Another great event hosted by the Newark Regional Business Partnership (NRBP) covering real estate in Newark. The event brought together several developers underscoring the changes in real estate in Newark. With a recent string of impressive buildings completed or underway, commercial development features household names such as Prudential, Panasonic and Cablevision.
The plan downtown is a combination of both commercial and residential development. Newark’s development projects such as Teacher’s Village, Market St/McCarter highway redevelopment, Rector Street, Four Corners Millennium, and across the Passaic River a Harrison development with a new PATH station will bring hundreds of new residents to the downtown . All of this activity is spurring increased excitement in both Newark and Harrison.
Frank J. Giantomasi, a partner of the law firm, Genova, Burns, Giantomasi, and Webster, moderated a panel discussion with some of the most influential individuals in real estate. In front of a packed house at the Newark Club, Mr. Giantomasi spoke with leading developers Ron Beit, Wasseem Boraie, Marc Berson, Michael Sommer, and Frank Ferruggia responsible for the recent development in Harrison and downtown Newark . Here is apart of that conversation.
Frank Giantomasi started the conversation by saying., “Newark was never designed to have downtown living,”, “It was a place where you came and worked — like downtown Manhattan — and you went home to North Ward or East Ward. Giantomasi begin his discussion with this question to the panel. Tell us how you feel about this real estate market with all the transitions from the booker administrator. How does this transition affect you as a out of town developers?
Frank then introduces Wasseem Boraie, Vice President of Boraie Development LLC, a large developer in the New Brunswick, Middlesex county,
Question: “Wasseem, What are the differences you see between development in New Brunswick and Newark?”
Answer: Wasseem Boraie: My family has been building in New Jersey for over 35 years, and was one of the first commercial pioneers in the New Brunswick market. I believe, New Brunswick matches up well to Newark, in its Macro Economic make-up, employment levels, education levels. We came to Newark 7 years ago and. I think the thing that separated Newark from other cities including New Brunswick, has been the leadership of the municipal government; in so much as we have seen by Booker administration over the last seven years. The leadership in the municipality worked towards promoting development, building new policies and a framework to attract development to the city.
Additionally, the funding tools in Newark are attractive to developers; there is institutional capital, subsidies from the New Jersey Economic Development Agency (EDA), through their new programs for residential development, and incentives for development around and near transit hubs. The EDA has been investing in Newark for the last 30 years and is now being the catalyst for redevelopment in Newark. Lastly, I would say a big difference between New Brunswick and Newark, is the business plan of the city. The city’s plan was to develop a 24/7 active downtown, and I think now everyone is beginning to see this vision being materialized.
Mr. Boraie is the developer on 40 Rectors Street, the previous location of Science High School, a joint-venture project with Shaquille O’Neal, which is being converted to a 170-unit residential tower. This development is one of the first new developments that is all market rate units. Other previous developments have used government subsidies and as a result subsidies a number of units rent below market rate. Mr. Boraie stated, “We believe this is the time to let the marketplace know, that Newark is a 100 percent market rate area. Another benefit is its a 5-minute walk to Newark Penn station, everyone feels that this is the time to make the investment.”
Another Boraie project is the proposed Triangle Park, located around the Prudential arena. Mr. Boraie believes the critical element in this development is the amenities and development of retail. He stated, “We strongly felt that retail is so important for Newark. Because people go to the arena, and afterwards there are no place to go unless you want to go to the Ironbound. The Ironbound is a wonderful place but there are only so many nights you want to eat garlic shrimp. There has to be other opportunities for mass retail in the area, and we believe we can deliver a different retail experience. I think Newark already has an “in-grown” market. Over 100,000 people coming to Newark every day, just look at the portion of empty nesters – that is going to be a major demographic that is going to want to move into downtown in my view”.
Frank then introduces panelist, Frank Ferruggia, a partner with McCarter & English, an accomplished property tax attorney.
Question: Frank Giantomasi, “Frank can you tell us, what you do and its impact on the development of Newark’s future?”
Answer: Frank Ferruggia: As a property tax attorney, there are things in the Newark’s valuation that are not positive. In 2012, the ratio between set residential values versus commercial, was 60 percent and 40 percent respectively, now after revaluation of 2013, it is exactly the opposite the burden has now been reversed, 60 percent for commercial and 40 percent on residential. In addition, the effective tax rate went up from $2.30 to $2.99. So it has a double impact for commercial property owners.
The increase assessment, along with increase tax rates make it no surprise that the tax court has over 45,000 pending case and only six Tax Court Justices to preside over them, said Ferruggia, “The good news is the Newark administration recognizes this problem and has been settling some cases.” So the forecast is mixed, on the one hand you have a positive story of this new development, but at the same time there are a few is a negative with the increasing vacancies in the Gateway buildings. With the positive of the new construction, the challenge of increase availability of space, in particular, in the Gateways, and other buildings need to be reflected in the tax assessment.
Frank then introduces panelist Michael Sommer, Managing Director, Community Development, Advance Realty Harrison.
Question: Frank Giantomasi, Tell us the impact your Harrison project will have on Newark. As a big developer in Newark and Harrison, what do you see in Newark or the integration of the Newark market?
Answer: Michael Sommer : We see Harrison as a complement to Newark. As a developer, in Harrison, we hope to leverage the retail, and the entertainment venues in Newark. Further, we feel the densities in Harrison will obviously benefit the Newark’s retail sector. As an example, Advance Realty is a redevelopment project in Harrison called River Bend (Passaic River that separates Newark from Harrison). The project total scale is 250 acres, with overt 2,500 residential units, and approximated 350,000 sq./ft. of retail space, and up to 400,000 sq./ft. of commercial/office space. The overall redevelopment represent almost a third of the available land in Harrison. So to say this will have an impact on Harrison and the region is an understatement.
Additionally, we believe the 256 Millions investment for the expansion on the new Path Station, will increase ridership from 7,500 riders to 15,000 riders per day. We see Harrison as an alternative to the Manhattan, Jersey City, Hoboken and Brooklyn markets because of its convenience and it’s proximately to Newark, and Manhattan.