July 13, 2008
In the Region | New Jersey
Deferred Hopes and Stalled Projects
By ANTOINETTE MARTIN
WHEN word came last December that work had stopped at the Esperanza,
the centerpiece of Asbury Park's long-awaited beachside redevelopment,
even the project's name "hope" in Spanish seemed to mock the
city's aspirations.
"I know a lot of people were very much stunned, and upset," said Dean
Geibel, the principal of Metro Homes, the developer of the
double-tower condominium, for which only the foundation has been
completed.
The Esperanza was starting to rise on the site of a previous failure,
where a steel skeleton had stood for two decades, menacing prospects
for revitalization. "And we were sort of the first big project in New
Jersey to take a hit when the financial market turned sour," Mr.
Geibel said.
Since then, destructive market forces have slowed progress on other
large projects around the state. Work has sputtered to a stop at two
of them the $1.5 billion Centuria development at the foot of the
George Washington Bridge in Fort Lee, and the $66 million Town Center
development in Somerville before foundations have even been laid.
"These large projects are facing trouble," said Andrew J. Merin, a
broker who is currently marketing the rights to build Centuria,
"because financing is almost impossible today."
Mr. Merin, a vice chairman of Cushman & Wakefield who is based in East
Rutherford, said banks had all but ceased making construction loans
for projects costing more than $50 million. And investors are holding
back, looking for the "rich returns" that mixed-use real estate
projects do not currently guarantee.
Mr. Merin said a number of developers were bidding to develop some
portion of Centuria. But Fort Lee officials have their hearts set on a
redevelopment plan that requires one "master developer" to produce
about 500 rental apartments, more than 150,000 square feet of retail
space, an office building and a hotel.
The current developer, the Town and Country Corporation of Manhattan,
bought the 16-acre Centuria site from the Helmsley Organization in
2003, and then laid out millions of dollars to clean up contaminated
soil, Mr. Merin said. By the time the site preparation was finished,
the financing situation had turned grim.
Also in 2003, Edgewood Properties bought its Somerville project site,
a run-down strip mall that was to be demolished. The project, which
envisions 272 apartments, retail shops and office space, became mired
in delays because of a lawsuit brought by the Pathmark grocery chain,
which operated a store in the strip mall. Now, the project is "on
hold," until the market improves, according to the developer and city
officials.
Meanwhile, in Asbury Park, Mr. Geibel is working feverishly on a
scaled-down plan and on securing reduced financing with the goal
of beginning work afresh by the end of the year.
This summer, city redevelopment officials worked out a new agreement
with the builder, acknowledging that a redesign of Esperanza would
take into account "current economic and market realities, and is
likely to involve fewer amenities, smaller units and a shorter structure."
Last week, Mr. Geibel said the condo towers were likely to be 12 or 13
stories high, rather than 10 and 16 stories as originally planned. "We
have been spending a lot of time lately with professionals on the
cutting edge of the construction industry, and learning everything
possible about the most cost-efficient ways to build," he said.
"This is still going to be a beautiful building with extravagant
amenities," he said, "but we'll be more sensible about the way we
construct it."
Limiting the building's height, for example, permits use of a new
"panelized" material that is a far less expensive alternative to
poured concrete flooring, Mr. Geibel said. Redesigning balconies to be
recessed, rather than extending out, also reduces construction costs,
because work scaffolding can be erected all at once, flat across an
exterior wall.
The new structure will rise on the existing foundation, Mr. Geibel
said, but it will have a new layout with smaller one-, two- and
three-bedroom units and fewer design configurations.
"Previously, we had 84 different designs, which might have been rather
excessive," he said, "but we were trying to offer everything, for
everybody."
Now, the project architect, Dean Marchetto of Hoboken, is creating far
fewer, in an array to be repeated on every floor. And he is working
with fresh data profiling the most likely buyers, compiled for Metro
Homes by the New Jersey market analyst Jeffrey Otteau, rather than
"just reaching for the stars" in terms of features, Mr. Geibel explained.
He added that he was negotiating with CapitalOne, the original lender
for the project, hoping to "recapitalize" it with a smaller loan. In
addition, the national real estate company Madison Marquette, which is
leading the rebuilding of Asbury Park's boardwalk, retail and theater
space and which recently bought out the Kushner Company's
condominium project at one end of the beach has indicated it might
invest in the Esperanza, which is at the beachfront's center.
Mr. Geibel said the project would be given a new name its third. It
was originally to have been called the Rising, in honor of a song by
Bruce Springsteen, and of Asbury Park's comeback, but Mr. Springsteen
demurred.
A contest among Asbury Park schoolchildren produced the name
Esperanza. "It was a great name," Mr. Geibel said, "but this is going
to be a different building, a building that will fit the market, and
the times."
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