The Art of Real Estate

I love running. In fact, I am training for the NYC half-marathon this July (wish me luck getting selected by the lottery). I also love cool-looking buildings. What is the connection between these two seemingly unrelated facts? When I run, I love looking at buildings and getting to know neighborhoods on foot. Running gives you an advantage, because you get to cover more ground than when walking. I absolutely love taking new streets as I run and checking out buildings, new and old, and fully breathing in each neighborhood’s character. I live and work out of downtown Jersey City (Hamilton park), where there are a ton of little neighborhoods, all with a distinct personality. I am still pretty new here, and the weather is only now starting to be a bit more fit for outside runs (except for tonight), so I am aggressively canvassing the neighborhoods.

I was running by this very cool building yesterday on 2nd st. and Luis Munoz Blvd (see picture). It looks like an updated spin on a old industrial building. And although residential industrial-looking loft buildings are anything but a new concept, lofts captivate my attention like nothing else. This building is gleaming and new, but fits into the local landscape.

The condo market is a bit overbuilt on the riverfront, so when I see new buildings going up, I wonder how these units will get sold, especially in this market. I looked at a couple of units a year ago (I didn’t live in Jersey City then) to turn in to luxury rentals, but the financials didn’t make sense. Would be interesting to see how these riverfront properties have fared in this market, and if the financials make sense for an investor (I guess I have some investigating to do). The Waldo Lofts, however, stand distinctly apart from the other new construction.

This building stayed on my mind and I had to do some research. This building sits in the Powerhouse Arts District, which is set a couple of blocks inland, between riverfront and historic downtown where I live. I always wondered why it was called that. Digging around uncovered a New York Times Article that talked about the project in May of 2006, before it opened in September of 2006. Turns out that the Powerhouse Arts District (PAD, as I will now refer to it – I hope I get to be the first one to coin it!) is an 8-block warehouse district, currently being redeveloped as an artist-centric district. The basic premise is that a thriving artist community is good for the neighborhood and for real estate, as it raises the “coolness factor” and yuppies start to move in to be close to the artists. Usually this movement develops on its own, but in the PAD example, artists are being enticed to move and congregate around a particular area. Apparently, there is a fairly large artist community in Jersey City already.

Waldo lofts took this approach to new heights and installed industrial features into its brand new lofts, as well as set aside seven of its lofts to be sold below market value to artists who are certified by the city’s Arts Commission (this is actually required by regulation in every arts district building).

As I checked out the NY Times Real Estate section today, I came across another such endeavor in Dumbo (Down Under Manhattan Bridge Overpass in Brooklyn, for those not from around here). Two Trees Management, a father-and-son team of developers, owns 3 million square feet of real estate in Dumbo, are subsidizing rents for artists and art organizations, and have attracted over 1,000 of them. Like the PAD effort, this is designed to add value to the neighborhood, based on the basic assumption that yuppies follow artists. Unfortunately for the artists, this seems like a temporary offering: after the area gets sufficiently gentrified, these rents can no longer be guaranteed to the artists. So if the artist doesn’t mind moving, initiatives like these help him/her afford city living, amongst pricey real estate. I should have studied urban planning / development!

Update: Turns out, other people have used the PAD abbreviation. So I didn’t get to coin the term. Oh well… Better luck next time!