NJ: Bayonne, Hackensack, Rahway, Filled with Assets, Are Ones to Watch

Twenty years ago it was Montclair and Morristown that were on the verge of downtown revivals that would earn them notoriety across the region.

So as New Jersey continues its economic recovery, what are the next towns and cities to keep an eye on?

That's tough to predict, but experts in New Jersey's commercial real estate industry say there are some that have the assets in place — like the all-important train station — and the potential to be hotbeds of new activity.

It's just a matter of embracing development.

Bayonne

The waterfront city in Hudson County has opened its doors to developers in recent months, hoping to introduce them to a 55-acre piece of undeveloped land on the New York Harbor.

And there seems to be sizable interest. In early December, more than 75 individuals from the real estate industry attended a seminar to explore opportunities at the site, giving way to a formal solicitation for interest that was due late last month.

The results of that process are still to come, but one developer said the initiative is eye-catching, signaling an interest in helping the private sector tackle the challenges of redevelopment.

"Having a real defined process in place helps create certainty for any developer," said Brent Jenkins, vice president at New York-based LCOR Inc. "And certainty is key."

Jenkins, whose firm has done several projects in New Jersey, said the outreach shows the city gets the issues that come from so-called infill construction — meaning a project in a previously developed space or within a built-up area.

City officials have spent more than a decade planning redevelopment, spurred by the federal government's closure of the 400-acre Bayonne Military Ocean Terminal in 1999. But those plans have changed over time, affected in part by the economic downturn.

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Still, developers are certainly taking notice for what the city now calls Harbor Station South. The original deadline for submitting proposals was Jan. 31, but it was extended to Feb. 28 because several developers were still finalizing their submissions.

One key reason is the good makeup of the redevelopment area. Jenkins noted the site abuts a Hudson-Bergen Light Rail station, giving it the appeal of a transit-oriented development.

The city said it plans to select a short list of developers, conduct interviews with some or all of those firms and make a conditional designation this spring.

Hackensack

It's been nearly two years since the city unveiled a sweeping rehabilitation plan for its downtown, one that overhauled its development process and laid out a vision for the 160-acre district surrounding Main Street.

It was a move that was long discussed without much action, but there are now signs of progress. In June, Capodagli Property Co. broke ground on a 222-unit residential property on State Street, in the first of what city officials hope is a string of new projects.

Experts say the Bergen County seat has the attributes needed for a renaissance — access to mass transit and highways and anchors such as Hackensack University Medical Center.

Jenkins said Hackensack and Bayonne are similar in that both cities "have highlighted a number of places in town where they're really looking to push development, where they really do have a vision."

LCOR does not have projects in either city but is exploring the possibilities, he said.

Aside from the Capodagli project, city officials have said there are other mixed-use projects in its pipeline. The City Council in late January moved to formally adopt a redevelopment plan for a 4.3-acre city-owned parking lot, allowing it solicit proposals from developers.

The governing body also approved the creation of a short-term tax abatement program for developers and residents who build or make improvements in the 39-block rehabilitation area, also known as Upper Main Street. The city's ordinance will allow the city to create criteria and a negotiating process for offering the five-year tax breaks, giving it a key tool for attracting top developers, though it did not guarantee abatements for anyone who builds in the area.

Hackensack's rehabilitation plan was a long time in the making, coming to fruition about three years ago when city officials joined local business leaders who sought to overhaul their outdated zoning procedures. That culminated in the June 2012 blueprint covering 389 properties across the 160-acre district.

Rahway

The city has been dedicated to redevelopment for more than 15 years, and it has nearly a dozen projects to show for it, from hotels and apartments buildings to an expanded Union County Performing Arts Center.

But real estate insiders say it hasn't reached its full potential as a transit hub, considering its central downtown train station that offers a 40-minute ride to Manhattan. City officials don't seem satisfied, either, with a reported seven multifamily projects in their development pipeline that they hope will draw young urban professionals and artists.

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Carol Stern, a commercial real estate attorney with McCarter & English, said the cities best-suited for redevelopment are those that can draw young commuters seeking a walkable living environment.

"If they can get to work by mass transit and live where there is the ability to do what you need to do without a car, that's definitely a plus," said Stern, a partner with the Newark-based firm.

For a city such as Rahway, the potential is there.

"Rahway certainly has that possibility because it's at the nexus of two train lines," she said, referring to the Northeast Corridor and North Jersey Coast lines that service the station. That's not to mention a "reasonably walkable downtown" and its arts component.

One of the state's commercial real estate powerhouses seems to think so. In November, Mack-Cali Realty Corp. announced it was acquiring a two-building, 159-unit rental property in Rahway for $46.5 million. jburd