Newark: The Next Great Investment Opportunity Gathers Steam
As the reach of expensive real estate spreads, Newark is still on the outer edges. But not for long.
Two decades ago brave souls with prescient minds bought real estate in places like Prospect Heights, Clinton Hill and Williamsburg and Long Island City. Other investors may have scorned them. The cross-hairs of crime, poverty, vacant lots and derelict warehouses is never generally a great place to start, especially with limited capital to ride out the hard times. But that’s how fortunes were made. Some may well bemoan the lack of investment opportunities around the Tri-State these days compared to the nineties and noughties. Clearly they haven’t looked closely at Newark, New Jersey.
The cons about Newark have been well stated for many years. Poverty, gang violence, poor schools. But it has one massive plus in its column: the proximity to New York. The $2.75 it costs on the Path Train from downtown Newark effectively makes it a subway ride away from the city. Investment around Newark Penn Station and all of downtown has been robust. It was just a matter of time until it started to filter outwards.
NY Yimby reports that NJ based developer, Rose Agency has proposed building a seven-story, 90-unit residential building at 161 Bellair Place, on the corner of Montclair Avenue in Newark’s Forest Hill section, a neighborhood located in the city’s North Ward. The project would include a parking garage on the first two floors, Jersey Digs reported. The property is currently occupied by a single-story storage facility and a commercial building. The Branch Brook Park station on the Newark Light Rail is three blocks away.
This comes on the back of news that Newark is about to welcome its first new high rises in 40 years. The Wall St Journal reported that Philadelphia developer Dranoff Properties closed on $116 million in financing to build a 22-story luxury apartment building in Newark’s downtown. At a nearby site, a development team that includes retired basketball star Shaquille O’Neal is expected to wrap up financing for a 23-story apartment tower later this month.
The city chipped in $11.8 million to the deal. The property will be known as One Theater District which will be built across the street from the Performing Arts Center. The nonprofit owns the land and will be leasing it to Dranoff Properties.
“This is my first foray into Newark,” developer Carl Dranoff said. “We try to select cities that we feel will be future superstars, and we feel that the stars are all aligned in Newark for a pretty prosperous future.”
Baye Adofo-Wilson, the city’s director of economic and housing development, concurred, believing that One Theater District would help Newark become a “24-hour, 7-day-a-week city”.
Newark’s gentrification, while feared by some, was always on the cards. Before the 2008 housing crashed the price of real estate soared with three and four unit homes rental in the Central and even south selling for up to $450,000. After the crash the city became decimated with foreclosures from which it has yet to fully recover. There was a deluge of new constructions— hardwood floors, granite countertops and stainless steel appliances—in gang infested neighborhoods, all of which ended up in foreclosure as homeowners found themselves upside down on their loans. However, last year, there was enough new investment downtown for Politico to run a feature titled, “Is Newark The New Brooklyn”? (Isn’t everywhere the new Brooklyn?) Equally the same year a report highlighted in NJSpotlight.com showed how the 23,500 new foreclosures that year alone was dragging the city’s economy down.
As for now Newark is still a tale of two cities, the area closest to the downtown and the poorer sections like the South Ward, where it’s still possible to pick up foreclosures for $30,000. It won’t last forever. As investment and growth starts to trickle through, a questions many New York investors will be asking themselves about Newark, is how long will they be prepared to sit on the sidelines?
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