From the Jersey Journal:
Newark’s rebirth is under way – will it rival Jersey City’s?
Separate, though nearly identical, reports in the New York Times and the Star-Ledger this past Sunday left the impression that Newark is on the brink of something big.
The stories showed that big-name developers and the banks that support them are now willing to take a gamble in Newark’s real estate market, hoping that the same magic dust that transformed its neighbor Jersey City will work again.
It forced me to consider whether a success in Newark matters to Jersey City homeowners, or whether one city has a competitive advantage in attracting new residents.
The short answer is that Jersey City, unlike Newark, has a long-established residential and commercial real estate market that offers the predictable return on investment that developers and investors love.
In addition, Jersey City benefits from its closer proximity and greater accessibility to the Manhattan market, a factor that has helped Jersey City get the label of the sixth borough.
That doesn’t mean that buyers won’t be swayed by the promise of greater value in Newark, or that these same buyers might be financially locked out of Downtown condos and choose Newark over other areas of Jersey City.
…
“Newark is still a frontier location, similar to where Jersey City was in the 1980s,” said James Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University.Any boom in Newark would have to coincide with a reversal of its violent crime, a trend that has hit historic proportions and will only get brushed under the rug if the city adopts the Jersey City model of creating two cities: one for the rich and another for the poor.
Make Newark a “pioneer” zone with no income or property taxes for 15 years. _THAT_ is how you kickstart a recovery.
The Time’s article over the weekend was very interesting. From Newark there are many options are available to get around…by car you can easily hop onto the Turnpike, 280, 1&9, 78, and 22…good access to mass transportation like NJ Transit, PATH, and Amtrak. So it has the transportation infrastructure that you should look for in a city. The city also has its faults…there’s plenty of crime there although I’m not sure that applies to the downtown area and the school system overall gets an “F”.
Defining the area for development…the train tracks to the East, where Rt 22 begins in the South, the Court houses to the West, and the river to the North has a lot of upside potential. That area could be like Grove St and financial area near the water in JC with the poorer areas on the outskirts.
There are completed projects like NJPAC and the Prudential Center should be completed soon. There are plenty of old buildings with beautiful architectural structures for developers. Although it’s a nice building (Eleven80 project), developers can be greedy and ask for prime market rates in Newark which is crazy. Although it’s out of my defined area, UMDNJ has built some new hospital wing and a new student housing development. Which brings up another point, there is plenty of commercial businesses there so taxes should remain relatively low.
Having said that, who would want to take a chance and move to Newark? My initial thought would be singles and families without kids who are more on the go. I know several lawyers who work in Newark and more than one person has mentioned that they have noticed a significant difference in the city over the past two years.
The question is, if you believe that to be true, how do you take advantage of it? You may not have wanted to live there but if you would have invested in a multi-family 3 or 4 yrs ago, the ROI would have easily been in double digits.
I’d definitely suggest caution before leaping into an investment in our fair Brick City. There’s a number of variables at work that can complicate what would otherwise look like a quick win:
* True, Booker’s national star power is driving up attention to Newark, but crime continues to hamstring our renaissance
* Watch out for repossessions due to exotic mortgages: the Times covered default rates recently and noted that large patches of the city — in which they’re mostly a high percentage of poor African-Americans — are being hit with this problem; if you buy in a depressed area, you may have to worry about a general decline of the neighborhood as the working-class are squeezed out by their own mortgages
* There’s a general vibe about the city lately: there’s more energy here, and people are excited about investing — this perception will continue as the idea of downtown Newark as a destination gains legitimacy throughout the state
* Taxes continue to be high and with municipal budget constraints on the horizon, Newarkers may see even higher taxes in the future — you’ll need to account for that in your budget
All in all, I think Newark is a great place to live: it’s as convenient to get to downtown NYC as it is to get to the burbs, a number of great building projects are underway, and the arts and culture are starting to pick up steam. But, as with most investments, there’s few quick wins here: buying in Newark will likely require that you’re committed to seeing your neighborhood change and grow.