They call Hoboken the Square Mile City, but the borders of where people live are rapidly expanding thanks to new condo development, even as the market cools.
Prices in Hoboken are stabilizing, but in many ways the market’s still hot. New developments on the western side of the city and strong rental demand are keeping the city hopping.
On the condo front, an oversupply of units has led to what one broker has described as a “normalization” of the prices.
“There is a demand for condos, but not at the runaway prices [of last year]; it has stabilized,” said Charleen Martinelli, manager of the Hoboken office of Coldwell Banker Realtor. “This is not a reason to panic. We will go back to business as normal, rather than business as abnormal.”
In surveying the condo market, Martinelli said that she is seeing a larger number of units — at times 15 to 20 — available in one building than she had previously. She noted that in 2005, it was not uncommon to see bidding wars driving up prices by between $50,000 and $60,000, but that the current market has not seen as competitive a situation.
According to Martinelli, the average price for a one-bedroom condominium is now between $385,000 and $425,000, with prices rising to between $470,000 and $500,000 for a two-bedroom.
She said that the average monthly rent on a one-bedroom apartment is between $1,300 and $1,500 a month, with the prices rising to $2,000 and $2,800 a month for a two-bedroom and over $3,000 a month for a three-bedroom apartment.
“You see the Manhattanites coming to Hoboken,” Martinelli said. “Manhattan gets you $1,000 a square foot for old construction. Here we get $750 a square foot for top-of-the-line new construction.”
A booming northwest
While the demand for condominiums is easing, it has not stopped developers from continuing to come into the city. According to City Councilman Peter Cammarano III, city officials routinely review several new development and condo conversion plans each month.
Cammarano said that some of the new plans cater to young families by providing more bedroom space.
The redevelopment zone in northwestern Hoboken, created in 1997, has been seeing growth in recent years as projects have been completed or are nearing completion. In addition, the decision by New Jersey Transit to place a stop of the Hudson-Bergen Light Rail in this neighborhood has helped to spur development.
One new development in northwest Hoboken is Monroe Center, a mixed-use community of condominiums, retail, office and artists’ space.
Seth Kestenbaum, a director of Monroe Center Development, said that the first 120 condo units will be completed within 18 months, with a total of 435 units coming on line by 2009.
“Hoboken is an incredible market,” Kestenbaum said. “It is absorbing residential product rapidly but it is under-retailed. The entire northwest area was rezoned and has a lot of residential, but no retail.”
To address this, Monroe Center will contain about 30 to 40 retail spaces, ranging from small boutiques to restaurants. Currently the retail nexus of Hoboken is Washington Street, which runs the length of the city center.
Other areas poised
Hoboken’s City Council recently designated a 13-acre parcel in the city’s southwest section as a redevelopment zone, opening up the way for increased development in this area. While there have been some loft conversions in the neighborhood in recent years, the southwest sector is currently an industrial zone, lined mainly with factories, and does not have the increased residential development that has characterized the other portions of the city.
The city’s northeast, along the Hudson River, has seen several new projects, including the recently-completed Hudson Tea Building and the under-construction Maxwell Place complex, both from Toll Brothers. The northeast section has been an area targeted by developers in recent years.
Applied Development Company has been working in the Hoboken market for 35 years. Focusing mainly on the rental market, the developer has built the Shipyard complex in the northeast area on the Hudson River. The Shipyard first opened in 1999 and will consist of 1,160 units when completed in 20 months. Of the 1,090 current units, just 170 are condos.
Michael Barry, president of the Applied Property Company, said the developer has been focused on the rental market for years, seeing it as a better long-term economic investment.
While rental interest in Hoboken decreased in favor of condos following the September 11 attacks, Barry said he has seen Hoboken’s rental demand climbing again.
“The rental market is healthy,” said Barry, adding that his firm has rented 70 percent of the units in the Sovereign building, which is part of the Shipyard project, since opening in April. “We are 95 percent leased in the South Tower and are signing leases for the North Tower.”
Barry said that he has had a good working relationship with city officials, who he noted have been encouraging residential development in the city. He said that every town he has worked in has a different development focus, with Hoboken’s being toward the residential market with lower-rise buildings. (In comparison, Jersey City, Hoboken’s southern neighbor, has focused on high-rise development, he said.)
Hoboken’s government has used tax abatements as a part of its redevelopment strategy, but not to the extent that Jersey City has. Jersey City has used tax abatements for most major development projects in recent years.
Shipyard does not use the abatement program, while Monroe Center is part of a pilot program for tax abatements. There have been arguments against continuing tax abatements in Hoboken, based on the amount of taxes non-abated properties have to pay to make up for abated property.
“The thing I try to emphasize is that Hoboken is what it is, because New York is what it is,” Cammarano said. “As long as New York is the capital of the empire, Hoboken will be an inviting alternative to New York.”