Can't sell units and No more money for JC project.

Lets see if LIC, can hold up better, in the months to come.

Well, EddieWilson said he wasn't coming back, but here he is again.

Everyone notice how these boards started turning back into more civilized discussions ever since EW stopped posting 1000 articles a day? lets see if dco can learn something from Eddie

I know most think Miami was not a good comparison, but JC is certainly relevant to NYC real estate. It shows how a development, has been impacted by the credit crisis. Some would consider it "foreshadowing" in regards to NYC RE.

I work in Jersey City (it's right next to the PATH, and oddly, the commute is better than most Manhattan commutes). Anyway, I've been shocked at all the new half-done construction here. These are huge buildings, too. I can't imagine there are close to enough buyers (or renters) to justify all the construction. JC isn't a bad place to work, but it would have to be cheap as hell for me to want to live here. I imagine it will take a year or 2 before the real fallout happens in this town (once these behemoths are all completed).

Developers are trying to turn JC into another Hoboken. There are some nice 'historic' districts with refurbished brownstones, but all of the new construction downtown has an artificial feel, and will take a while until it's up and running.

Because if its geography, I think downtown JC is a good investment for the longer term.

dco:

This development was a fait accompli as a total and utter disaster from day one.

You sound as if you're actually surprised by the flame out.

the finishes in this place were atrocious. Downtown JC is just plain bad news. Zero infrastructure and unless you work in downtown NYC or JC, its a pretty remote location in that the PATH runs like shit on the weekends and the Ferry is price gouged.

Jersey City = Hoboken wannabees

Hoboken = Manhattan wannbees

malraux- I'm not surprise by anything in this market. As matter of fact, just a about an hour ago, the Big 3 auto makers have asked for the Gov't for a $25 Billion loan. So no nothing surprises me. I guess if you can't get it from the bank, look for the nearest sucker, the Tax Payer.

This isn't the first and it is far from the last.

Hilde: "Oh, master builder! My beautiful, beautiful castle! Our castle in the air!"

Solness: "Built on a firm foundation!"

Henrik Ibsen, The Master Builder

dco:

Your last comment actually made very little sense.

This specific piece of real estate in Jersey City has little or no bearing, nor relationship, to prime Manhattan real estate, in my mind. Which isn't to say that I think Manhattan prices aren't dropping, but simply that they have zip to do with an overpriced, under delivering "Trump" development in Jersey City.

I don't think you can judge the Manhattan makret by some stupid building in Jersey City. If anyone has ever seen Trump in JC, the exterior looks like low income housing. A lot of people bought elsehwere because the competition offers much nicer buildings, especially those with floor to ceiling windows, which Trump does not have.

malraux- It's all part of a bigger picture. If you can't see, then I'm sorry. I don't have the patients to explain or strength in my fingers. IF you cant make the comparison between JC and Manhattan, perhaps you should start small. Try JC to LIC, Williamsburg, Park Slope, Cobble Hill...... Get the picture. How are these areas any different. None are in Manhattan. Does this JC article, have any comparison, to those areas. Are those areas less special then Manhattan but more important then JC. The point is, it's closing in.

I think this has historically often been the case where the fringe areas are the first to feel the pain. They are also the "high beta" markets (more price sensitivity to overall market) while the prime areas like "many" areas of Manhattan are the relatively "lower beta" markets. Fringe pricing tends to be a leading indicator.

Let me also note that Manhattan, as a whole - and relative to the rest of the country, is a "high beta" market. Its swings have historically been much wider than those of most of the rest of the country.

I took a bicycle ride along the Hudson River yesterday. It was just mind boggling to me to see how much new residential construction was going on along the river - including Jersey City. Presumably, new construction remains very profitable for builders at "current" price per square foot. Eventually, new supply will bring prices down closer to "replacement" values as is happening in the rest of the country.

The current issue of The Real Deal notes that the "land" price per buildable square foot in Chelsea is in the area of $150 to $200. I know construction costs are higher in Manhattan than the rest of the country. But what is the "construction" cost per square foot in Manhattan today for "A Class" residential buildings? (I really don't know.) As I understand it there are also "soft" costs per square foot which cover things like marketing expenses. But my hunch is that the "all-in" costs of new construction (land, construction, and soft) are "far" lower than the all-in cost per square foot of new construction of about $1300 which suggests very high profits. If anyone knows a good figure, please let me know!

I was with a friend from Florida on that bike trip and he said all the new construction reminded him of Florida a couple of years ago. Virtually no new residential construction in Florida today. Prices, of course, continue to tumble there. Each geographic market has its own cycle and rhythm.

Topper: Agree,

Back of the envelope calculations I made indicated builders make 30 - 40% margins at today's prices. I ran this by a small builder I met at a party once, and he said (without getting into specifics) that it's closer to 20 - 25%. So they'll keep building - 2 years to complete a small project, 25% on leveraged money - is a better deal than anything you can get on wall street.

Eric, Thanks.

Any idea what is a "normal" profit margin? Anyone?

Thanks!

totallyanonymous is *absolutely correct* regarding how awful the PATH train is on the weekends. Nobody should move to New Jersey -- to ANY part of NJ, including Hoboken -- unless they really want to live in the suburbs, where it's time-consuming and tedious to get to the city and you only actually go to the city in your free time maybe a few times a year, if that.

So many people I know have moved across the river only to find that the PATH train is nothing at all like the subway. The subways can be crappy on the weekend because of construction, I grant you, but at least they run.

Whereas on the PATH, if you are coming home on a Saturday night after midnight you really have to figure it will take you at least two hours to get home, because the train doesn't run very often and when it does, the various lines are combines into one slow, backtracking local train.

It's hideous.

As for Jersey City, it's not ever going to rise to the level of Hoboken, at least not in this real estate cycle, Maybe in another 25 years.

As a former long-time NYC resident, and now JC resident of 1 year - I feel I must speak and provide additional context to this thread.

First, it is pretty much unanimously agreed that the Trump Tower in JC is the most hideous, ugliest building in downtown Jersey City. It's an eyesore to me (imho). Finishes are not as nice as what you'd expect from a "Trump" quality name (whatever the name "Trump" should even mean ;) ) There are many buildings in downtown JC of higher quality finishes and similar amenities. Trump does have nice views though, since it is the highest residential tower in the area. But I can def see how it is having issues, charging high $ / psf - as well as having a lot of investors buying places here and not people who are looking to live. Kinda sucks, but what can you do.... Trump is probably the one semi-failed project in the area, since it's ugly, doesn't have central air, and unfortunately is being built during an economic downturn. Maybe in the future it will perk up again.

Second, downtown JC residents, much like Hoboken residents - are a different demographic than the "have to live in NYC" crowdt. Generally speaking, Hoboken is a self-sustaining city. If you live there, you rarely would need to go into Manhattan on weekends as infrastructure (retail, restaurants, etc) is really good. Downtown JC is quite similar, but has more of an urban feel -- Hoboken has a small-town charm/feel. Very different places in my mind. I can't speak much to Hoboken (been there a few times to eat and hangout), but with downtown Jersey City - you can definitely spend your weekends in JC and have plenty enough stuff to do. Sure, it's not NYC, but then again, people living in JC aren't paying Manhattan prices for either RENT or BUYING... Generally JC people I find are people who work downtown manhattan, and now have an amazingly quick commute with a lovely awesome neighborhood to live and play in.

So on the rent equation, you can either be in a new construction 1BR luxury building for approx $2,200 - $2,500. Or if you prefer a walkup rowhouse/brownstone type, for approx $2,500-$3,000 you can get a 3BR, 2 BA. Some friends of mine recently signed a lease for a 4BR / 2BA for $2,500 - just 3.5 blocks west of the Grove Street PATH - it's two floors, and it even includes a backyard (for grilling) and a washer/dryer in unit. There is tremendous income savings here: First, rent is ultra-cheap. Paying under $700 each for your own bedroom, and only a 7 minute PATH ride to WTC or 18 minute to 33rd Street is absolutely a bargain. You also save on the fact that you don't pay NYC income tax. Bottom-line, you get way more for your money in jersey city.

If one does the math, you can either pony up well over $1,200+ to probably share a bedroom with somebody in Manhattan or you can spend practically half that and have equally as good commutes (to some parts of Manhattan) as people living in NYC. I work downtown Manhattan, and my total door-to-door commute is only 23 minutes. It's an amazing commute, coupled with the fact that I'm actually able to own real estate in JC. The amount I paid for almost 1,000 square feet new construction loft (floor to ceiling 10" foot windows), could probably get me a 450 square foot studio in Manhattan, in an older co-op type building with no amenities, no washer/dryer, no sunlight, etc. But I'd be in the city, one could argue... again, it's a trade-off. Buying a place in JC generally runs $500 - $700 psf, which is a bargain compared to Manhattan, and these are for new construction luxury places.

Of course living in Manhattan has its privileges - I would never argue agains that - namely convenience, location, and obviously a lot more things to do. But for others who don't necessarily are out partying until past 1 or 2am in the city on weekends, then downtown JC is an excellent place to live, to work, and to even settle for the long-term. If one were to ever visit Grove Street area of downtown JC, you would see that the area is extremely pleasant and beautiful (esp. near Hamilton Park, and Van Vorst, where many a NYC friend has commented that it has a West Village feel, esp. with all the beautiful brownstones and townhouses).

Let's just mutually agree that, yes, Manhattan commands a higher premium, but these outer-Manhattan areas like JC, LIC, Brooklyn, all have their own appeal and their own little and great neighborhoods to hang and play in. Oh, and except for Trump - hideous and no demand! :)

patients

dco are you a doctor?

"Whereas on the PATH, if you are coming home on a Saturday night after midnight you really have to figure it will take you at least two hours to get home, because the train doesn't run very often and when it does, the various lines are combines into one slow, backtracking local train. "

Well said. My personal take is, JC and Hoboken leave a lot to be desired for anyone who isn't rush hour in and rush hour out (which to me is a painful life). Other times, that commute can be horrendous (thats usually when I've had to go). Its great that they have this community all their own, but so do lots of places further from NYC and even cheaper...

DCO - "I don't have the patients to explain or strength in my fingers."
...or, apparently, the vocabulary.