CAPRE’s Northern New Jersey & Gold Coast Investment Outlook Preview: George Vallone Offers Solution for Jersey City’s AirBnb & Affordable Housing Problems
JERSEY CITY, NJ — The Hoboken Brownstone Company philosophy is simple; to develop with respect and pride for the neighborhood keeping alive historical validity, the community needs, and the original architectural feeling. Our design philosophy can be seen in our signature Brownstone style; preserving the heritage of brownstone communities while offering the finest in new amenities and modern style. In addition to being Founder and President of Hoboken Brownstone, George Vallone is also the President of Our House Inc., a non-profit organization that builds and operates housing for the developmentally disabled. George has spoken all over the country on real estate development and financial topics, entrepreneurship, and Brownfield redevelopment topics. In anticipation of CAPRE’s Northern New Jersey & Gold Coast Investment Outlook, we connected with George to get the low-down on the latest in Jersey City.
CAPRE: Thanks for chatting with us today, George. We hear you have some big news.
Vallone: Today is very exciting day for us – we had the official ribbon cutting for our first project tin the Jersey Avenue Park Redevelopment Area, called The Enclave. This is a three phase project and we’ve opened up the largest of the three phases today. Which his 260 rental apartments with 40 square feet of amenity space and a 570 car indoor self -parking garage. We actually opened up our leasing three weeks ago and we’re using the marketing directors as our leasing agency, and they leased 60 apartments in three weeks. So we’re over 25% leased in just a little over three weeks.
CAPRE: You must be pretty excited.
Vallone: Yes, we are. The mayor was even there. And we’re so excited that a couple of weeks ago we started driving piles on Phase II, right across Hoboken Avenue from the site. In about a month we’re going to start Phase III. Phase II will have 137 apartments and 137 parking spaces, and Phase III is going to have 240 units and they’re going to park their cars in the Phase I garage, so a total of 637 units when we’re all said and done.
That’s a partnership between Hoboken Brownstone Company, a family office out Philly called McKinney Properties, and BNE out of Livingston. BNE is going to be the contractor and the property manager. We originally bought the land back in 2005, so it’s been a long time coming. Two of the three sites are the former locations of the Van Leer Chocolate Factory.
CAPRE: Great. What else have you been keeping busy with?
Vallone: A second partnership we’re involved with owns the three blocks around the enclave and we have a total of 1181 units approved. We’re in negotiations with another major New York City developer to take on the largest of the three blocks, for 670 units. We’re also donating the land for a 2-acre public park, and we’re very excited about that. Finally we have a 131 unit project just on the other side of the NJ Transit Track at 39 New York Avenue and it’s going to be called The Avenue. We broke ground about a month ago, and we’re in partnership with a NRP on that, out of Cleveland.
CAPRE: What kind of takeaways are you seeing within all this leasing?
Vallone: The trends we’ve been talking about since 2005 when we first started assembling land in this part of Jersey City, and are still talking about, is that this is an amazing neighborhood. It’s right on the border of Hoboken, it’s downtown Jersey City, which has the strong market demand given its proximity to the PATH train. But we’re noticing that about half of the leases from people relocating out of Hoboken.
CAPRE: Why do you think that is?
Vallone: We believe that the reason is the traffic, for those who drive, out on the turnpike from Hoboken. It can take as much as 30 minutes to get on the turnpike. But we’re literally two blocks form the entrance to the turnpike, so people who need to get in their car to either go north west or south just saved a half an hour on their commute. We think that bodes very well for the lease up of what will eventually be several thousand units in that zone – almost 4000 in fact.
CAPRE: What are you looking forward to about CAPRE’s upcoming Northern New Jersey and Gold Coast Investment Outlook?
Vallone: CAPRE’s New Jersey events are great. People want to hear form the guys doing the work on the ground, and this is the place to go. Based on the attendance list that I’ve seen, you’ve got 100% of the most significant players in the market, who will all be talking about their views on the city.
CAPRE: What challenges persist in Jersey City, amongst all this positive activity?
Vallone: The 18th Street Light Rail Station stop needs to get built. That’ll be right across the street from us. Originally the Light Rail system called for, I believe 23 stops. It’s been very successful, but this one needs to get built. The original ridership estimate was 10,000 a day back when they started in 2009, and I’ve heard they’re running as many as 50,000. That certainly something I’m concerned about.
We participated in an impact study back when half the stops were built, back in 2010 done by a team at Rutgers University, and at that point they had invested $1.5 Billion USD. We helped Rutgers identify projects that were built or under construction or approved to be built surrounding those stops, and over $30 Billion USD of private investment followed that $1.5 Billion USD public investment. And that alone had to do with the transit getting the remaining money to build the rest of the system. Staten Island has proposed a tramway for commuters that want to park their car on the Staten Island Side, take the tram to the station stop at the end of Bayonne, and then get to the PATH portals into Manhattan. I see ridership doing nothing but going up – it’s been a very successful infrastructure project.
CAPRE: What about affordable housing? Do recent efforts on that front concern you?
Vallone: A lot of developers are concerned about a proposed affordable housing ordinance. There are two version – the mayor’s version and the council president’s version the case law on affordable housing is pretty clear – you can’t just ask developers to build it without giving them some kind of a compensating benefit. And the two ordinances are cognizant of that. But I’m concerned that ultimately when the ordinance passes, and it will because Jersey City needs affordable housing, there’s either a density bonus or some other benefit that will help pay for it.
CAPRE: What about AirBnb? We’ve heard quite a bit about that recently.
Vallone: Recently there was a ruckus about AirBnb – and some of the impacted people that have AirBnbs around them were trying to kill it. But you know, about five years ago, some people said why isn’t the city making any money off of this? And they passed an AirBnb tax. And I’ve heard numbers as high as $4 or $5 Million, so they’re making a lot of money on that tax. I suggested to the mayor that they take that tax and dedicate it to affordable housing. And I know they’re thinking about that. AirBnb has said that Jersey City is the #1 Airbnb destination in New Jersey, so we’ve got ourselves a real asset there and I hope that they allow that to continue to happen and use that tax wisely. Using it for affordable housing would be a great win-win for the city.
CAPRE: Got it. Thanks for your time George. We’re looking forward to hearing more from you, and soon.