Ironstate Development’s David Barry, one of NJ’s biggest developers, on Jersey City’s past, present and future
As a New Jersey native, David Barry has seen countless changes along the Hudson River. Less than two decades ago, Jersey City’s waterfront was primarily used as a shipping hub and its land was inundated with industrial rail yards. But as the ports became fewer and manufacturing moved elsewhere, the city reinvented itself as a vibrant community for established residents and newcomers alike. Now, the 51-year-old developer and his brother Michael Barry, who co-own Ironstate Development Company, are the faces behind one of the most active development firms in Jersey City. Since the early 1990s, Ironstate — which is based in nearby Hoboken — has played a key role in Jersey City’s evolution with the construction and management of large-scale, mixed-use projects that now total a growing 4.7 million square feet across several neighborhoods. The firm’s portfolio consists of apartments, condominiums, shopping and recreational spaces, often located near mass-transportation hubs. Ironstate’s latest projects include the luxury rental tower 235 Grand in Liberty Harbor North; the residential, retail and hotel properties at 50-90 Columbus off of Grove Street; and the massive, three-tower Urby Harborside — New Jersey’s tallest residential tower — which the firm is co-developing with Mack-Cali Realty Corporation. Each of those devopments, Barry explained, is a part of his commitment to the community and Jersey City’s goal of becoming a premier city on the East Coast.
What sparked the dramatic increase in interest in Jersey City over the past decade?
It’s a story similar to the development activity that’s been occurring in the outer boroughs. As New York City has continued to become increasingly less affordable, the demand shifts to convenient locations. I think Jersey City, while it is in New Jersey, and it’s technically not an outer borough, it functions as one. Its proximity to New York City is terrific. It has the PATH, ferries and an infrastructure that is not too dissimilar to, say, Williamsburg or Long Island City.
When did Ironstate begin its first development project in Jersey City?
In the early ‘90s, we took over a partially completed apartment building called Towers at Portside. It was a project started by the DeMatteis Organization, who hit that early ‘90s recession head on. We finished it, rented it and then built a second tower with another 300 apartments, which was part of the deal. We sold the property [in June of 1998, for $119 million] to Equity Residential.
Were there any forecasted signs of the area’s real estate boom when you first started building there?
As a kid, I had been to these cities many times in the ‘70s and ‘80s. By the ‘90s, I could see the differences. The areas were getting safer and there was a demand for more reasonably priced housing alternatives outside of Manhattan, where people could quickly commute into the city.
Ironstate has played an active role in Jersey City’s Grove District and Liberty Harbor neighborhoods. How do those neighborhoods differ from each other from a developer’s perspective?
Grove Street was the marquee area to develop first. It has great views and is a close walking distance to all offices built around the waterfront. Liberty Harbor took a little longer. That area was one giant industrial swath 10 years ago.
Your 18 Park property in Liberty Harbor houses a rehabilitated Boys and Girls Club. How else has the area’s community benefited from the revitalization of Jersey City’s downtown?
The development of downtown has made it safer than it was 15 years ago. There have been more jobs created and more people on the street, which adds pressure for ferry and PATH service upgrades. It also effectively connected a couple of submarkets in Jersey City — the Hamilton Park area, the Paulus Hook area and Van Vorst Park. This revitalization has really connected those pockets of pre-existing residences.
The 152-key Marriott Residence Inn at 80 Columbus is due to open in the fall. How did you decide on Marriott for the project?
We had a few hotels vying for that space. With that particular site, we thought it would have a lot of advantages as a business hotel, since there are a lot of businesses in downtown Jersey City. We were leaning towards the extended stay category. Having that big brand presence would help a submarket like Jersey City in that it’s a little bit off the beaten path for the typical traveler. Marriott was the best operator to be in that space.
Are you concerned about the timing of the 80 Columbus project with the country’s hotel industry starting to cool off and talks of a downturn hitting in the near future?
I’m definitely not concerned. I recognize all those macro concerns and they’re legitimate, but I do think this Hudson County submarket is very underrepresented relative to hotels. I think it’s actually perfectly placed.
Ironstate is getting ready to break ground on 235 Grand, a 45-story, 549-unit rental building, and on 101 Grove, a 10-story, 131-unit rental building. When do you expect to complete these projects?
The two properties are right next to one another and being that 235 Grand is a bigger building, we want to get that one started first. We’re just getting into construction on it, so I’d say it will be ready to occupy 30 months from today.
Is there a benefit to building rentals over condos in those neighborhoods?
I think people are trending towards rentals in general. With condo ownership, you have tax advantages and the American dream of home ownership. But on the other hand, with renting there’s a lot of flexibility and mobility. I think there’s going to be a continued demand for rentals relative to condos. It’s also my personal preference as a business model. I trust it more. I like it better.
What are you seeing in terms of average rents in Jersey City for 2016?
On a dollar-per-square-foot basis for new product, Jersey City is $50 to $54 a square foot. Depending on the size of the unit, a studio might be below $2,000, one-bedrooms give or take $2,500 and two-bedrooms $4,000 and up. The pricing for units in Jersey City — and in most markets — depends on the age of the building. As the market has evolved over the last 10 to 15 years, the newer buildings tend to have more amenities that people want. Older buildings are less likely to contain things like gyms and pools.
At Harborside, you’re co-developing a brand new waterfront property on an empty lot with Mack-Cali. The 713-foot development will feature Ironstate’s “Urban Ready Life” design concept. What’s the main idea behind that?
First, we look at the apartment product from a spatial design standpoint: How can we make these apartments more desirable for today’s resident? We approach that by considering what today’s renters really want. Nowadays, if you want to order groceries, you call FreshDirect, if you want movies, you stream them into your home and you don’t need racks of DVDs anymore. There are all these things that are working towards people needing
How far along are you in the Urby Harborside residential project?
We predict it will be ready for occupancy in November 2016.
The tax abatements granted to developers in the coveted downtown area of Jersey City have been reduced to five to 10 years, down from 30 years. How does this change affect your development process?
At some point, when you push these policies too far, you have the potential of choking off development, which I think is happening in New York City, to be honest. There’s so much uncertainty around 421-a that it is slowing development. Obviously developers and municipalities are diametrically opposed to each other when it comes to taxation policy. Municipalities want the taxes and they want affordable housing. That’s legitimate. It’s not a complaint — it’s just a reality. There’s no free lunch in this world.
Sen. Robert Menendez’s legal defense fund raised nearly $1.3 million, up until he was indicted on bribery and corruption charges in April 2015. Prior to his indictment, he received $10,000 from your father, retired real estate developer Joseph Barry. Menendez’s fund also received $130,000 from Ironstate executives. Has this experience made you more reluctant to fund a political candidate?
Senator Menendez has been a great friend for many years and I think he’s been an effective and upstanding senator for the state of New Jersey. I’m entitled to support elected officials that I believe are doing a good job for New Jersey. If I believe in someone’s policies and their leadership, I’m entitled to support them within the legal limits prescribed by the patchworks of regulations. We’re a private company involved in this state for decades and we have a good perspective on which leaders, governors and senators have been effective and have represented Jersey well. If I believe they’re doing the right thing, I don’t have reluctance. I’m not focused on what other people may say or may think. You have to go with your beliefs in this world.
If you could see one big change in the relationship between the real estate industry and the public sector in New Jersey, and in the country as a whole, what would it be?
I would look at the relationship between the regulations that are passed relative to building codes, environmental codes and zoning. I feel like there’s an endless capacity for public bodies to pass additional regulations that then get pumped up in the media, and what ends up happening is housing prices get more expensive.