Unlikely Tower Mates — The Wall Street Journal
A Maryland developer plans to build a residential tower in Jersey City catering to college students who want to live off campus in more modern quarters and working adults stung by a short supply of rental apartments.
The Wall Street Journal
The proposed 20-story building would have more than 300 beds for students attending nearby Saint Peter’s University and 375 market-rate apartments with views facing Manhattan, said Timothy Elliott, a partner with Sora Development, based in Towson, Md.
Sora would build the $165 million tower as a joint venture with the university, a Jesuit institution founded in 1872 that has about 3,000 students. Sora would own most of the building, while Saint Peter’s would provide the site and a parking lot. The university would pay an annual rent to Sora and maintain some equity in the building.
Mr. Elliott said state tax credits, private equity and debt would help pay for construction, which is expected to start in 2015. Sora would pay property taxes.
The project is in the McGinley Square area, which hasn’t seen the same developer interest and gentrification that has happened closer to the waterfront. The Sora project, which would include a movie theater, bank and other retailers, hasn’t received final approval, but Jersey City officials have been supportive. This would be in the “heart of the city,” Mayor Steven Fulop said. “We have made a commitment to redeveloping areas off the waterfront and projects such as this in McGinley Square will be a focus of the administration.”
Mixing college students and working adults could be disastrous if students host loud parties or try to sneak into the high-end residential amenities, such as a planned rooftop swimming pool. But Mr. Elliott said the building would have separate entrances, elevators and amenities. “The two populations won’t even mix,” he said.
Jersey City, which is increasingly becoming a rental alternative to Manhattan or Brooklyn, is seeing an apartment-construction boom as developers race to meet demand. Nearly 5,000 units are under construction, with more than 12,000 more units approved, according to a city spokeswoman.
But like most cities nationwide, Jersey City risks overdevelopment that could force landlords to cut rents. Mr. Elliott doesn’t expect to finish construction until late 2016. It is impossible to know if the rental market will still be hot.
Right now, Jersey City doesn’t have much excess supply. In the third quarter, its vacancy rate was 3.5%, below the national 4.2% rate, according to Reis Inc., REIS +4.70% a real-estate research firm. Its average rent was $1,558, well above the national $1,073 average.
Mr. Elliott expects to charge monthly rental rates of $3.25 a foot. The average unit will be about 1,000 square feet.
Cash-strapped schools nationwide are increasingly working with the private sector to replace outdated dormitories.
“We are in one of the most hypercompetitive marketplaces in the nation in terms of attracting students, so we need to make sure that the place we provide for students for their four-plus years here is the best it can be,” said Michael A. Fazio, Saint Peter’s vice president for advancement and external affairs.
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