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What comes to mind when you say the name “Hoboken” today? A thriving downtown area filled with young, hip residents, high-class retail and 24/7 traffic that rivals areas of downtown Brooklyn. However, that wasn’t the case 10 years ago. National and regional tenants seeking space would first — and in most cases only — look to the suburban centers that were the heart of New Jersey life. Downtown retail areas were seen as lunch-driven areas boasting only five-day foot traffic and not enough parking. Now mainstays like Starbucks, Chipotle and Panera Bread have all made a home for themselves in Hoboken.
What has brought about this change — which has seen Hoboken thrive but also brought about a new era of downtown retail that can be seen in the emerging neighborhoods of Newark and Jersey City?
A prime factor in these areas’ rise to prominence has been the massive swell of development, not only in office towers but in entertainment centers and residential hubs.
The opening of the Prudential Center in Newark four years ago revitalized the area with more than 200 events each year, including home games for the New Jersey Devils. The project was truly the first of its kind in the area and the neighborhood has taken on an air of desirability previously lacking — so much that the Courtyard Marriott this year opened the first ever downtown Newark hotel, which will be home to an outpost of Joe’s Crab Shack.
Retail has followed suit as Dinosaur BBQ, a popular restaurant destination in Harlem for many years, opted to open its second metropolitan area store not in one of New York’s five boroughs but on Market Street in Newark.
This trend will only grow as Newark’s ambitious new mixed-use project Teachers Village gets ready to open in mid-2013. The project, designed to entice inner-city teachers to live and work in Newark, will not only bring new residents to the area but also three charter schools, a daycare center and 70,000 square feet of retail that will further invigorate an area once decidedly absent from most retailers’ radar.
In the case of Jersey City, the strongest retail markets have emerged near transportation hubs like Exchange Place, which have become increasingly important as homeowners stung by the recession have turned to rental properties like Hartz Mountain’s new 1,000-unit residential complex at 99 Hudson Street. These residents aim to simplify their lives by being able to walk to their place of business and to convenient transportation at two PATH stations and a ferry — all of which travel to and from downtown Manhattan. In addition, a light rail service that travels north and south along the New Jersey coast has seen a steady increase in ridership. This developing transportation hub further strengthens the neighborhood. And, like its counterpart in Newark, the neighborhood now warrants the type of seven-day amenities that will satisfy its growing population.
Several of our tenants are currently looking in these markets, including Wendy’s and Chipotle — brands that in the past had sought out suburban retail sites as they weren’t convinced downtown markets had strong enough residential markets to sustain more than a five-day business.
The confluence of growth in downtown areas and dwindling suburban retail stock has created a perfect storm for retailers to consider areas like Hoboken, Jersey City and Newark and to thrive in them. The retailers in these markets compare rents against their sales volume and find they’re getting a good deal. That window of opportunity is open but getting smaller. It’s no exaggeration to predict five to 10 years from now, all three cities will be teeming with good tenants at rents 50 percent higher than those you see today.
— Daniel Spector and Tyler Bennett, senior vice presidents and founding partners of Winick Realty Group NJ