Falcon Negotiates Joint Venture with Hovnanian Enterprises for Jersey City Development
Falcon Real Estate has entered into an agreement, on behalf of one of its clients, to form a joint venture with Hovnanian Enterprises of Red Bank, New Jersey. Hovnanian Enterprises is a publicly traded company that is one of the largest homebuilders in the United States and the largest homebuilder in New Jersey. The purpose of the joint venture is to construct a 38-story condominium tower containing 420 units on the Hudson River waterfront in Jersey City. This development will be immediately across the Hudson from Lower Manhattan, and will be just steps from the new Goldman Sachs Tower in Jersey City. This condominium tower, at 77 Hudson Street, is being built as part of a joint development agreement between Hovnanian and EQR Residential. EQR will simultaneously erect a 464-unit rental tower immediately behind the condominium tower. The two towers will be built on top of a 10-level parking garage that is being constructed for use by both buildings, together with 25,000 square feet of retail space on the ground level.
Jersey City has experienced rapid growth in recent years fueled by the very high price of both office and residential properties in Manhattan. Many firms, such as Goldman Sachs, J.P. Morgan Chase and others, have moved substantial parts of their operations across the Hudson River from the Wall Street area of New York City into Jersey City since real estate and operating expenses are much lower in New Jersey than in New York. At the same time, the residential condominium market in New York soared, with the average price of an apartment in Manhattan exceeding $1 million in 2005. This has encouraged a tremendous amount of apartment and condominium development immediately across the Hudson in New Jersey, where condominiums will sell for about 50% of the price that would be paid in Manhattan. Jersey City is especially well situated to benefit from both of these trends since it has superb transportation links to Manhattan, including railroad, bus, auto and ferry service. As a result, Jersey City has quickly emerged as the largest and fastest growing city in the State.
The land on which the two towers are to be built was acquired by Hovnanian and EQR from Hartz Mountain Corporation. They will jointly construct the parking garage and retail space, as well as an amenity area on the roof of the parking garage that will serve both towers. It is expected that a condominium interest in the retail area, when leased, will be sold to a third party. Total revenues from the sale of all the condominium units in the building are anticipated to exceed $350 million.