4B — August 10 - 23, 2018 — New Jersey — M id A tlantic
Real Estate Journal
www.marejournal.com
N ew J ersey
By Jason Gottdenker, Bane Realty Capital Is this Newark Real Estate’s Time to Shine?
T
he atmosphere of New- ark, NJ has changed dramatically over the
during the last 15 years. What has enabled Newark to over- come its shaky past and rewrite its future? Is this Renaissance finally here to stay? According to www.huduser. gov, the period of 2003-2006 saw a rise in multi-family construction, with an average of 3,475 units permitted annu- ally. Many people believed this could have been a turning point in Newark’s history. However, from 2007-2011, these numbers decreased again, due to rising apartment vacancy rates and a lack of financing options avail- able. But since 2012, the num-
bers have steadily increased again. In 2015, Newark saw a 9 percent increase in multifamily units constructed. The numbers haven’t looked back since. If you came to Newark a couple decades ago, you prob- ably wouldn’t think it was an attractive place to invest. The city’s population was cut nearly in half from outward migration in the 1960s-1970s, leaving behind a plethora of empty factories and buildings, left to deteriorate for years. However, this is precisely what some investors liked about Newark. Carl Dranoff, president and
founder of Dranoff Properties (developer of 1 Theater Square) saw the potential in Newark before most other people did. However, he knew it would take even more time for the city to be ready for investment. “I saw potential in Newark 11 years ago, but if I built the building (1 Theater Square) at that time, I probably wouldn’t be sitting at this panel,” Dranoff said at CAPRE’s conference in Newark. He planned to have twice as many units in his building than he ended up with. Dranoff and other developers believe that Newark is greatly
undervalued; its low prices will pave the way for higher rents, and higher returns in the long run. The macro trend of hous- ing supply shortage drives up prices elsewhere and makes Newark more attractive. As financial institutions continue to move across the river from NYC, Jersey City’s real estate costs have risen accordingly. Newark’s lower costs and stra- tegic location just a PATH stop away are making it more attractive to homeowners. It seems inevitable that more business will find its way over to Newark as well. An additional factor which has helped Newark achieve a greater real estate scene is the fact that there are so many new projects appearing around the city, increasing housing supply. This has attracted the nearly 50,000 students and 60,000 professionals who prior had commuted into the city. Was- seem Boraie, executive VP of Boraie Development (developer of 1 Rector Tower), stated at CAPRE’s conference: “People want choice when they come to a market… in Newark… the more supply we actually cre- ate will reciprocate by creating its own demand.” He believes that downtown should have a variety of mixed income build- ings, because people love them when they’re done correctly. The new approval process for developments in Newark has assisted in these developments; the planning board is support- ive, and the city works hand in hand with developers to find common ground. Although New Jersey has been and will likely be for a long time a vehicle-oriented state, the city of Newark is de- signed to be walkable. Accord- ing to Gabe Lopez, principal of J&L Companies, one of the most important things to con- sider for developments is the quarter mile walking radius around the project. “Newark is a pedestrian-oriented city,” Lopez stated. J&L’s 55 Union Street will be the first project to be developed under it the new MX Zoning introduced this year in the city. It requires a step back of the building after the 8th floor, and 50% of the roof space to be green. Projects like these are what give Newark investors their confidence in the city. New Jersey Perform- ing Arts Center, in downtown Newark, has attracted over 9 continued on page 14B
last decade; its downtown has flourished with new breathtak- ing apartment buildings and cultural insti- tutions, large b u s i n e s s e s
Jason Gottdenker
such as Amazon have taken interest, and the overall view of Newark has changed for the better. There have been ups and downs in the construction and development of real estate
BANE REALTY CAPITAL Bespoke Multi-family Financing Customized, Individualized, Optimized Members have financed over $8.5B in commercial property debt and equity financing & investment sales transactions. Neil Bane Faith Bergman Jason Gottdenker Bane Realty Capital Bane Realty Capital Bane Realty Capital President Associate Associate T: 917-923-0214 T: 617-777-0746 T: 732-740-0127 E: neilbane@banerealtycapital.com E: faith.bergman@banerealtycapital.com E: jason.gottdenker@banerealtycapital.com Company Headquarters: 94 Beech Road, Englewood, NJ 07631 Licensed Real Estate Broker in New York, New Jersey & Massachusetts
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