News
Some See Economic Opportunity In Downturn
By John Burton
RED BANK - With the economic downturn it seems the more cautious owners have taken a let's wait and see approach before venturing into any new and substantial capital projects. To drive that point home, all one has to do is look at agendas for the borough planning and zoning boards, which were for some time, often brimming with large commercial applications. Now, those same meetings are often cancelled for lack of an agenda or have relatively small lineups of applications.
But there are those that see this as an opportunity to move forward with some ambitious plans, and for one developer to try a different tack for a project already completed.
This week, the planning board approved an application to allow the Sourlis family to move forward with their long-planned addition to the Galleria, a Bridge Avenue development that houses retail, restaurants and office space. The new project would construct a 358-space, partially below grade, multilevel -parking structure, with two levels of office space sitting on top Last week, the Oyster Point Hotel, 146 Bodman Place, completed a multi-million dollar renovation project, which, according to the project manager, actually came in under budget and ahead of schedule.
Next could be the long planned addition to Navesink Harbor, the Riverside Avenue retirement community, where officials are hoping to gain borough approval to add floors onto the already approved six-story project intended to occupy a neighboring property overlooking the Navesink River.
While these clearly are difficult times and reasons to be cautious about big outlays of cash remain, local land- use attorney Martin A. McGann Jr. said he would advise developers that business opportunities are plentiful. "It's a good time when the economy is on its back," at least from a planning perspective.
McGann was the lawyer for the Galleria project, and in the past has represented a number of large projects in the Red Bank area. He will soon appear before the zoning board on behalf of the Community YMCA of Red Bank, which is proposing an addition to its Maple Avenue facility. That hearing is scheduled for early June.
Significant commercial projects can take in excess of one year to gain board approvals and to collect the requisite permits and bids for contracts. "From the standpoint of your approvals, it's probably a good time generally, when the economy is flat, to get all this work done, get it out of the way," he explained. "So when you start to see things turn you're ready to get the shovel in the ground."
It is easier to get time before the appropriate board, and it's easier to get the professionals, such as engineers and architects, if their business is slower, he observed.
Kevin Barry, the project manager for the Oyster Point renovation, said the owner, JP Barry Hospitality, took the approach of "being optimistic in a pessimistic time."
Knowing winters are generally a slower time of the year for the business, and realizing that this winter may well be less busy than previous winters, they thought it would be an appropriate time to undertake a planned facelift. Initially the plan was to replace windows throughout the hotel, but then decided, "If we're going to rip off the face of the building," Barry said, "Why not reinvent the hotel?"
The owners spent roughly $3 million to completely renovate the hotel's 52 guest rooms and six suites, the banquet facility, much of the lobby and main common area. "We gutted it," Barry said, "started fresh, new walls, new carpet, new windows, new furniture."
The hotel finds itself in a good position now as it enters its traditionally busy summer and wedding season. "We'll be in full position to take off when the economy comes back up," he said. "Which hopefully, is looking a little bit better."
PHS Senior Living, Inc., a Princeton-based firm that owns and operates 26 adult communities throughout New Jersey, acquired what was then called the Navesink House, in July 2006.
Since then the upscale senior facility, 40 Riverside Avenue, was rechristened Navesink Harbor, to be marketed as more of an active adult community than a retirement home. Now it is being re-branded again as The Atrium at Navesink Harbor.
With the new name is a new plan, where, according to Gary Puma, PHS president and chief executive officer, the company hopes to gain approval to place an additional six stories onto the proposed six-story project, with plans to have 84 units in the addition.
The project would cost approximately $23 million dollars to build.
"The market is changing right now," with real estate, "bouncing along the bottom," observed Puma.
"Probably there is no better time than now," with interest rates low, he said of this firm's plans to spend that kind of money.
"Look, we'll get out of this," the current economic malaise, Puma said, with confidence. "The time to get out of it will take a little bit longer. But we'll get out of this."
His company, by March saw its best quarter, "in many, many years," he noted, adding that the over 75 population is growing, and staying healthier and more active than ever before. But ultimately the increase, "says something about the strength of our organization," he said The existing structure has been undergoing a significant renovation over the past few years as well, which expanded and renovated the units and eliminated some of the smaller ones, going from 139 when PHS took over to 79 when that project is completed, according to Puma.
PHS has contracted with the PRC Group, West Long Branch, to purchase property across from the site, on a triangular parcel situated between Riverside and West Front Street. That property, he said, eventually would be used for valet parking for residents and guests.
The facility, "is just a fabulous resource," allowing residents to remain in the community connected to friends and families, and with access to much at the facility and in the community at large, Puma stressed, noting his mother now resides there.
For the property owners of the Metropolitan, a recently constructed condominium development on Wallace Street, the situation is a little bit different, as the owners, faced with a soft real estate market, take another tack.
"The market is challenging right now," acknowledged Christine Segalini, a spokesperson for the property owners, Pyramid Property Partners, Woodbridge. So, instead of reducing the price of the units, the owners have designated a number of the development's unsold units as rentals.
With some of the site's 37 units sold and occupied, it would undermine those people's investment by "slashing prices," on other units, Segalini said.
"These people feel the value of the property deserves to be respected and be protected," she said. "And that's part of the developer's responsibility."
The site is an upscale development offering a number of amenities including concierge service. And while, Segalini didn't say what it would be, she did note, "The pricing for the rentals is reflective of the level of construction and design of these residences."
Pyramid conducted an auction for available units in January. But when faced with offers lower than hoped for, pulled the plug on it early in the process. At that time Steven Schultz, Pyramid managing partner, said following the auction, others purchased seven units, though, at the time he declined to say what was the selling price.
Schultz said in January he hoped to sell 11 units by the end of that month.
But given the market conditions, this rental proposal is a viable option for now, Segalini explained. "The market is what it is and developers who adapt to the market, but with the mindset of trying to keep the best interest of residents in mind, is just the reality of the situation," she said.
In his professional career McGann said he has seen three similar cycles, of boom and bust, in the early 1980s, and again in the late '80s and early '90s, and now. It is sort of like a train chugging up the grade and then gains speed.
"Things will start to turn gradually and pick up momentum," he expected.
"What you want, is to be there when the momentum picks up," he said.
