THINK THERE'S NO NEW multifamily product coming out of the ground this year? Then visit the Monaco on Jersey City's Gold Coast, Roseland Property Co.'s 524- unit, luxury twin towers that will open for leasing in February (the grand opening is later this spring).
After closing a construction loan in November 2008, Roseland and its development partners— Jersey City, N.J.–based waterfront development specialists Garden State Development and Secaucus, N.J.–based Hartz Mountain Industries— began building in earnest to take advantage of lower material and labor costs.
“We're coming out at a time when there is little, if any, new construction and where luxury rental is probably the single most desirable asset class in the industry,” says Roseland partner Carl Goldberg.
“People thought we were insane borrowing money for construction in late 2008, but sometimes good timing is better than good sense."
Good terms don't hurt, either. The $214 million construction loan, financed primarily with PNC—and Regents Bank, J.P. Morgan, Key Bank, Capital One, and T.D. North syndicating—carries interest of LIBOR plus 250 basis points with a February 2012 maturity and an equity take-out that activates on issuance of the community's certificate of occupancy. The 2012 maturity gives Roseland roughly a year to establish cash flow from occupancy, a prospect that's not as daunting as it seems, even with the company targeting luxury rents starting at $1,600 for studios and $5,300 for three-bedroom penthouses.
“I'd like to get 35 to 40 apartments leased per month. I don't think that's unreasonable,"
Goldberg says. “This is the only building that has been started since 2008 and the only building being delivered, as there is still an imbalance here between supply and demand."
Helping to attract applicants to the Monaco are a suite of amenities, including concierge and valet services, a club room with billiards, movie theater, heated outdoor swimming pool, fitness center, dog run, and children's playroom.
Even better is the Monaco's location on the Hudson River waterfront, off ering sweeping views of the New York City skyline, adjacency to the Pavonia/Newport PATH station just two blocks away, and easy access to both Hoboken and the Holland Tunnel.
“In many ways, the Gold Coast operates like the sixth borough of New York,” Goldberg says. “But for the same amount of services, amenities, and access to mass transportation, you get to live in Jersey City at a significant discount."
Across its portfolio, Roseland is currently getting $40 to $42 per square foot in Gold Coast rent while the firm's comparable buildings in New York City get in excess of $70 per square foot. Occupancies are steady, from 95.5 percent to 98 percent leased, all of which points to a positive lease-up at the Monaco.
“We are really excited about the timing of the Monaco,” Goldberg says. “We believe this building is going to get the highest residential rents heretofore found in the state of New Jersey."