies.

Jonathan Merrill of Time Equities said the square’s reputation as a
mass transit center, along with the new development interest in the
square, contributed to the area being a destination for some office
space.

Merrill said that while Journal Square remains in demand, it is lagging
behind the burgeoning waterfront commercial space because of the lack
of Class A buildings and the fact that waterfront properties are closer
to Manhattan.

So even as new development comes into the square and more buyers show
interest, the question is whether Journal Square will take off like the
downtown and waterfront neighborhoods or remain an afterthought.

“Clients do not come looking for Journal Square; they come looking for
downtown,” said Lauro Arantes, an agent at Weichert Realtors. “I’ve
shown them Journal Square when they are priced out of downtown.”

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