From the Jersey Journal:
Despite a booming condo market in New York City, developers on this side of the Hudson River are still wary about shifting their focus away from building rental units any time soon, local experts tell The Jersey Journal.
“It’s too risky,” said Eric Silverman, who with his brother, Paul, has developed numerous Downtown Jersey City properties, including a new rental building under construction next to City Hall.
Financing for condos dried up after the recession, leading to a near-total focus on developing rental units, including at luxury properties like the Beacon in Jersey City. The market for condos in Hudson County won’t return to its former strength for at least a few years, Silverman told The Jersey Journal.
“It’ll be a while before the lenders forget,” he said.
Jonathan Kushner, of KRE Group, said he’s “starting to think about” building condos, but nothing close to the scale of KRE’s $666 million project in Journal Square, which, when finished, will house 1,840 rental apartments in three towers.
The men were part of a discussion on the condo-vs.-rental market at the second annual New Jersey Gold Coast Investment Summit, a confab of developers and investors held earlier this month at Maritime Parc, overlooking Downtown Jersey City and Lower Manhattan.
The developers’ hesitancy to build condos is bad news for real estate financiers like Mark DeLillo, of New York-based investment firm BlueGate Partners. DeLillo told The Jersey Journal he’s willing to pony up the cash if developers like the Silvermans build condos.
“We’ll even raise money for the developer so it looks like they’re fully investing in the deal,” he said, noting the strength of Manhattan’s condo market.
The problem with comparing Jersey City’s market to New York’s, according to Silverman, is that in New York, you can get more than $1,500 a square foot, meaning investors can “make some money.” With prices in Jersey City coming in at half that, he said, the same moneymaking opportunity doesn’t exist.