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Thread: Jersey City Rising

  1. #5326

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    And KUSHNER 1?????? seriously?????????? Mayor Fulop has to step in like he did with the previous time wasters and inform the Kushners to get moving or get the hell out. We don't need the negative publicity... it's unbelievable how they are messing up an amazing opportunity. Their sane, sensible cousins are moving slowly but steadily with Journal Squared and have one built out and renting and another about to start up soon. There is no reason why One Journal Square(I sure am not calling it "Kushner 1") should not be a transformative, smashing success being the most easily visible in the heart of Journal Square. Reading about their behavior hawking this project I was truly pissed... especially learning that the Chinese are nervous about putting money in a Trump-affiliated house of cards that can collapse at any moment. If the Kushners have sound funding, then they don't need large investment here from the Chinese... I wonder what their actual financial condition is.

  2. #5327

    Default NY Times Article - Mentions Possible Construction Start Date for One Journal Square


  3. #5328
    Forum Veteran West Hudson's Avatar
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    I wouldn't count on this. Congress is close to increasing the requirement for EB-5 investors from $500k to $1.2 million; there's a much smaller pool of people with that kind of money laying around, and even smaller pool of people with that kind of money laying around who are willing to invest it in this particular project.

    And I wouldn't blame the Kushners...they're established developers. The problem is the market; as I explained on this board a few months ago, there's an oversupply of apartments in the price bracket that this building's units would fall into, and that's making it very difficult for developers to get financing. Very few tenants are paying anywhere near the full advertised rents at these new buildings and lenders know this (they've actually been sending undercover employees to see how far they can negotiate down rent on new leases according to an article in the Times from a few weeks ago).

  4. #5329
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    ^^^There is a shortage of housing supply at mid-market rent levels, as LeFrak pointed out in that article I posted a couple months ago. Shouldn't it be possible to build towers on this site at a cost basis that would make lower rents profitable? Fewer amenities (nix the in-house medical center for pets), fewer parking spaces (they got a waiver to build extra parking above what's allowed by the redevelopment plan), smaller apartments, less fancy appliances... If the Kushners aren't capable or interested in that, then the JCRA needs to bring aboard a developer that can get it done. Because having this eyesore site sit vacant is a huge drag on Journal Square. Enough with the pipe dreams and the landbanking. The JCRA and city's priority right now should be getting something done here. The city shouldn't have to wait another 10 years until the next luxury boom before seeing this sorry vacant lot developed. Base rents at the Panepinto building across the Blvd begin at $1600 for a studio...they'd have no problem renting out a building at those rents at this location.

    This branch of the Kushner family may be "established," but they've got a spotty record as of late...from Charlie's felony convictions to the trainwreck at 666 Fifth to Jared's comically fumbled and failed attempt at getting that lot in Dumbo rezoned residential after buying it for record prices.

    I hate to say "I told you so," but this is why I said this crap is a waste of our time 2 years ago when there was a big stink about the new renderings Kushner was releasing at the time and the big promises they were making. I could sense that they were having trouble getting this off the ground when they had to go back to the Planning Board with a radically revised plan last year. And I was told that I was nuts....
    Last edited by Hamilton; May 7th, 2017 at 06:16 PM.

  5. #5330
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    And the Curse of JSQ strikes again. From the mayor's Facebook page:

    I want to be clear with residents on where the city stands here. Last week, the developer of this project submitted an application to Jersey City for a tax subsidy and abatement on this property. The administration made clear to the applicant that the city is not supportive of their request and while the law requires a first reading ordinance vote if they submit an application, I don't foresee the council voting in favor. I know for certain I have made my feelings clear here on this project and what I feel works best for Jersey City. This tax abatement application doesn't work for us.
    West Hudson or anyone else with knowledge of development in Hudson County: will the revaluation underway make it viable to build in JC without the abatement? If not, hopefully the city can broker a change to a new developer quickly rather than stalling this project even more.

    Frankly I'm surprised they would even bother to submit an abatement request...I think it's been obvious that they wouldn't get an abatement since last November. Especially given that we're now in a municipal election year. I understand why everyone's mad at the Kushners, but what if the alternative to the abatement is a hole in the ground for another 10 years?
    Last edited by Hamilton; May 7th, 2017 at 08:18 PM.

  6. #5331

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    I think if Jared had just stopped with this fixation about becoming a power broker in his father in law's new Administration, things might be going much more smoothly now. Maybe his business acumen is overrated anyway.. but his dad at the helm is not doing anything to show that side of the Kushner empire is in good hands. I'm glad others like Hamilton are also talking about trying to push for Mayor Fulop to get this out of the dysfunctional Kushner situation. They are now talking about 2018? I so agree that it's an eyesore and further attempts at landbanking are such a waste for what should be a huge transformative project. It's essential we get this moving as soon as possible and there's no excuse for waiting til the next uber luxury cycle. We're not talking about affordable housing here... though I do believe it's high time that 25% affordable set asides in these Journal Square major projects are part of the mix... if there's going to be ANY talk by ANY developer of long term abatements ...and for the time being they do make sense to some degree in this far less established part of the city, as it makes total sense for the most part downtown that abatements are much shorter term or phasing out completely. But prices in Journal Square should be lower than downtown. Under $2,000 for studios. Not higher than $2,500 for one bedrooms. Not higher than $3,000 for two bedrooms. Not higher than $3,500-$4,000 for three bedrooms. What use is it being an alternative to pricy Manhattan/ Brooklyn/ now downtown Jersey City if the market sets up the same way?


    Am I being too Pollyanna-ish here? I want a balance of "market rate" and affordable... I want to see the Square finally be the heart of the city it can and should be... better than ever. I certainly don't want another five-ten years of being a closed up eyesore of a lot. I am really at the point I hope the Kushners are forced to sell. It's more than disconcerting enough that their cousins have put up one tower that seems to be renting out quite nicely and will likely soon start on the tallest of their three tower project. There's no reason that Jared and Co. had they been focused to be in this kind of position here and in other situations (666 5th, Dumbo).. greed, arrogance, incompetence... whatever it is, I just hope we can get the site developed whether they remain the developers or not. At this point, I really believe it may be for the best that the project change hands and starts fresh as long as it is with the certainty that whoever develops it will get moving forward as quickly as possible. We've waited 10 wasted years on promises, pie in the sky proclamations and unsightly landbanking and that has to stop NOW.

  7. #5332
    Forum Veteran West Hudson's Avatar
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    I think it's important to put this project into context. Journal Square land prices went way up a few years ago and the site was turned over at a fairly high price. Alot of commodities prices have come up in the past few years, making construction more expensive. And, we have alot of new apartments downtown that are renting at steep discounts from previously projected rents. Most developers are having trouble getting financing right now for projects that don't have some sort of government support. The numbers just don't work otherwise when compared to other investments (such as a stock index fund). That's really the key here - banks are looking at risk and return, and realizing that they're probably better off investing their capital in stocks, oil, bonds, etc, rather than an overheated RE market.

    As far as making the numbers work is concerned, yes - 3 Journal Square Plaza has substantially lower rents than buildings downtown, but One JSQ wouldn't. Compare the designs & construction. 3 JSQ Plaza was a prefab light gauge steel building, and you cannot build a 60+ story highrise that way; the exterior of 3 JSQ Plaza also uses cheaper materials (metal paneling) than One JSQ has been planned with. So the construction cost of One JSQ per residential unit is projected to be higher than the cost at 3 JSQ Plaza was, which necessitates higher rents. And although there's a handful of people who would be willing to live in One JSQ at a discount of $300/month to a comparable building downtown, I have a feeling that the vast majority of people who live downtown think it's worth alot more than that to live in a safer, more developed neighborhood and have significantly greater convenience (at least I do). If I'm right about that part, which I believe I am, the type of discount a unit in One JSQ would need to offer would result in rental income too low to make the project profitable enough.

    How is Journal Squared doing so well, then? Well, it probably isn't. They got their financing awhile ago and I'm sure they're distorting their numbers like crazy when reporting results to their creditors. When I signed a lease downtown a few months ago, my lease suggested that I would be paying a certain market-rate rent with no mention of free months, but I also signed a completely separate document (that I'm sure my building's creditors haven't ever seen) that entitled me to several months of free rent (thereby making it appear to the creditors that I'm paying the full market rate while I'm really getting a 15% discount). When we read stories in the news about how well Journal Squared has done since leasing launched, the fluff pieces are careful not to mention that the building is filling up quickly because most of the units are renting with massive discounts.

    Getting back to One JSQ, since rents would presumably come in so much lower than they would need to in order to generate a competitive profit, in order to make the numbers work the options are to either get alot of government support or wait several years until the market for apartments in that price range becomes supply-constrained again. So without the abatement and with rents being where they are now, I don't see any developer building at that site until the market tightens back up several years from now.
    Last edited by West Hudson; May 9th, 2017 at 01:07 AM.

  8. #5333

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    And the worst people to come up for a long term abatement like this are the KABR Kushners who are so tied to President Trump... it just loks like they have to sell off this development and we've got to hope someone else will buy the potential. It's still enormous and I think West Hudson is too pessimistic about the interest of people willing to move in here. Losing We Works was the big devastating blow here and it's discussed in a report that I saw on nj.com. Another developer without the toxic baggage that the KABR Kushners are bringing right now would be the only hope of being able to turn Fulop around and snag the long term abatement because it seems certain now the relationship with the Kushners is now quite toxic, and a lot of it they brought on themselves.

  9. #5334
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    Thanks for your thoughts, West Hudson.

    Your discussion about construction costs is informative and interesting. For sure, there's not much that can be done about superstructure costs, but facade design is a different story. I don't normally advocate value engineering, but even Downtown had to start somewhere, and this vacant lot is a huge drag on the area. As far as land costs are concerned, have they stayed elevated, or have they fallen? If they've fallen, then the loss in value is a sunk cost, and rationally it shouldn't guide land use decisions moving forward. If land values are still high, I guess that signals that the market expects that rents will rise in the JSQ area within a reasonable horizon such that the carrying costs of keeping the land vacant temporarily vacant are justified. Obviously that's a subjective calculation and generally you can't force a landowner to see things from one perspective or the other. But in the case of 1JSQ, I would think the city has some leverage in whether the land is banked or not, since the plan is so reliant on tax credits, infrastructure bonds, abatements, and a JCRA redevelopment agreement.

    As far as Journal Squared is concerned, I think it makes sense to be skeptical of the fluff pieces, but I was more impressed by the fact that they shut down the Art House in order to begin building the second tower. It seems like a real sign of optimism from KRE on the viability of the project. Maybe you have a different perspective?

    As a resident of Journal Square who moved here after spending some time in Brooklyn, I disagree with your assessment about the desirability of the area. I think a 15%-20% discount relative to downtown is reasonable for a lot of people. Obviously the Grove St area will always command a premium, but I seriously do think Journal Square has great bones and the essential elements that drive rent prices in the NYC region: excellent walkability, transit connections, and a quick commute to Manhattan. It may look unsafe, but despite the transients who hang out in the station, crime is not an issue anywhere within a 10-minute walk of the station. Marion Gardens, West Side Ave, and Monticello Ave, which are farther away, are another story.

    Perhaps it's because I've seen what sort of rents can be commanded by projects in gritty Brooklyn neighborhoods which are farther from Manhattan and comparable in terms of safety to JSQ, but I think there is definitely a market of value-oriented people who don't mind a grittier setting and a commute that's 3 minutes longer in exchange for a cheaper rent or a more spacious/luxurious apartment. I mean, I could afford to live downtown, but the yuppie-type retail and atmosphere aren't particularly alluring for me and don't warrant a rent premium in my opinion. Then again, the parks and rowhouse architecture in some parts of downtown are fantastic...
    Last edited by Hamilton; May 9th, 2017 at 05:04 PM.

  10. #5335
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    I think if Jared had just stopped with this fixation about becoming a power broker in his father in law's new Administration, things might be going much more smoothly now. Maybe his business acumen is overrated anyway.. but his dad at the helm is not doing anything to show that side of the Kushner empire is in good hands. I'm glad others like Hamilton are also talking about trying to push for Mayor Fulop to get this out of the dysfunctional Kushner situation. They are now talking about 2018? I so agree that it's an eyesore and further attempts at landbanking are such a waste for what should be a huge transformative project. It's essential we get this moving as soon as possible and there's no excuse for waiting til the next uber luxury cycle. We're not talking about affordable housing here... though I do believe it's high time that 25% affordable set asides in these Journal Square major projects are part of the mix... if there's going to be ANY talk by ANY developer of long term abatements ...and for the time being they do make sense to some degree in this far less established part of the city, as it makes total sense for the most part downtown that abatements are much shorter term or phasing out completely. But prices in Journal Square should be lower than downtown. Under $2,000 for studios. Not higher than $2,500 for one bedrooms. Not higher than $3,000 for two bedrooms. Not higher than $3,500-$4,000 for three bedrooms. What use is it being an alternative to pricy Manhattan
    I agree with almost everything you wrote here, but I think that we have to be careful with mandating affordable housing. Doing so tends to keep already shaky projects from making financial sense, which results in the construction of less housing and forcing up rents overall. It's already hard enough to get projects off the ground in JSQ. Here's a report on how SF's affordable housing requirements have this effect:

    http://www.bizjournals.com/sanfrancisco/blog/real-estate/2016/09/prop-c-affordable-housing-study-for-sf.html


    And here's a study from NYC showing similar results:

    https://therealdeal.com/2017/05/08/n...dvocacy-group/
    Last edited by Hamilton; May 9th, 2017 at 01:34 PM.

  11. #5336
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    So...WeWork DID pull out of this project after all, taking its tax credits along with it. There's also some interesting facts about the financing structure here: https://www.bloomberg.com/news/artic...rouble-at-home
    The previously unreported exit by tenant WeWork -- which is also expected to sell its stake in the project -- as well as the mayor’s shift, add up to a sharp reversal of fortunes that led the family company to do what it has done before: seek Chinese investors.
    Though Jersey City Mayor Steven Fulop had written a letter to the state in support of the tower and was considering issuing $10 million in city bonds to help it along, this past weekend he stated publicly what he earlier told the family: that he opposes the Kushners’ new petition for $30.4 million in city bonds and a 30-year tax abatement. “The administration made clear to the applicant that the city is not supportive of their request,” Fulop wrote on Facebook. “I have made my feelings clear here on this project and what I feel works best for Jersey City. This tax abatement application doesn’t work for us.” Oddly, the version Meyer promoted in China is bigger, grander and more than twice as expensive as plans pitched to the New Jersey Economic Development Authority in November 2015. It will cost nearly $1 billion, including $150 million from Chinese investors, $301 million in owner equity and $525 million in debt, according to a pitchbook for an upcoming meeting in Guangzhou. It will have more than double the 744 apartments originally proposed to New Jersey.
    There was also an interesting passage in a Jersey Journal article: http://www.nj.com/jjournal-news/inde...ner_tower.html
    A source close to the developers said they may mount a PR campaign to convince the public to support the abatement, citing the jobs created by the project (4,367 jobs during construction and up to 400 permanent jobs, according to the developers) and the additional revenue to the city. The developers estimate the towers will bring in $3.8 million annually to the city versus the $490,702 the city collects now on the vacant land.
    They sound delusional. There's a snowball's chance in hell that JC will approve this abatement even if it rationally benefits the city. People in JC don't care if it would bring in $380 million in revenue, they hate Trump that much. If they absolutely depend on the abatement to get this off the ground, they need to sell immediately.
    Last edited by Hamilton; May 11th, 2017 at 10:05 AM.

  12. #5337

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    I think a big part of San Francisco's problem is their restrictions on density and height... Nimbyism gone wild is one of the saddest, most infuriating thing as the rents there are crazy, so much demand but the working and middle classes have no hope to get decent housing built never mind the poor... and even the upper middle class has difficulty keeping up with the cost of living in that city. I would agree that maybe mandating affordable housing units goes too far but studies show it better for upward mobility of poor and working class people to be located in mixed neighborhoods economically, not segregated into poor ones. Too often developers contributed to funding affordable housing off site in already segregated, economically depressed areas. So I do think that having a decent percentage of units(like 25%) in exchange for long term abatements, if the developer has strong enough financial stability is a laudable goal.

    That said, delusional and snowball's chance in hell are apt descriptions of the possibility of the Kushners building a successful public relations campaign to get the average JC resident to support building this. If they cannot handle getting One Journal Square off the ground without that abatement after their public relations fiasco in China, as Hamilton say sell asap. LAST thing we need is another promising yet ultimately pie in the sky development to keep this essential part of Journal Square a closed off, vacant eyesore for another five or ten years.

    This also points the imperative of holding the Harwoods(who started this long blight on our Square with their do-nothing development process here starting just over a decade ago) to their word on the Loew's Theater Arts District and the two towers they can build there on the property they own behind the theater.

  13. #5338
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    The hits keep on coming.

    The FAA has given interim approval to One Journal Sq. LOL great timing:

    https://oeaaa.faa.gov/oeaaa/external...22462826&row=9

    And Kushner, the leading bidder for the Bayfront (Honeywell) site, backs out of the bidding:

    https://www.bloomberg.com/news/artic...over-conflicts
    Last edited by Hamilton; May 10th, 2017 at 04:37 PM.

  14. #5339
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    So I was wrong...Kushner is replacing the office component of the project with more apartments. And somehow they think they don't need Planning Board approval for this change. They also want to phase the project instead of constructing it all at once.

    Anybody have any thoughts on how this affects the prospects for this project getting built any time soon?

    https://www.nytimes.com/2017/05/10/n...ment.html?_r=0

  15. #5340

    Default Kushner execs pull out of EB-5 roadshow amid ethics fracas

    Last edited by DominiRicanJSQ; May 12th, 2017 at 09:51 AM.

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