Hudson County Has it All

Hudson County has always taken advantage of its geography; mainly its proximity to New York City. Hosting the Lincoln and Holland tunnels, the Bayonne Bridge, PATH trains and multiple ferry lines, it is the gateway to Manhattan. It is so close that Hudson County Executive Thomas A. DeGise says, "You can hit a golfball from our side of the Hudson River and have it practically land in New York City."

And as many Hudson County business advocates say, though New York boasts about its famed skyline, that skyline view can be seen, in its entirety, along the Hudson County waterfront, not in Manhattan. Furthermore, the county offers just as much as Manhattan does, but on a more affordable and less stressful scale.

The growth of financial services firms on the county's waterfront, especially Jersey City, has created the services and amenities that one would find in Manhattan. "In a lot of ways, when you leave your office building here to take a walk during lunch time, you are just as much a part of the New York scene in Jersey City as you are in Manhattan, with all of the shops and restaurants available to you," DeGise says.

Additionally, the cost of commercial office space in Hudson County is significantly less expensive than Manhattan. In a 2013, third-quarter office-space snapshot conducted by commercial real estate services firm Cushman & Wakefield (C&W), Class A space in Manhattan averaged just under $70 per square foot versus $35 on the Hudson Waterfront.

Overall vacancy rates have increased along the Hudson County waterfront (which includes Jersey City, Hoboken and Weehawken) from 7 percent last year to 9 percent this year, but Edward Duenas, executive director of C&W, reports a lot of positive activity these past 60 to 90 days. "If the current level of activity is maintained, I think we will see a vacancy rate decrease going forward in 2014," he says. The waterfront is doing well in comparison to the rest of New Jersey, which has an average commercial office vacancy rate of 19 percent.

While financial firms have been attracted to Hudson County's rental rates and have found homes along the waterfront for back office operations and headquarters (some of the other reasons for locating to Hudson County from Manhattan include 9-11 and Superstorm Sandy), Duenas sees more interest today from media companies and high-tech firms.

Additionally, the C&W report states, "Unlike in past years, when financial services firms dominated leasing activity, demand in the last year has been more diverse."

Jamie M. Weiss, president of Weiss Realty, a Moonachie-based commercial real estate services firm that has been involved in major Hudson County deals over the past 32 years, sees the healthcare market as being active today. "I am seeing an increase in medical office leasing, and that is being driven by an aging population and changes in the way healthcare is being delivered," he says. "On the other hand, the financial firms are consolidating. That is beneficial because it has brought about substantial sublease space to the market. This presents a great opportunity for the medical office space sector."

Most recently, Weiss Realty completed a 36,624-square-foot lease transaction at 10 Exchange Place in Jersey City, where Bayonne Medical Center committed to the entire 15th floor at the complex. As the exclusive brokers for Union Kennedy Associates, the firm also closed more than 40,000 square feet of new medical office lease transactions at Kennedy Medical Center in Union City.

At a recent symposium discussing the history and future of the 19-mile waterfront, the consensus was that the region will be busy with residential construction projects rather than office and retail. "Retail is effectively built out," Marc Pfeiffer, senior fellow of the Bloustein Local Government Research Center, tells New Jersey Business magazine. "Because of the recession and the retrenchment of the financial industry, a lot of existing office space has to be absorbed."

The total inventory of commercial office space in Hudson County was 24.5 million square feet for 3Q 2013, according to C&W. Of this, direct vacancy was 3.1 million square for a rate of 12.7 percent and sublet vacancy was 458,095 square feet, for a rate of 1.9 percent.

Development Projects

While much has been written about development in the towns along the Hudson County waterfront or "Gold Coast," it is important to mention major developments in the rest of the 62.24-square-mile county, with its 12 municipalities and population of 630,000.

Hudson County is a peninsula - surrounded by the Hudson River on the east, the Kill Van Kull on the south, the Hackensack River on the northwest, the Passaic River on the west and Newark Bay on the southwest - and development is occurring along these waterfront areas.

"A ride along the Passaic and Hudson rivers will show former wastelands and abandoned factories and junkyards being turned into productive places of business and upscale places to live," says DeGise.

In Harrison, work is underway for a new $256-million PATH station, operated by the Port Authority of New York & New Jersey. According to Elizabeth Spinelli, executive director of the Hudson County Economic Development Corporation, "The existing station, which opened in 1936, is outdated, is not ADA compliant and the trains do not fit the length of the platform. The update will be a thing of beauty with modern elevators, wide stairs and escalators, weather-enclosed protected areas, an extended platform that will fit 10 PATH cars and enhanced security and communications. It is going to be the crown jewel of the Harrison Redevelopment Area."

Another jewel in this district is the $200-million, 25,000-seat Red Bull Arena, which opened in 2010 and sparked the redevelopment of a 250-acre area.

Currently, Ironstate Development and the Pegasus Group - a joint venture - are in the midst of their Harrison Station project, the first phase of which is the 275-unit Harrison Station luxury rental building. Opened in 2011, the building is now fully leased. It offers 12,814 square feet of retail space. Existing tenants include Five Guys Burgers, Pronto Gourmet, GNC and restaurant Sakura Japan.

This year, the partnership broke ground for Element Harrison, a 138-room Starwood Hotels & Resorts Worldwide, Inc. facility.

Another phase of Harrison Station will include a four-story, 329-unit residential structure with 8,675 square feet of retail space on the ground floor.

Also in the area are Russo Development's new 300-unit rental apartment building and Heller Industrial's planned mixed-use project, featuring 65 rental units.

Additionally, Roseland Properties offers its River Park at Harrison, a multi-phase development project. Phase I of the project, currently under construction, will consist of a 250-unit luxury condominium community.

For warehousing and distribution firms looking for space in Hudson County, South Kearny should be among the first stops to make. River Terminal Development currently owns and manages some 3.2 million square feet of such space on 170 acres. Sites can be offered from 2,000 square feet to 400,000 square feet.

Planned for redevelopment is the Koppers Coke site. This 130-acre tract, owned by the Hudson County Improvement Authority, is earmarked for intermodal, warehousing and light industrial facilities, flex space, data centers, business support services, retail, hotels and boat sales, rentals and repairs. According to Spinelli, the county is getting ready to select a developer for the site, which was a former coal tar processing plant, coke plant and storage facility. If two adjacent tracts of land are developed along with Koppers Coke, there is the potential for more than a million square feet of space to become available.

In Secaucus, which is basically ground zero for February's Super Bowl at MetLife Stadium, Spinelli says the municipality and area businesses are working hard to make things ready for the event, which is expected to attract 400,000 visitors to the region. "Secaucus has a plethora of hotels, but I have heard there isn't a hotel in Hudson County that isn't already fully booked for the Super Bowl."

Within the next 18 months, Hartz Mountain Industries is expected to open a new hotel at its Harmon Meadow location. Already at this sprawling office and retail complex are seven hotels offering a combined 1,200 rooms. The site also offers 2 million square feet of office space, 1 million square feet of retail and more than 15 restaurants. The company has completed renovations at 450 Harmon Meadow Boulevard, a 100,000-square-foot office building, on 5.3 acres, which it deemed as outdated. In its place are a 5,908-square-foot Red Robin restaurant and a 6,943-square-foot Buffalo Wild Wings Restaurant.

The company is also making renovations to the 49.1-acre former Panasonic site (which has an existing four-story 202,019-square-foot office building), left vacant after the electronics company moved to Newark this year.

Hartz Mountain also owns Harmon Cove in Secaucus, a mixed-use development on a 750-acre tract that includes more than 1,400 residential townhouses and high-rise luxury condos; 13 million square feet of office and warehouse space; retail outlet stores; and the 200-bed Meadowlands Hospital Medical Center.

When Mack Cali acquired Roseland Properties in the fall of 2012, the former company diversified into the multi-family apartment sector - a Roseland strong-point - especially in the Hudson County area. Some of the recent activities under the new ownership include the newly opened RiverTrace at Port Imperial, West New York. This $120-million, 316-unit complex features studio, one-, two-and three-bedroom units with views of the Manhattan skyline.

Also at Port Imperial, Mack-Cali and Roseland, in partnership with The Prudential Insurance Company, are developing RiverParc in Weehawken, a 10-story, 280-unit apartment complex that is scheduled to open in 2014. Opened this past summer was an 850-space public parking garage featuring 17,000 square feet of retail space. To be built on top of this garage, alongside each other, are a 226-room Renaissance by Marriott and a 154-room Residence Inn by Marriott. Roseland is also planning to open The Estuary in Weehawken. This three building complex will feature 589 rental units.

These Weehawken and West New York buildings may have fantastic views of the pending Grand Prix of America at Port Imperial - if it ever is held. Financial problems have plagued the race ever since it was announced in October of 2011. It was supposed to be held this year and is on the 2014 Formula 1 racing calendar for September, but may not happen until 2015, according to an Autoweek article. Leo Hindery, Jr., executive chairman of Port Imperial Racing Associates, is seeking, at press-time, $100 million to make the 3.2-mile race, along the West New York and Weehawken waterfront, a reality.

Meanwhile in Hoboken, Bijou Properties is transforming a stretch of properties along 14th Street into a distinct urban neighborhood. The firm's Edge Lofts, a collection of 35 rental residences located at 1405 Clinton Street on the city's northern end, is a six-story building with modern loft-type, one-, two- and three-bedroom residences. Park Place, another Bijou Development, is a planned $131-million, 12-story mixed-use building that will feature 212 apartment homes, 13,000 square feet of retail space, 32,000 square feet of educational space and a six-level parking garage. Construction is expected to be complete by early 2015.

Hoboken has also become a hub for technology entrepreneurs, thanks to the NJ Tech Meetup located at Steven Institute of Technology. This meetup group is the largest of its kind in the state with more than 2,900 members. According to Aaron Price, founder, the NJ Tech Meetup's goal "is to create an atmosphere of sharing best practices and learning from both failures and successes." Price is also a co-founder of Mission 50 Workspaces, which offers collaborative work space areas for entrepreneurs in an 80,000-square-foot penthouse at the Hoboken Business Center.

Jersey City

South of Hoboken is Jersey City, the state's second largest municipality with 250,000 residents. The revitalization along the city's waterfront, dating back to the mid-1980s, is part in parcel to what has been happening along the entire Hudson County waterfront these past three decades. Among the developers leading this revitalization are the LeFrak Organization and Melvin Simon and Associates, who, back in 1986, began building Newport, the multi-billion-dollar, mixed-use community that currently encompasses more than 5 million square feet of office space in eight state-of-the art Class A office towers, 1.8 million square feet of retail space, some 4,000 housing units in 13 high-rise condominium and rental towers and a 190-room hotel. By its anticipated build out in 2020, Newport will encompass additional nonresidential space and a total of 9,000 housing units.</p>

Among LeFrak's most recent projects at Newport is the Laguna, a 19-story residential property that features 158, one-, two-, and three-bedroom apartments ranging in size from 759 square feet to 2,015 square feet. The building marks the first of the master-planned community's final phase of development, which will surround Newport Green, a 4.25-acre park, which opened last year.

Sharing the waterfront with LeFrak is Mack-Cali and its Harborside complex, which the company dubs "a city within a city" with approximately 3.1 million square feet of Class A space in five Harborside Plaza office buildings. Harborside is currently undergoing a multi-million-dollar exterior and interior renovation. A few elements include: enhanced entrances and anchor spaces; new finishes, lighting, metal detailing and signage; new retail facades; upgrades to the buildings' technology infrastructure; increased outdoor spaces with seating and dining areas; new flooring in the common areas; and increased green spaces.

In October, Mack-Cali and Ironstate Development were awarded $33 million in tax credits by the New Jersey Economic Development Authority (EDA) for their URLtm Harborside mixed-use development. This $291-million project, the first phase of a three residential tower project, is expected to break ground at press-time. It will consist of a 69-story tower with 763 apartment units.

Inland in Jersey City'sJournal Square area, KRE (Kushner Real Estate) Developers is planning the $600-million, three-tower Journal Squared project. Jason Segal of KRE, says 1,840 units of luxury rental residents are planned. The first tower would consist of 540 units and stand at 54 stories; the second tower would consist of 70 stories (700 units) and the third tower 60 stories (600 units). The entire project would also include 36,000 square feet of retail space. It would create an estimated 700 construction jobs. As part of the redevelopment, KRE is contributing $2.5 million toward the restoration of the Loew's Theatre. Opened in September 1929, the 3,100-seat theater is slowly being revitalized to its former glory. It was once known as "the most lavish temple of entertainment in New Jersey."

Under development in the city's Liberty Harbor Redevelopment District is the 11-story, 422-unit 18 Park, an Ironstate and KRE project, and 70 & 90 Columbus, an Ironstate and Panepinto Properties development, which will consist of two, 50-story towers with 1,000 apartments and 150 hotel rooms.

Then there is The Beacon Project, which is perhaps the largest historic residential restoration project in the country and the largest in the history of New Jersey. The structures at the site were part of the former Jersey City Medical Center. They were built during the Great Depression under the authority of former Jersey City Mayor Frank "I am the law" Hague.

Recent activity at the Beacon includes the opening this spring of the 22-story, 158-unit Orpheum rental building, which is more than 90 percent leased. Work is underway on the Paramount, which will offer 231 rental residences, with initial occupancy expected later this year.

Last month, a new six-level parking garage opened within the community. It offers 510 parking spaces and a 45,000-square-foot landscaped community park, offering panoramic Manhattan skyline views.

On the western side of Jersey City, along the Hackensack River, the development of a nine-hole, public golf course is underway at the 273-acre Lincoln Park. The golf course, expected to cost between $12-$13 million, will be located on 64-acres (40 acres of which sits on a former landfill). According to DeGise, "Land is at a premium here; that is why we didn't have space for an 18-hole course. However, this is going to be a first-class course. Residents won't have to get in their cars and drive an hour somewhere to play golf."

Transportation & Infrastructure Initiatives

Meanwhile, the City of Bayonne is getting ready for the $1.3-billion raising of the Bayonne Bridge by 64 feet. The project is being undertaken in order to accept the new breed of larger container vessels that will be sailing through the expanded Panama Canal in 2015. According to the Port Authority of New York and New Jersey, the project will support nearly 2,800 construction jobs and $240 million in wages.

According to Weiss, the bridge project will "increase trade and open vast opportunities for industrial development in the region," he says.

Plans are also underway for Royal Caribbean's new $70-million cruise ship terminal at the company's current site at the old Military Ocean Terminal. It will include 36,000-square-foot check-in areas, a parking deck and improvements to the existing berth. Construction will begin this summer, with completion scheduled for October 2014.

Another positive story concerning infrastructure and transportation improvements is the continued expansion of the Hudson-Bergen Light Rail line, which officially opened on April 22, 2000. Starting on 8th Street in Bayonne, it travels north through Jersey City, Hoboken, Weehawken</location> and ends at Tonnelle Avenue at 50th Street in North Bergen.

Rutgers' Pfeiffer says discussions are underway to extend the light rail into Bergen County, perhaps going to the Vince Lombardi Service Area of the New Jersey. Turnpike and through to the Meadowlands. Additionally, he says with a greater north/south link, the light rail system will further complement the ferries (in areas where ferries and the rail line meet), giving people greater access to New York City and enhancing housing and commercial values along the line.

What many consider a necessity, but a transportation nightmare while under construction, is the $1-billion rehabilitation of the 3.5-mile-long Pulaski Skyway (Routes 1&9), which connects Newark with Jersey City and is a direct route to the Holland Tunnel. Construction is to begin immediately after this year's Super Bowl. Two northbound lanes of the skyway, impacting New Jersey-to-New York traffic, will be closed for two years. The southbound lanes will remain open.

"The traffic is going to be a mess," DeGise says, "but this is a major infrastructure investment that is necessary for Hudson County. The skyway is functionally obsolete, and will be unsafe in a few years. The reconstruction will add another 75 years to its life span."

Spinelli says getting around the area is going to become "very creative." A shoulder of the Hudson County extension of the Turnpike will be converted into an extra lane to allow vehicles to take this alternate route to Jersey City and the Holland Tunnel.

Conclusion

Revitalization never stops in Hudson County, whether it's buildings, roads, bridges or other infrastructure.

According to DeGise, "There is land that can be developed all over our county. It is usually brownfields, but the science of dealing with that has gotten better. When you look at all of the big buildings in Jersey City, every single one of them was built on a Brownfield. It's a challenge to develop these properties ... but it's not impossible. Some of the best businesses and developers from around the world have come here and have found that it is possible to work here."