Category Archives: Rentals

Manhattan real estate will continue to hamper New Jersey housing recovery

As a by-product of Manhattan real estate market, what happens in the city usually at some point spills over to the northern New Jersey market. When Manhattan real estate does well New Jersey prospers.  Conversely when Manhattan hits the skids as it did when the market crashes in 2008, the New Jersey market tanks. This is usually how it goes in New Jersey…”usually” being the key word.

We’re still waiting for this to happen in New Jersey…and we’ve been impatiently waiting for years and there’s no light at the end of the tunnel.  And worse, there’s more bad news for us to the west of the city.  Why has the New York City real estate prospered so much while the Bergen County, New Jersey market (except for new rental projects) still languishes after so many years.

The Modern…new ultra luxury glass residential tower in Fort Lee, New jersey

Here are a few reasons:

As a recent New York Times article points out…

Real Estate in Manhattan Set Records in 2014…

It was a banner year for Manhattan real estate. In 2014, buoyed by sales of ultraluxury apartments in new developments, the real estate market rebounded to surpass its previous peak, reached in 2008, when the financial crisis hit, according to Jonathan J. Miller, the president of the appraisal firm Miller Samuel.

The average sales price reached a new high of $1,718,530 last year, surpassing the record set in 2008, when the average sales price for the year was $1,591,823, according to Mr. Miller, the author of a report for Douglas Elliman Real Estate.

Big-ticket closings also helped the average price per square foot climb to a record $1,297 for the year, above the previous high of $1,251 per square foot in 2008.

The median apartment price, which measures the middle of the market and is less affected by high-end sales, was $940,000 in 2014, just behind the record of $955,000 set in 2008, according to Miller Samuel.

The better the market is in New York City the worse it seems to be for the suburbs 

“It was an extremely strong year,” said Sofia Song, the head of research at Urban Compass, which reported record dollar volume in the fourth quarter of 2014 with approximately $5.4 billion in closed deals. “Properties were being snapped up faster and at higher closing prices than the 2008 market peak.”

This is what’s happening with the housing market in Bergen County:

  • Single family home sales decreased 6% in 2014…decrease of 368 homes on a sales volume of 5564 homes
  • Multi-family home sales decreased 3%…decrease of 88 units on a volume of 2655 units

And this is what’s happening with the Manhattan housing market:

Dottie Herman, the chief executive of Douglas Elliman, reported half of all apartments in the fourth quarter sold at or above list prices, the highest percentage in six years.

Pamela Liebman, the chief executive of the Corcoran Group. “And there’s really no sign of things slowing down.”

The number of contracts signed in the fourth quarter, 3,216, was the highest since the fourth quarter of 2006, when 3,246 were signed, according to the Corcoran Group. Co-ops accounted for 58 percent of signed contracts this quarter, the highest co-op market share since the third quarter of 2009.

And the real killer…”at least twice as many new condominium units are scheduled to hit the Manhattan market this year as in 2014, the most since 2007, leading some real estate watchers to predict a tempering of price growth and slower pace of sales. “It is anticipated that the market will likely see a price adjustment,” in the first quarter of 2015, Urban Compass stated in its report.

All of this points to problems for a New Jersey real estate recovery:

  • If prices in Manhattan stabilize or even decrease fewer city lovers will be inclined to make the exodus out of the State.  Even with the super quick inflation, city residents haven’t fled in mass numbers to the much cheaper burbs…at least not to the single family market
  • As long as people continue to invest in new ultra luxury condos in the city the New Jersey ultra-luxury market will continue its downward spiral
  • And the real kicker is that with all of the new rental buildings being built along the New Jersey waterfront with their amazing designs and amenities and sexy locations, this has become huge competition for homes that are for sale, and will surely take a major bite out of the sales numbers…and prices.

Example:  The Modern…Fort Lee, New Jersey

As just published in the New York Post…

Fort Lee is the new New Jersey

The New York Post tells the story of The Modern in Fort Lee, New Jersey…the areas newest and most spectacular ultra luxury rental building, and why people are attracted to this iconic new 40 story building.  And this is just the tip of the iceberg for what is to come of the real estate market along the Hudson River waterfront in New Jersey.

Those of us who have followed Steve Pozycki over the years will understand why no one will ever duplicate the design and quality of The Modern in New Jersey…unless of course he decides to build another building. SJP also duplicates this incredible attention to detail in their new 500,000sf Waterfront Corporate Center 3 on the Hoboken waterfront.

Fort Lee luxury tower reflects housing rebound

The Modern…website

NJBIZ Power 50: #5 Steven J. Pozycki — SJP Properties

SJP Properties inks lease with e-commerce startup Jet.com at new Hoboken building

SJP Properties, Thomson Reuters ink major expansion deal in Hoboken

Also see:

And this is only one developer and one residential rental project in New Jersey.

How can the suburban real estate market withstand the competition from so many new rental buildings. It’s a case of the new vs the old. Guess who’s going to win?

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Will new rentals sink Bergen County home sales?

IMG_6974
The Modern, Fort Lee NJ

A recent article on northjersey.com, grabbed my attention with the headline…NJ homebuilding up 39 percent over 2012 pace.

But after reading the story and analyzing the numbers, the real headline should have been…Will new rentals sink Bergen County home sales?

Let’s look at some facts:

Multi-family construction is not the same as “homebuilding”, when you’re talking sales and construction figures. Yes multi-family units are housing in a true sense, but most of the pros like Case-Shiller,  separate multi-family units form single family home sales.  Media outlets such as CNBC, the New York Times and others also separate the two different types of housing when they’re presenting market stats.

  • Multi-family rentals like the new high rise rental building shown here, is competition for single family home sales, because they take potential home buyers from the market for an extended period of time

As the Ms Lynn points out:

Through August, builders took out 15,842 building permits, compared with 11,364 in the same period last year. Multifamily construction accounted for about 59 percent of the activity.

“Multifamily construction is what’s driving the bulk of the expansion in New Jersey,” said Patrick O’Keefe, an economist with CohnReznick, an accounting and consulting firm with offices in Roseland. Multifamily rentals are in high demand as tight mortgage standards keep many households out of the purchase market. In addition, banks are much more willing to lend to builders for construction of rentals, rather than for-sale properties.

But here’s where this will most likely take a nasty turn, and cause home sales to decrease: Just under 16,000 building permits sounds great, but when you break down the type of housing, multi-family rentals accounted for almost 60% of the volume. One would have to imagine that 9,600 rental units will take a major number of would be buyers out of the marketplace. And in areas such as Tenafly and elsewhere in eastern New Jersey where large scale homes building has all by disappeared, (leaving only old and outdated homes to choose from)…the loss of buyers could have a devastating effect on future home sales for the coming years.

Will these rentals become a suburban market killer?

“People are becoming renters by choice,” said BNE Executive Vice President Jonathan Schwartz. “People want to be closer to the city, nearer commuter areas.” And many households are wary of buying a single-family home after seeing property values plummet during the housing bust, he said

BNE understands this all too well…the project mentioned in this article  because their project in Fort Lee (the 316 unit Twenty50 building) was originally slated to be a for sale building.  They obviously changed to rentals because the, for-sale-condo-market still hasn’t recovered in New Jersey, and most people are looking to rent rather than to purchase condos.

New rentals in Fort Lee:

  • Twenty50….316 units
  • The Modern….two highrise towers….900 units
  • Hudson Lights…200 units

The ripple effect:

In these three projects alone (which sit next to one another in Fort Lee) 1,416 new rental units will come on the market by the end of 2014 (Twenty50 is already leasing units).  Not only will these new rentals take buyers from the market, but it will also take renters away from the older high rise buildings in Fort Lee.  Which in turn will cause those rents to decrease.   And when you consider the thousands of new rentals that are coming on line in Edgewater, North Bergen, Weehawken, Hoboken and Jersey City the problem intensifies in the for sale market for the surrounding markets like Englewood, Tenafly, Cresskill and so on.

Recent articles

Luxury in Fort Lee

Groundbreaking marks start of Fort Lee project

How new rental projects along the waterfront will affect area home sales

Just came across this article on NTTimes.com titled….Feeding the rental appetite…by Antoinette Martin, where the author details numerous upcoming  rental projects that are slated to be built in Hudson County, as well as some interesting facts that back up her perception for the areas future as it pertains to housing.  Though the article was published in February 2012, the facts remain relevant:

HUDSON COUNTY indisputably rules the rental housing market in New Jersey: It has the largest supply of Class A units — around 13,000, according to industry experts — and commands the highest average rental rates of any part of the state. This year and next, that rental kingdom is projected to grow rapidly      

As these projects get off the ground and start renting out, I believe that it will have a negative effect on the for sale market in the outling markets in Bergen County and elsewhere in New Jersey. Home sales in the suburbs will suffer as young buyers flock to these projects, rather than buying homes in the suburbs. And it will happen sooner rather than later:

  • people will put off making a purchase or rental decision while these projects are being built
  • there’s no real rush to buy a home because interest rates and prices aren’t inflating anytime soon

Developers are already at work on, or have recently announced, projects that will add several thousand more units in waterfront communities like Hoboken, Jersey City and Weehawken, and hundreds of other units elsewhere. Hudson County is one part of the state where builders “can still get the economics to work” in their favor, said David Barry, the president of the Ironstate Development Company in Hoboken. “You have to add in the fact that multifamily rentals seem to be the only thing for which builders can get a construction loan from lenders these days,” Mr. Barry added, noting that this factor was keeping the rental development market “very warm, if not hot.”  

Even if the economy picks up these rental projects will thrive for decades compared to home sales and new home construction.

If you’re trying to sell your home in towns like Tenafly, Cresskill, Closter and Demarest, then you need to find a way to compete for the first time buyers who make up a majority of home buyers in our area.  You need to find a way to entice them with their future ties in the community, because the rental market is an easy “buy”for them.

And these new mega projects that contain every modern amenity imaginable that everyone now looks for, so they too will affect the older once more established rental markets like Fort Lee and Hackensack, because they can’t compete with new more vibrant projects and locations.

As I point out time and again on this site.  It’s all about competing for sales.

It’s all about marketing.

More retail for Nutley and Clifton?

Roche announced Tuesday that it plans to shut the 83-year-old location, which includes 2 million square feet of space on a 119-acre campus. The site once was home to 5,000 workers, but now contains only 1,000 employees and 1,000 contract or temporary workers. Roche said it plans to end operations by the end of 2013, clean up pollution on the site and sell it by the end of 2015

As per a past in northjersey.com…Retail development expected for much of 119 acres Roche is leaving. it seems as though the commercial real estate brokers have their mind made up as to what the 119 acres that Roche will be leaving behind will be used for…at least in their mind.

Can’t wait to see what actually happens many years from now, when the people who actually have to put up the money to purchase the property the plane it out and obtain all the necessary approvals to develop it come up with.

By then who knows what will happen with the economy, retail development, retail in general, and with the change in demographics.

The smartest comment on the matter comes from famed super-broker Andrew Merin of Cushman & Wakefield….

Real estate brokers said Nutley and Clifton would probably resist large-scale residential development on the site, because of the cost of providing services, especially schools, for a big influx of new residents. But Merin said multi-family development on at least some of the site would increase the tax base and provide needed housing.

“That’s how you attract young people back to these towns,” he said.

Retail and towns will die in suburbia if young people are forced to live elsewhere because of ta lack of affordable housing, and a lack of mass transportation…and all the other amenities that today’s buyers are looking for.

119 acres is a huge project, and an equally huge undertaking, and it would be a crime not to develop an all inclusive mixed use project as Hartz Mountain and Gene Heller has done in the past in many communities.  Mixed use projects are where it’s at for the future development of large scale projects.  Developers need to give back something of value to the communities they want to build in…and this is the way to do it.

And btw, by the time it takes to put a shovel in the ground, who knows what the state of retail will be. Will consumers need more places to shop for  items they can easily get online?

Fort Lee’s affordable housing dilemma, isn’t such a dilemma

Advocates sue Fort Lee over project

Hudson Lights

The Center at Fort Lee

I’ve always been a an advocate of New Jersey’s effort to create affordable housing.

  • affordable housing helps stabilize local real estate markets
  • it makes it affordable for some to live in the town that they grew up in, but can’t afford to live there because of exclusionary and antiquated zoning laws that create larger and more expensive properties and incredibly high taxes
  • it help create a better mix of residents…young, old, move up buyers, first time buyers without families, and move down buyers who want to remain part of the community they helped build
  • and it stops developers from raping a community for their own profits

Though not all of the line items for the Affordable Housing Act are fair to developers or towns, the program has nonetheless worked to the benefit of New Jersey as a state-wide community.

Having built numerous projects in several New Jersey towns, I believe that developers need to give back to the community, for being allowed to develop projects for profit.

However, in the case of the article in northjersey.com, it’s unreasonable for the developers of these two projects in Fort Lee to set aside 20% of the units for affordable housing.  That is an unreasonable percentage given our current economic conditions…at this time.

There is a way to work out a compromise where in the future, when the market changes and grows and rents can be increased, the number of affordable units could then increase at that time.  A simple solution for a not so complex matter that’s a win win for everyone.

Let me know what you think.

 

Fort Lee grappled with future development for 20 years. Revitalizing the area will now begin

I don’t understand the purpose of a recent post on northjersey.com titled….Fort Lee grapples with questions on future development.

Two projects…The Center at Fort Lee received approvals a few months ago, and Hudson Lights was just approved a few days ago…are a culmination of grappling with a problem for 20 years.

This article makes it as though this grappling is in its infant stage, when in fact it’s not.

The future plans for development in Fort Lee are finally in place, and the only question is, when will these projects be started and when will they be completed, so the community can start seeing the benefits from all the new traffic that will come into the area.

Hudson Lights get the go ahead from Ft Lee!

The Planning Board on Monday night unanimously approved plans for the western half of a mixed-use development, clearing the way for $1 billion in construction that supporters say will revitalize the borough’s struggling downtown

What could be so bad for Ft Lee to add $5.1 million to it’s tax base?

A lifestyle change for Fort Lee

Nothing but upside…except for some additional traffic (but traffic is actually a good thing for towns that welcome people into their community to shop, dine, work, and live).

The vote appeared to herald an end to decades of false starts and failed efforts to develop 16 acres south of the George Washington Bridge, bounded by Bruce Reynolds Boulevard, Central Road, Main Street and Lemoine Avenue

The reality is, in order to survive into the future, more suburban communities need to allow projects, such as Hudson Lights to be built, or they will continue to decline.

“I know we have a spectacular project – one that, when it is completed, we will all be proud to have,” Richard Tucker (developer) said.

Planned projects like this, is a good thing for a community.  A community can only improve when you take an antiquated area and modernize it for the future.  After a long 20 year process, Ft Lee will finally have a wonderful projects that brings it into the 21st century.

There’s really no downside to the Hudson Lights project which is about to be approved by the town. Hudson Lights will generate a larger financial, and more beneficial long term benefits to the town than the previous project that was recently approved (The Center at Ft Lee). Two residential towers do nothing for the community, but to add a stunning skycap and bring in additional taxes.  But, with the addition of a large retail center, this combination creates a dynamic lifestyle component that you can’t find in but a few locations.

After all the aggravation that is sure to happen during the construction process, Hudson lights and The Center at Ft Lee will be a welcome addition for the region.

Read the entire article here in northjersey.com…Fort Lee planning board ok’s western half of $1B downtown development

Fort Lee’s Hudson Lights can have huge positive impact for area retail

The creation of Hudson Lights and  The Center at Fort Lee are two very crucial projects to Fort Lee and to all of the surrounding communities

Business district near Hudson Lights

In a June 4th 2012 article on northjersey titled….Fort Lee development will improve “tired” downtown, mayor says…Ft Lee’s Mayor Sokolich stated that the special improvement district was created to clean up “a tired downtown” which would in turn help current shop owners in the town.

And he’s correct in his thinking.  However, a lot more needs to be done for this to be a success for store owners who have been in Ft Lee for years, or decades.

The problem facing Ft Lee’s downtown isn’t unlike the problems facing every downtown area in our region:

  • there’s tremendous competition from shopping centers,
  • competition from the internet where it’s easy to shop for deals…and for current merchandise,
  • a large percentage of downtown stores fail after a year or two because they don’t carry products that most people want
  • most downtown stores are poorly marketed, if they’re marketed at all
  • most stores carry outdated merchandise
  • most stores and their storefront windows are ugly and are uninviting to passersby

So to think that the creation of Hudson Lights and The Center at Fort Lee, will bring instant prosperity to shop owners is highly unlikely.  The developers  and the town are not responsible for making these businesses successful, so expensive overhead crosswalks aren’t the answer.  If these shop owners have something worthwhile to walk to, then people will cross the street to get there.

This doesn’t mean that it can’t happen.  But it rests solely on the shoulders of the owners themselves.

These two projects can’t make everyone successful, unless the store owners and landlords make that happen.

And here’s how it can happen:

  • If you carry merchandise or supply services that people want they will seek you out
  • store owners need to update their business models so they can compete and draw customers
  • update your storefronts so they look as appealing as a new modern store
  • learn to market yourselves on blogs, twitter, and through local newspapers
  • To an extent you’re going to have to compete on price, so you better do it
  • your merchandise has to be what people are looking for
  • create delivery services for whatever you sell, so it becomes easier for the apartment renters to buy your products
  • landlords have to update their buildings, because if they remain ugly and the current stores fail, then it’s going to be that much harder, or impossible to re-lease the space without offering steep discounts
  • create new signage that compete with the new projects
  • learn to draw from the traffic that the new retailers will be spending tons of money on to create

Unfortunately some of the existing stores will fail.  But if you look at their balance sheets at this time they’ve probably been on life support for years, and it was only a matter of pride why the plug wasn’t pulled years before.

These projects will bring in a tremendous amount of new traffic to this area, and retailers need to learn how to grab the attention of those people.  If you don’t know how to compete in a modern local economy, your business will fail.  And you will only have yourself to blame.

There are dozens of ways to compete and to increase your local business…retailers just need to step out of their comfort zone and learn how to create success, because it won’t happen by accident, or because of an increase in traffice.

In anticipation of a huge influx of new potential business, start your social media marketing now, and start updating your stores and merchandise.  The existing stores have an advantage over new stores, because these stores are already part of the community, so use that yo your advantage.

Play to compete.

Social media can be your key to success.

Let me know what you think.

Ft. Lee’s Hudson Lights inches closer to approval

Fort Lee Planning Board hears more on Hudson Lights project

Via northjersey.com

Representatives of the Hudson Lights at Fort Lee development project attempted to quell concerns from Planning Board officials on May 14, reassuring them that architectural and environmental issues on the site will not delay construction.

What amazes me after all the time that was put into the planning process for the new Hudson Lights project, is that there are still unanswered questions from either side.  Why haven’t all the major issues been resolved at this point?  It’s not like this is the first time the Planning Board has seen the plans. Id be willing to be that everything has been reviewed and re-reviewed at great length by both parties.

Everyone has known what the size and scope of the project is for quite s0me time, and I can’t believe that this is the first time that a rendering has been presented to the Board.

So why all the questions…now?  Could it be posturing by either side?

Testimony as to what the storefronts on Lemoine would look like drew a confused response from the Planning Board, prompting member Don Porrino to question whether the panel was rushing through the reviewing process.

“There are so many unanswered questions on this application,” he said. “There seems to be a lot of first-time presentations here.”

“I don’t think any of the environmental issues should hold up construction,” said McAndrew. “Soil can be remediated right now; groundwater is also being remediated right now.”

It’s real simple…

  • if there’s not enough parking spots, then either create more or reduce the size of the project
  • if a traffic light is needed then add one.  And if you don’t know if there’s a need then make provisions if one needs to be added
  • at this point in time there should be no confusion as to what the storefronts will look like.  No matter what it looks like, it will be more attractive than anything else in Ft Lee.  Towns can’t dictate beauty…though they try
  • no matter happens here there will be additional traffic on Lemoine.  The developers can’t fool themselves here because if it doesn’t work then the project will be a failure and they lose out big time financially
  • the project will be a boost to the town
  • and without Harbor Lights, the other project (twin rental towers…900 rentals) that was just approved could end up a failure

It’s unfortunate that the two projects weren’t part of a combined approval, because if something does go wrong the blame will go to one project or the other…when it will really be the fault of both.

The developer and the Planning Board need to deal with the outstanding issues, which I assume they already have, and move this project to a vote…so it doesn’t drag on.  2o years is a long time.

Hudson Lights and twin towers project in Ft Lee are becoming a reality

The proposed Hudson Lights project and the already approved “yet to be named” twin towers: A view from space

The two new projects that will be started in Ft Lee this year offer some exciting opportunities for the surrounding communities. Yes it’s going to be a bit of a pain while the construction is taking place, but once everything is completed everyone (even in Tenafly) will benefit from this enhancement:

  • The eyesore that we’ve all lived with for 20+ years will now become an iconic looking project.  No one can deny that that this isn’t an amazing upgrade for Ft Lee and all of New Jersey
  • If they’re smart, and upgrade their businesses, the area retails will have an influx of people to fill their stores. And if they don’t take advantage of this opportunity, they have no one else to blame but themselves
  • The area restaurants will see a boom in their business…the delivery business should go wild.  And this isn’t just for Ft Lee…this is going to benefit the entire area
  • 1500+- new apartments will be filled with people (2000-3000 people?) from all over the region and these people will shop and dine here
  • New retail creates better existing retail…only if they have what people are looking for.  And now the retailers will have to compete with the new project, so it’s not going to be a guarantee.  They will have to work it if they want to be successful
  • New employment opportunities will exist.  This is a huge plus
  • Contrary to popular opinion…traffic patterns and timing should actually get better because of the proposed upgrades
  • The residential rental business will boom for everyone…not just for the new projects

There will defiantly be some bumps in the road (no pun intended) throughout the construction process, but that’s to be expected. Just get these projects underway and completed as soon as humanly possible, so we can all start enjoying the benefits.

Suburbia needs more projects like this.

Here are a few satellite shots of the area, via bing and google earth.  Now you’ll see why this is such a valuable location

Yes, I’ve developed a lot of real estate projects in my career, and I love seeing progress.  And why shouldn’t the suburbs start benefiting from what it has to offer.  Politics aside, these projects are needed for a multitude of reasons.  Whether or not the original developers make money or not, the community as a whole will benefit for decades to come.  And that’s what really matters here.