The best thing about New Jersey’s so-called Gold Coast used to be the view east across the Hudson. But northern New Jersey’s once unloved waterfront is no longer so unlovely — the area that stretches from Fort Lee down to Bayonne is seeing renewed development efforts as a newer sort of resident sets up house. The Real Deal spoke to brokers and developers who’ve decided to mine the possibilities for a look at what the future holds.
Jamie LeFrak
managing director, LeFrak Organization
What is the most interesting trend you see in the Gold Coast market?
The number of strollers there now.
What is the most positive trend you’ve seen?
The most positive trend is the recognition among families that the Newport waterfront area is as good or better a place to live than Battery Park City.
What is the most negative trend?
The most negative trend is the government failure at every level to foster growth and development in New Jersey. Historically there have been complicated political problems.
What is the most overrated area of the Gold Coast?
Brooklyn.
Will prices rise or drop this year and why?
In Jersey City, they will rise. The average condo price was $600 per square foot. In my opinion, pricing will converge with Brooklyn waterfront pricing, which is about $800 a square foot.
Which has been the weakest neighborhood for development in the Gold Coast market?
There isn’t a lot of development in Weehawken. They like office buildings. But I wouldn’t say there is any weak area.
Where is the best area for new condo development?
The Jersey City waterfront where Newport is, but I’m biased [because Newport is a LeFrak project].
Where is the most overlooked area?
I think every station along the Hudson-Bergen Light Rail — the trolley turned to mass-transit system, which has been open [for more than six years] — could definitely use development.
How are the demographics of buyers changing?
The average age of the population has gone from 20-something to early 30-something with kids. There are more families with children ages four through 10, and the staying tenure is longer.
Where are they coming from?
Fifty percent come from New Jersey and 50 percent from New York.
What surprises you most about the current market?
It surprises me that the New York media hasn’t noticed it yet. And New Yorkers have been ignorant because it is in the 201 area code, but they will get over that just like they got over 718.
Louis Dubin
founder and president, The Athena Group
What is the most interesting residential development trend you see in the Gold Coast market?
The trend we’re seeing is a lot of high-density development in the form of high-rises. Today all residential development is pretty much high-rise. It is becoming the kind of density that more resembles the type you see in Manhattan. Land prices have gone up and there is the consequent need for higher yields. You need more units to amortize the land cost.
What is the most positive trend you’ve seen?
A lot of the major regional and national developers have come to the Gold Coast in the last few years.
What is the most negative trend?
With all these great developers there’s a lot of competition so it’s one of those double-edged swords. While it’s great, we are not out there alone anymore — it’s a very competitive market. Because there is so much supply on the market and coming on the market, I don’t think you are going to see large price upticks in the near future. Consumers have a lot of choices.
What is the most underrated part of the Gold Coast market?
Traditionally, in my opinion, Jersey City is underrated. We see a lot of momentum, including our building, the “A” Jersey City, and Trump is building two across the street from us. Retail, restaurants and entertainment have really just started coming in the volume that’s needed to sustain the demand over there.
How is the Gold Coast doing in relation to Manhattan?
The absorption has been a little slower than Manhattan up until December and January. Since then we have seen a huge spike in buying because bonuses were great and a lot of buyers work on Wall Street. Just in the last couple of months it’s become an even healthier market than Manhattan, where we also have projects.
How about inventory oversupply?
We are at about equilibrium right now but if all the planned projects are built, there’s a chance there will be a lot of oversupply. I don’t think they will all be built. I think there’s a lot of paper projects out there.
Where is the most overlooked area for new condo development?
An area in Jersey City called Journal Square is just starting to get redeveloped in a major way. It has unbelievable access to various modes of transit including the PATH train.
What sort of buyers are you seeing that you didn’t in the past?
The large influx of foreign, specifically Asian, buyers, which we didn’t see on this scale before. It has been reported that Trump sold over a hundred units to Korean buyers in the last month. Tax changes in Korea have allowed them to export more money. Before, there were major restrictions on using money abroad.
We also are starting to see a lot of empty nesters. As they start to sell their bigger suburban homes they are buying an apartment in Jersey City to have greater proximity to the city, and they may have a home in Florida as well.
Who is the typical buyer?
Most buyers continue to be younger people and couples who either work in Jersey City or Midtown or Downtown Manhattan because it’s a very easy commute on the PATH train. Also younger Wall Street types that were typical renters are coming from Manhattan and buying here.
What sort of buyers do you no longer see as new people come in?
One buyer we no longer see is the speculator, thank goodness. The speculators don’t have a spec game to play anymore, which is welcome in our business. We are delighted they are out of it.
Jackie Urgo
executive vice president, The Marketing Directors
What is the most interesting trend you see in the Gold Coast market?
For years, residential development along the Gold Coast was dominated by local developers who were entrenched in the area. Today, we’re seeing an influx of regional and national companies, like Trump and W Hotels.
What is the most positive trend you see?
We’re seeing an uptick in traffic and sales activity that started in December and has continued throughout the winter. I think home buyers took a step back last year after being continuously hammered with negative stories about the market, and then realized that the economy was strong, Wall Street was thriving, and real estate was retaining its value.
We’re also seeing an evolution of amenities. Much like in Manhattan, developers on this side of the river are rethinking traditional living concepts. Yesterday’s amenities like fitness centers and theater rooms are as ho-hum today as satellite TV. Instead, we’re seeing aqua grottos, spas with hot tubs and treatment rooms, maid service, concierge service, Zipcars and more.
What is the most underrated area?
I think Jersey City remains underrated. The waterfront offers some of the best views in the world, while PATH trains, ferries and light rail make commuting to Manhattan and other Gold Coast towns a breeze. There’s also a well-established financial center, not to mention the highest concentration of artists in any New Jersey municipality.
Which has been the weakest neighborhood for development?
Bayonne has long been the forgotten child of the Gold Coast. A less convenient commute to Manhattan, less dramatic views and a lack of a substantial commercial base have all contributed to the city watching from the rear as areas like Jersey City, Hoboken and Edgewater have prospered. However, that is changing somewhat as the light rail system has improved the commute. Bayonne’s underdeveloped waterfront is now attracting developers who are aggressively seeking new opportunities, particularly at the Peninsula at Bayonne Harbor, the former military ocean terminal that is being redeveloped into a mixed-use waterfront community, and the former Texaco site at the Bayonne Bridge, which is also being redeveloped into a mixed-use community.
Hoboken has long been the leader in Gold Coast development, but Jersey City is catching up. There’s also prominent development taking place in Weehawken and Edgewater.
Will prices rise or drop this year and why?
We’re already seeing prices go up this year. In early February, a two-story penthouse at the Beacon in Jersey City sold for $2.3 million, which was the highest price ever paid for a high-rise condo in Jersey City. Impressive numbers are also being recorded at Trump Plaza Jersey City. [The Marketing Directors is the sales agent for both projects.]
Any market segments surprisingly active or inactive compared to years past?
When the for-sale market slowed down last year, we began to see a strengthening of the rental market as buyers decided the safe move was to rent for a year before re-evaluating a new home purchase. Not surprisingly, owners began raising rents to take advantage of the shift in the market, which subsequently persuaded many long-time renters to jump into the home buying game. Developers offering product in the $300,000 to $500,000 range benefited the most from these opposing factors. While the high-end market seemed to suffer the most from a lack of confidence and urgency in the market, today we’re definitely seeing an increase in activity there as well.
How about inventory undersupply and oversupply?
There’s seems to be a crane on every corner these days. The substantial inventory supply will certainly impact sales velocity as buyers have more options than ever to consider, but there always seems to be more people in the market than product.
Where is the best area for new condo development?
The waterfront will always enjoy prime real estate status for all of the obvious reasons. However, there’s not much waterfront left to develop, and more and more activity is occurring in-town. Jersey City, in particular, is enjoying tremendous activity west of the waterfront as areas like the evolving Powerhouse Arts District and other blocks of dilapidated structures are being redeveloped, while new buildings continue to rise in Journal Square. Hoboken’s long-neglected western boundary is also ripe with new development, spurred in some part by the introduction of the light rail, which now links that side of town with PATH and ferry terminals.
What sort of buyers are you seeing that you didn’t in the past?
The Gold Coast has always been a magnet for 20- and 30-somethings. However, we’re now seeing those age boundaries extended in the form of empty nesters. We’re also seeing an increase in pieds-a-terre. Some developers are also incorporating daycare and child learning facilities to help retain families with school-age children.
What sort of buyers have disappeared?
We’re seeing less flippers in the market today. The conditions just aren’t right for the acquisition of blocks of units for the sole purpose of turning a quick profit, particularly before closing. As a result, developers are more focused on targeting true end users for homes.
Scott Selleck
principal, New Jersey Gold Coast Real Estate
What is the most interesting trend you see in the Gold Coast market?
Port Imperial along the waterfront, where my office is, has been coming together with both residential and commercial. They are constructing commercial on the lower floors of buildings with the residential above. Retailers like Starbucks and A & P have taken space.
Residents had to go to Edgewater, Hoboken or more western parts of Hudson County to go shopping. Now they have this retail on their doorstep; they will have this city feeling that they can walk downstairs in their building and get everything they need.
What is the most negative trend?
There is some traffic congestion, but the good thing is a new ferry is opening in Edgewater next month and more buses are coming, which will help with the commute. The light rail has brought in a whole influx of people that would normally have stopped at Hoboken if they were taking the PATH because it is the last stop.
What is the most overrated part of the Gold Coast market?
None, because each one satisfies a different lifestyle. Hoboken is a more trendy area; it used to be younger, but now more baby carriages stay there longer before moving off to the suburbs. It most mirrors Manhattan, at a much more reasonable price per square foot. The downtown Jersey City waterfront and historic Hoboken is for grown-ups. Edgewater is more family-oriented. But it depends on what type of community someone is looking for.
How is the Gold Coast doing in relation to the New York City market?
A lot of the base here is from Manhattan because they want more square footage and they don’t want to be too far from Manhattan. Eventually they venture off to Essex or Bergen counties when the children are five or six years old. Usually their time horizon is two to five years. Some trade up and stay.
What surprises you most about the current market?
The activity we picked up from January to February. At the pace we are at right now we will exceed last year’s numbers.
Lauro Arantes
sales agent, Weichert Realtors
What is the most interesting trend you see in the Gold Coast market?
Jersey City approved a 67-story residential tower, the highest in the state. That is one of many residential towers coming up. The skyline is being reshaped fast.
What is the most negative trend?
Developers might be overbuilding on the Gold Coast.
What is the most overrated part of the Gold Coast market? Underrated?
Overrated is Hoboken and Paulus Hook in Jersey City. Underrated is Bergen Lafayette in Jersey City.
Any market segments surprisingly active or inactive compared to years past?
West New York is taking longer to catch up. It’s amazing that you can buy a 1,300-square-foot, 2-bedroom, 2-bath condo with a terrace and panoramic views of Manhattan in the low $600,000s.
Where is the best area for new condo development?
The Powerhouse Arts District in Jersey City. It has amazing potential. It’s the waterfront across from Tribeca. It’s booming.
What sort of sellers are you seeing that you didn’t in the past?
Some sellers have decided to sell and move back to the city, taking advantage of the “buyers’ market.”
Ben Jogodnik
senior vice president, Toll Brothers
Where is the best area for new condo development?
Buyers want an urban experience and the hotter areas are those that stick to those ideals. Our Maxwell Place and Hudson Tea projects in Hoboken have allure because they are one-and-a-half blocks from the ferry and half a block to Washington Street, Hoboken’s main thoroughfare.
Where are buyers coming from?
We have buyers from New Jersey, Manhattan and from out of town. On the whole we have apartments 10 to 15 percent larger than Manhattan. There’s real value for the buyer that comes from Manhattan.
What are you seeing as far as sellers?
People have a little shorter horizon in this area, so there is always a little turnover, but nothing extraordinary.
Doug Fenichel
regional director of public relations, K. Hovnanian
What is the most interesting trend you are seeing in the Gold Coast market?
The diversity of the people. We have seen so many active adult couples that we are building an entire community for active adults. We are building all the amenities that the city offers and the convenience to get anywhere quickly.
Will prices rise or drop this year and why?
We are seeing a stabilization of the market. Prices got overheated and rose to a point where it had to come back, and now they are back in line to where it should have been. Invariably you will see increases in price, whether it happens in 2007 or 2008. We have built homes for sale here starting in the mid 1990s. We have done 2,500 homes, and we are always looking for opportunities.
Any market segments surprisingly inactive compared to years past?
The property flippers are out, we are happy to say. It makes for a more stable and better community.