nj real estate

The Tale of Two Cities, and Their Developers

A Conversation With Paul Silverman & Lawrence Bijou About NJ Real Estate

Hoboken and Jersey City are two cities that have experienced a great deal of growth thanks to the work of developers like Bijou Properties and Silverman. Like each city, each of these developers has something different to offer their respective communities, so we sat down with Lawrence Bijou and Paul Silverman to pick their brains about development and what they thought of their neighboring municipality.

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What motivated you to get into real estate development?
Paul Silverman: My brother invited me to invest in a building with him.

What building was that?
PS: Sussex St., 120, 130 Sussex St. I was running my dad’s trucking company at the time. My brother [Eric Silverman] had gotten out of college and wanted to get in the real estate business so he found an old building in downtown Jersey City, but didn’t have the money to buy it since he just got out of college. So he asked me to be his partner. I put up the money and did the office side of it while I was still running the trucking company, and Eric did the real estate. We rehabbed this old, rundown building, put our hearts and souls into it – fourteen units and a commercial storefront – and after a year of rehab we had a beautiful building. We put a little ad in the New York Times and in three weekends rented all fourteen apartments for crazy rents—it was amazing. That was 1981 and that became our formula: take crappy rundown buildings that nobody else wants, then fix them up, make them beautiful, and make neighborhoods out of them with the storefronts, events, the art shows, the culture, and education. That’s our company tagline, “Building Neighborhoods.” So much comes from my mom who was a big entertainer all the time. She always had friends over, real hospitable. That’s what we’ve kind of applied to our business model, to make a beautiful place to live, not just a building, but a whole experience. So it’s fun to do and very rewarding.

What do you find to be the most difficult aspect of real estate development?
PS: A lot of it is difficult. There are so many moving parts in the whole thing, between finding a property, designing it, getting acceptance and approval from the community, the planning board, historical commission, city council, all the levels of government, financing it, and then building it and filling it. Every step along the way there are so many stumbling blocks, but like most entrepreneurs, you just keep fighting until it happens, and when we complete a project, my brother and I sit there and go, “Wow, how did we ever get that done?” There are a hundred things that could go wrong, to have it not finish, and you see that all around the city—unfinished construction projects, a hole in the ground, a building that’s halfway done, a building that took five years to build instead of one year. So it’s difficult everywhere, but you just keep plugging at it.

You primarily develop Jersey City. Is that a conscious decision or is there something advantageous about Jersey City?
PS: Jersey City is the perfect place to do real estate development. It’s got such a mix of everything, between diversity of the citizens that live here, the proximity to one of the best cities in the world New York City, the transportation, and the opportunities here because you’ve got spectacular, beautiful buildings with empty lots or abandoned buildings next door. It’s really a model for real estate development. I attend a national real estate conference in Washington D.C. every year and huge developers from all over the country talk about Jersey City and that model of what we’re doing here, so I think it’s the perfect place for development. We got lucky and found it. Our family’s business roots are here. Our grandfather started in the trucking business, 1935 in Bayonne, our father 1950 in Jersey City, so we’ve had these Hudson County business roots. That’s kind of what attracted us to the area, but then we found we had a great place to develop. Another big thing with Jersey City, being so small relative to New York City, is that Eric and I make a difference. With our little 99 unit building here or 25 unit building on 10th St., those little buildings make a difference to the community, whereas if we do this in New York City it’s nothing, we’re like a speck of sand. Here, we’re a force and although we’re small, we can make a difference in somebody’s life. The charities here, New City Kids, whom I’m involved with helps these kids get to college and you really feel like you’re contributing. The school system is manageable – 30,000 kids instead of hundreds of thousands of kids – so we really feel like we can make an impact here. That’s what is so worthwhile about it.

Have you noticed any new trends in development, something that stands out in your mind that has really changed over the years?
PS: Something I see changing is empty nesters moving to Jersey City. Our attorney of many years, she and her husband raised two kids out in Madison, sold their house and are now renting an apartment from us, here at the Schroeder Lofts. They’re in their late fifties, early sixties, both attorneys, she works in the city, he works here in New Jersey, and they’re renting an apartment from us. We’re seeing so much of that, where the parents or grandparents are moving to Jersey City and getting an apartment near the kids. We have a professor from Penn State who got an apartment from us in Hamilton Square. His kids live in Hamilton Park, so instead of sleeping on their air mattress, he bought an apartment and he’s here every month. So we’re seeing more of that, not just the kids coming in. That’s a trend we’ve noticed in the last year and a half or so.

What are your thoughts on gentrification in Jersey City?
PS: Well, it’s happening. All of our neighborhoods are gentrifying and I think it’s a great thing. It brings stability to the community because you’ve got ratables where there were empty lots and empty buildings. I think we are sensitive to not kicking out people that are here already. We only buy empty buildings. We’re careful to do these restorations of old buildings rather than buy a building, kick out all the seniors, kick out all the people living there. That’s something we all have to be aware of, to make sure we keep the diversity here. You don’t want to just have new residences, you need people who have been here a long time to keep the character of a neighborhood. I think it’s a good thing overall.

Thinking ten years ahead, which of the two markets will actually be higher when it comes to property value, overall living, and affluence?
PS: I think Hoboken will always be a little bit more expensive than Jersey City because it’s so much smaller and condensed like that. I think you will find some rentals in Jersey City that surpass Hoboken, but small pockets of it. It’s never going to be as much as Hoboken. We will have a $3 million condo that will sell, whereas Hoboken will be $2.5 million, and we’ll have an $8000 a month rental whereas Hoboken’s will be $6000, but Hoboken will have more of the $6000 rentals while we’ll only have a handful of them. So there is greater diversity. But you see it. We have a $5000 rental now, it’s amazing. Our average is not $5000, but we have a family that’s renting a huge apartment, paying over $5000 a month which is great. Their kids go to school here, it’s just delightful. So, I think, comparatively you will see Jersey City surpass Hoboken with individual sales and rentals, but not on the overall scale.

What’s your favorite building that you’ve worked on so far? What’s the most iconic for you?
PS: They are all so unique. That’s the thing, we build really unique projects and we don’t say, “Well, that plan worked here, let’s build it there,” because we work with existing footprints. This building where we’re sitting, the Majestic was an amazing combination of everything, from historic rehabilitation for the facades here — which are certified historic by the Department of the Interior National Park Service — to new construction for the condominiums here, digging out of the ground, rentals of apartments, sales of condominiums, restaurant space, office space, and commercial space. As small as it was, it was really a combination of everything. Then across the street, Charles & Company, the site we put together over nine years, getting all those parcels of land together, then two years ago broke ground building this great mixed use building where we have ground floor retail space, second floor office spaces, including coworking space, and 99 rental apartments upstairs, ranging from little studios to gigantic three bedrooms, so again you get that diversity of residences too. They’re all fun. We redeveloped Hamilton Square, took an old abandoned hospital complex, and turned it into a residential and retail space. It’s a great neighborhood, the park is beautiful, with fourteen really interesting retailers. A pharmacist, Victor Mosquera who grew up in Spain was the first kid of his family to ever go to college. He went to Rutgers Pharmacy School at night, bought the existing tiny Newport Pharmacy, then moved into our building. He now fills 75,000 prescriptions and has 16 full time employees. What a story. There are just so many stories like that. We have fifty commercial spaces and everyone of them can be a magazine story.

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What motivated you to become a real estate developer?
Lawrence Bijou:
I actually worked in New York real estate for 18 years, so I have a background in real estate. I wanted to start my own company, was able to raise some capital, and then I set out to find a place to set up my business. I had some connection to Hoboken. I was familiar with the US Testing Building because I used to represent the owner of that company. They had wanted me to give them a quick idea of what the valuation would be but I lived in Manhattan at the time and I had no idea I would be setting up my business. So when I came back ten years later—they had sold it—I was driving by and remembered that building and I asked the broker who was representing me, if the seller would be interested in selling it. As it turns out, they were. They turned it into an old parking garage, so that’s how I got started in Hoboken. That was in 1999. So we’ve been operating successfully in Hoboken for over fifteen years. I’m also conservation minded, so the LEED process, and the green building aspects of development really interest me. We are community based, so rather than bottom line driven—we don’t have shareholders or anything like that—we try to reflect what the community is about.

How do you choose projects, taking all that into consideration?
LB:
I’ve been accused of playing monopoly here in town, but at one time, we put together several blocks of real estate on the north end of Hoboken. When I came here at the end of ‘99, early 2000, and we set up shop, there was very little development north of Fourteenth St. Toll Brothers was coming into Hoboken at the time – they did the US Testing Building – and I assembled two or three blocks of real estate. We had the US Testing Building which was called Park on Park, a parking facility and my neighbor was the Hostess Building. That was built in the late 1890’s and the owner couldn’t develop it because he had no parking, so he said, “Look I’m some odd 80 years old, why don’t you just buy it from me.” And that’s how it started with that—a little happenstance, a little luck and we were in business. Then I went next door and I bought the Philippine Dessicated Coconut Building. That became the award winning Garden St. Lofts. The parking garage is now Park & Garden and will be completed in May of this year.

All of those properties were adaptive reuse?
LB:
Yes, except for Park and Garden. The Hostess Building we restored, saved all the brick, took all the mortar out, it has a fantastic green roof on it, which is about 20,000 square feet, a portion of which we use as a market garden.

Do all the Bijou building have green roofs?
LB:
Yes, with the exception of Edge Lofts. We have a solar ray there. We were able to achieve a platinum designation by the US Green Building Council, which is the highest gradient you can get. A super energy efficient building. You have to have a third party consultant to compile all the information, everything that goes into the building, and oversee the whole thing. We used the Steve Winters Group out of New York, the biggest in the region, I think.

Have you noticed any developing trends in the real estate market over the last few years?
LB:
If you’re a green builder, you have a different bent on life, you’re looking for those trends. The Mayor is trying to make Hoboken more walkable, and bicycle friendly, so that it’s a really user friendly place. Hoboken is attracting all kinds of different people and tenants. It has everything a big city would have but condensed to a mile squared. There is always room for projects here. There’s not a lot to be had, and you have to choose them carefully, but when the light rail went up, it just revitalized that whole area. The Mayor and her staff are really concerned with open spaces so you can’t just have development, you need open space. We have some nice parks now and a lot more coming our way, so it adds to the feeling of Hoboken. Everyone likes sunlight and open air, and dog runs. It’s part of every building’s DNA now—you have pet rooms, pet baths, and some people have dog walks on the roof of the building. We haven’t gotten that far yet, but all our buildings are pet friendly.

How do you approach gentrification when you develop? How do you connect with the community?
LB:
One instance of what we did is in the area where we have Garden St. Lofts. The north end of Garden St., off of Fourteenth was cobblestone, so we asked the city if we could close it down. The city agreed and we restored the cobblestone street. Now, every weekend from June to November we hold the Family Farmer’s Market. Everybody comes out for that and it’s a big success. People want to come out of their buildings, you can’t just have residential development in and of itself. All our retail, all our uses are community based. Education is really important too. Our city is growing, so the public schools are gradually getting better. Now we have charter schools and they are impacted because they can only operate in certain buildings, many of which need to be updated, so we made a deal with Elysian Charter Schools and they’re coming into Park & Garden. We signed a lease with them for 35,000 sq. ft. They’re going to have a gymnasium which the building will have access to as well. So that’s novel. In a truly mixed use building you can put a lot of different uses with- in them other than the traditional stuff. It’s just a different way of looking at housing. These are also livable healthier buildings which constantly evolve, are super energy efficient, and very inexpensive to live in.

Where do you see Hoboken ten years from now? How will it grow and evolve relative to cities like Jersey City? Which will be more affluent?
LB:
Well we’re confined by space, so it’s different from Jersey City which is pretty much the size of Brooklyn. They have room to grow there. We are constrained by size and geography. Geography has a lot to do with the way an area gets developed. We have historical neighborhoods which are saved for future development—nobody will be tearing those down. There are areas that are industrial based which are changing. They are slow to change, but they are changing. You will still see change here in Hoboken, though there is not a great deal of land left. Will we be tearing down buildings to build higher ones? I have no idea, but that may be something in the foreseeable future, as our population grows. People want to live in cities. What prevents a city from growing? No transportation. If you are relying on a car and sitting on the highway waiting two hours to get to work, or you’re commuting from the suburbs to get to work and suburban transportation is not that great. Hoboken is ten minutes from the New York City. What better place to live and work? It’s hard to find that dichotomy and still be outside New York City.

I think the cities that thrive are the ones that are more diverse. If taxes are higher, that’s not necessarily the answer. The answer is to have affordable living. You can’t let it get out of hand where you’re paying crazy taxes to live somewhere. It’s high but not out of control here. By making the city diverse and having a good mixture of different types of housing, retail amenities, and venues outside of buildings that people can utilize and have access to is what makes a place good to live in.

What’s your favorite property that you’ve worked on?
LB:
Park and Garden is interesting because I owned that property for ten years. It’s interesting for me to see how a building comes together and how you can make it into something more than just bricks and mortar. I also like restoring older buildings and saving them. That’s something you can look back on and say that you’ve really had an impact on the way the city turned out.