UP AGAINST THE WALL
By ADAM BONISLAWSKI
October 30, 2008 --
James Keating doesn't work on Wall Street. But living in Jersey City,
he's had a front-row seat to the financial sector's recent traumas.
Keating, a resident of the Beacon condo development, takes his
building's free shuttle to the PATH train each morning. The day of the
Lehman Brothers collapse, he sat across from two of his fellow
residents - one an employee at Lehman and the other an employee at
Merrill Lynch (which sold itself to Bank of America just a few days
later). They were, of course, discussing what fates awaited them at
the office.
"One of them was saying to the other that he wondered if he should
have brought a cardboard box with him to collect his things," recalls
Keating, vice president of marketing at Shopwiki.com.
Such is life these days on "Wall Street West," as Jersey City is often
called, given the area's close ties to Manhattan's investment world.
Home to some 24,000 finance jobs and to thousands more residents who
work in the industry across the river in Manhattan, Jersey City's
fortunes are very much entwined with those of Wall Street.
Which, given the markets' current woes, probably isn't the most
reassuring fact in the world. Especially if you're trying to sell
Jersey City real estate.
"What's going on right now is scary," says Dean Geibel, managing
partner of Metro Homes, the development company that built the Trump
Plaza Jersey City condo tower. "It has a lot of people sitting on the
sidelines. Sales haven't come to a halt, but it's slower because
people are being cautious."
The 440-unit building (plans for a second 417-unit tower are on hold)
has sold 375 apartments since going to market at the end of 2006. With
the market slowing, however, the building is offering concessions like
six months of free parking, although Geibel says he has yet to resort
to price cuts (currently, one-bedrooms start at $495,000, two-bedrooms
at $799,000 and three-bedrooms at $899,000).
Sales are similarly slow at developer K. Hovnanian's 77 Hudson, which,
with prices averaging around $850 per square foot, is one of Jersey
City's priciest buildings. On sale since July 2007, apartments in the
420-unit building are only 30 percent sold.
Tom Graham, the building's senior community director, says that K.
Hovnanian is covering transfer taxes and other closing costs in an
effort to lure buyers to the building. Nevertheless, Graham admits,
sales office traffic is down 15 to 20 percent since September.
Curiously, though, Graham notes that the week Congress began
discussion of the bailout plan, sales at 77 Hudson were relatively
strong, with five units purchased - all by international buyers. Which
raises the question - just how essential are Wall Street workers to
Jersey City's housing market?
"When we first started marketing, our target market was the Wall
Street buyer," Graham says. "But it turns out that's not who's been
buying."
Then again, with close to 300 units still unsold, it's going to take
more than foreign buyers, who have also been hit hard by the world's
falling markets.
Still, Jamie LeFrak, managing director of the LeFrak Organization,
similarly suggests that Jersey City's Wall Street ties have been
overblown.
"The whole region is in the same boat together. Brooklyn is tied to
the financial sector. Queens is tied to the financial sector. You
could make the same exact statement about Bergen County, Westchester
County, Nassau County," says LeFrak, whose Jersey City projects
consist of nearly 5,000 residential units and will soon include the
new 350-unit Aquablu rental building (studios start at $2,079,
one-bedrooms at $2,257, two-bedrooms at $2,808 and three-bedrooms at
$3,885).
Then again, Keating estimates that more than a third of his neighbors
at the Beacon work in finance.
"You can definitely see the fear," he says. "People are going around
asking each other, 'Are you going to be all right?' "
And Beacon developer George Filopoulos has changed his plans to build
an adjacent 103-unit condo building, opting instead for 26 3,000- to
6,000-square-foot live/work lofts (with prices starting around
$900,000) - a hedge against reduced demand.
"I wanted to offer something different from what's on the market,"
Filopoulos says. "We have to admit that there may be less buyers to go
around than there were in 2005."
The Beacon's first building had nearly sold out by early 2008, with
apartments in the 315-unit building going for under $500 per square
foot. Fifty of those sales fell through, however, when the buyers were
unable to secure financing. Since those 50 units returned to the
market this September, five of them have sold.
But there are signs of hope in Jersey City. Near the Grove Street PATH
station is Ivy House, a boutique condo building from Fields
Development Group and TreeTop Development, which has sold 15 of its 18
units since going on sale at the beginning of July. With prices around
$500 per square foot, the units are aimed at entry-level buyers, a
demographic, says Fields principal James Caulfield, that's been
under-served by new construction.
Retail planning director Sean Corolan and his wife, Magdalena, bought
a two-bedroom in the building. Although nervous about the effects of
the downturn, he's convinced that the area's relatively low prices
will help protect his investment.
"We definitely talked about it: 'Is this a good time to buy with
everything that's going on?' " he says. "But the thing I always come
back to is that I see such a big discount in price per square foot.
You can't even get close to this on price in Brooklyn."
And, of course, the proximity to Manhattan (the Financial District is
just a five-minute PATH ride away), which helped tie Jersey City to
Wall Street in the first place, won't be going away - regardless of
what the market does.
"I'm still very confident that this area is going to appreciate," says
hospitality industry executive Ankur Randev, who, with his wife
Rachna, moved from Midtown to Trump Plaza Jersey City in June.
"At the end of the day, you're five minutes from lower Manhattan, but
you have a $500-per-square-foot spread in price."
And then there are those who don't want anything to do with living in
New York, anyway.
Manhattan nightclub owner Rocco Ancarola (of Pink Elephant fame) moved
from NoLita to a three-bedroom rental by the Grove Street PATH stop
three years ago. Since then, he's gotten hooked on his neighborhood's
peace and quiet.
"I wake up in the morning in a Zen-like atmosphere," he says. "I can't
wait to get back to New Jersey after my work in the city."
And, by the way, if you're a developer worried about luring buyers
from across the river in this current climate, well, listen up -
Ancarola has some good news.
"You put my name and picture in the paper, people will be flocking to
Jersey City," he jokes.
So there's that, at least.
Market watch
TRUMP PLAZA JERSEY CITY
The 440-unit tower (one-bedrooms start at $495,000) has sold 375
condos, with units averaging around $700 per square foot. Plans for a
second building are on hold.
77 HUDSON
The 420-unit building, with condos averaging around $850 per square
foot, is 30 percent sold. One buyer bought two penthouse units, a
combined 4,188 square feet, for $6 million last year.
THE BEACON
Fifty units in the 315-unit building, with condos selling for less
than $500 per square foot, returned to the market this September. Five
have sold. In early 2007, a two-story penthouse sold for $2.3 million.
IVY HOUSE
This 18-unit boutique building, with prices around $500 per square
foot, has sold 15 condos since hitting the market in July.
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