Condo projects into rentals

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?

21 thoughts on “Condo projects into rentals”

  1. River place is indeed completely occupied. But our manager let us know that this may change over the summer when many of the residents will be moving into their new condo’s at skyview. Currently there is a 12 person waiting list for 1 bedroom units. Not sure about 2 bedrooms though.

  2. I’m trying very hard not to say I told you so….The Esperanza debacle in Asbury Park is the poster child for renovation gone wrong. The gay community was doing a great job re-doing the city block by block until that albatross got started (or re-started) a couple of years ago. This is what happens when you trust your renovation plans to big developers with big ambitions seeking big profit margins, and this is exactly what is unfolding in Rahway. Economic conditions change, and suddenly the hip loft condos which should have lifted everyone’s property values are converted to rentals with the stroke of a pen. Hoboken as I understood it happened block by block, building by building until the recent past when the big boys started piling on with Maxwell Place, Hudson Tea, etc. It seems to me that Skyview soaked up the demand for condos in Rahway and now these other projects are stalling because the condo market is under extreme pressure for as far as anyone can see. What kind of rents do the developers think they’ll collect on these projects? If they cross the $1500-1600 threshold, I’ll take Hoboken or a nice place in JC thank you very much, and have a much shorter NYC commute.Mark, thanks for sharing this information in a “fair and balanced” way. If in 4-5 years I’m in the market for city-like living, I’ll do some bargain hunting in Rahway.

  3. Yeah I’m in River Place and have notified of the waiting list for the apartment as well. I think that’s a great sign of the demand for people wanting to live in Rahway, even at luxury prices. Although you might not be willing to pay those prices NCR, it seems like everyone else is.If anything these converts to rentals will only help the condo market. As a Skyview owner, I was worried about the influx of condo inventory that would put pressure on the value on my condo. However, knowing that all these buildings going up are rentals makes my investment look even better.Thanks for the news Mark!

  4. I understand that the slow down in the housing market has put a damper on new condo projects at this time. What I don’t understand is why Rahway needs to push through with all of the proposed redevelopment projects right now. Developers having a hard time obtaining financing for approved condo projects? Maybe they have to sit it out for a few years; when the market picks back up they can proceed as planned with the condo development. I think Rahway will benefit from a good mix of condo and rental units, but I’d rather see things slow down and again, done right, than suddenly see hundreds more planned housing units suddenly switched over from condo to rental units because we’re going through a slow patch in real estate. Those decisions are long-term, and shouldn’t be made in response to short-term market conditions.Anyway, with respect to the property owner hold-outs (Block 379, Lots 1, 5 and 8) I’d like to see the city step up and muscle these eyesores out of the hands of the slumlords who apparently own them.

  5. Doesn’t Rahway have enough rental units in relation to owned units?I agree with Matthew about slowing down instead of haplessly going ahead in the maybe wrong direction.Maybe the builders could rent out the units until the market picks up.

  6. I noticed that the Lofts at Rahway Station came off the MLS a couple of weeks ago, all at once. I have no idea if they all sold out, if the listings expired (seemed kinda early for that) or if the developer is deciding on other options and pulled them off. The photos seemed nice and the construction appeared solid but the price was steep – 1 BRs in the mid to high 300s, even 400s. Mark (or anyone else) – do you have any info on what happened there?

  7. that’s the one,I also heard they are suppose to tear down the buildings next to them. They found out the structures couldnt handle the added floors or something like that. The elevations I saw looked pretty good-a version of the buildings there with balcony’s etc. I just hope they start the new parking garage.Arent those Dornoch guys suppose to be building it also?

  8. I was curious about those lofts. They even pulled the floor plans off of their sites but I always thought it was because they were sold. They are the ones right next to the elevated rail. I’ve heard that the section was going to get re-done but does anyone know what’s going on the with other buildings on cherry street that are abandon (beverage shop and other)?

  9. Alexis the beverage shop and the ones next to it are going to be torn down and rebuilt to i think 3 or 4 stories. Those where the ones I was speaking of before. Anyone know whats happening with the buildings on main st next to the townhouse pizza?

  10. thanks Kevin,if the beverage shops and all those buildings are going to be torn down, is Taste of Portugal going to move or just close? Does anyone know?

  11. Alexis – I spoke to the owner of Taste of Portugal (Dominic) back in Jan/Feb and he said that Taste of Portugal was waiting to move around the corner, into the ground floor of The Lofts building, where there is that empty space that looks like it was a cafe at some point (I’m sure someone else can comment on what that used to be, but I don’t know).There was some hold-up that was delaying the move at that time, but I know that was his plan. So I hope that’s what will happen when/if the current building where Taste is located gets torn down.

  12. The guys that owned the cafe “eat to the beat” had it first in the loft corner spot.They moved to the spot where the tase of portugal is now.Everything reverts back to its past I guess!!!!!

  13. If this were an episode of the A-Team, the Renaissance developers would do all they could to rough up the owners of the land standing in the way of progress…. the A-Team would get brought in, and the owners would get to keep their land while the greedy developers were hauled off to jail. Somehow thousands of rounds would be fired from automatic weapons yet nobody would get more than a scratch.Scott, how do you figure the rental conversions are a boost to your Skyview purchase? The Heartstone developers with their clever marketing teams don’t see a healthy Rahway condo market in the coming years, otherwise they would press on as planned – what makes you think that your place will hold its value? New development attracts speculation and when those speculators start to cut their losses and exit, the comps for everyone go down. I’d rather be the person buying a unit from a desperate speculator in 2009 than someone paying far too much in 06/07. Condo buyers have plenty of options if the Rahway supply is reduced by rental conversions – while it looks like the downtown rebirth is moving along, it’s not a location that compels people to live there.Not sure if this thread is dead… I figured I’d give it a kick.

  14. I ain’t buying no condo, Hannibal!The only way that I could see the conversion of plans for new condos into plans for new rentals HURTING the valuation of other condos is if it brought in undesirable residents and hurt the town as a whole. But frankly, what downtown Rahway desperately needs more than anything is people and foot traffic, to help revive the downtown businesses, which would in turn attract more people as the town gets nicer …If the plans for a few condo buildings change into rentals, I think it will still be a net positive for the town and therefore a net positive for owners in town.But I still think Rahway needs to put the brakes on some of the new development instead of making permanent changes (e.g. rentals instead of condos) based on temporary market conditions. I don’t think a bunch of new development too heavily tilted toward rentals is a good thing – there needs to be a balance.That way, 10 years from now, when Rahway is doing much better, we can all kick back and say “Ah, I love it when a plan comes together!”

  15. Maybe this episode the greedy developers can hire the A-Team…Or get in touch with our friend, Mr. Eminent Domain.

  16. Yeah – if it’s a choice between greedy developers who want to put up new construction and greedy slumlord owners content to keep their property looking like something that belongs in Mogadishu, I’ll take the greedy developers any day. The developers undoubtedly have more available resources to hire the A-Team anyway 😉

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