If it can happen in everyone’s redevelopment mentor city of Hoboken, it can happen in Rahway. It looks like two projects originally planned as for-sale condos will become rentals.
The developer of Station Place has started to look at a plan for 116 rental units instead of 80 condos for the five-story project on a 1.6-acre site on Campbell Street. “Because of what happened in the economy in general, and the financial sector specifically, condos are very difficult to finance,” Clay Bonny of Heartstone Development said at last week’s Redevelopment Agency meeting. “Apartments are very easy to finance.” No major lenders are getting into condo construction, he said, so to keep the project moving, they decided to examine rentals instead.
A recent Wall Street Journal story pretty much confirmed the lending situation, for both consumer and businesses: “Banks continue to get more restrictive in their real-estate lending as the housing bust adds to their losses.”
Heartstone received Planning Board approval in March 2007 (.pdf) for 80 units, so it would have to get approval again for the increased density. Zoning currently allows for 60 units per acre.
The current occupant, A&M Industrial Supply, is under contract to be relocated to Edison, said Bonny. Some minor environmental issues on the property have to be cleared up, he added, so an extension on the closing has been requested through September.
Heartstone’s other project in Rahway, the 135 rentals at River Place, is 100 percent fully occupied for the first time since it opened in 2004, Bonny said.
Renaissance at Rahway was to be a 72-unit condo project on property encompassing the former Triangle Inn. Renaissance has five of the eight necessary parcels under contract so rather than go through what could be a two-year condemnation battle, developers will move forward with 64 rental units as part of a first phase. The second phase could include the remaining units if the properties are eventually acquired, said Joseph Ranieri, an attorney with Weiner Lesniak representing Renaissance. “This project works better under these economic conditions,” he said, adding that it’s not certain they can get financing for the whole thing.
The five-story project, which would include parking on the ground floor, would eliminate and be built on top of a short stretch of Montgomery Street between East Grand Avenue and Monroe Street.
Renaissance has been unable to acquire Block 379, Lots 1, 5 and 8. City Administrator and Redevelopment Director Peter Pelissier said the owners of Lots 1 and 8 are not interested in selling at all. An unacceptable counteroffer was received from the owner of Lot 5, he said, which bifurcates the whole project, so if it sells in the future, it could be added. It’s unclear how many more units could be built with Lot 5 part of the project, Pelissier said. “That’s the economic dilemma,” he said, the land costs versus the number of units that could be built; do you overpay for those or go through a costly, unfriendly sale?