Development - Ledger - Projects shelved, cut back, delayed

Published in the Star-Ledger, Sunday, December 02, 2007

[See Hughes, Kaplan quotes]

Real estate slump has developers stymied
Perth Amboy, Carteret, East Brunswick slowed

BY SUE EPSTEIN
Star-Ledger Staff

More than $2 billion in redevelopment projects were planned in Perth Amboy, East Brunswick and Carteret, where officials hoped declining business districts and abandoned industrial spots would be replaced by luxury condominiums, townhouses and homes.

But with the real estate boom a fading memory and some housing developers declaring bankruptcy, the grand plans for redevelopment linked to housing have been shelved, scaled down and put in jeopardy. Some underestimated how quickly the housing slump would set in.

"I thought we'd just be going downhill, but we went off a cliff," said Jason Kaplan, president of Kaplan Cos., a developer with multimillion-dollar projects planned in Carteret and Perth Amboy.

In East Brunswick, where Toll Brothers has a contract to redevelop the "Golden Triangle," the formal application for the $35 million project was expected to have been submitted to the planning board already, but the plans have been delayed.

The project would replace a shopping center off Tices Lane, Old Bridge Turnpike and Route 18 with a mix of retail, office and residential units. The site currently includes the Route 18 Flea Market, Jason's Furniture, Sam's Club and the East Brunswick Transportation Center, all of which have leases running through 2008. Toll Brothers now wants to extend the leases until late 2009.

Mayor William Neary said he believes the housing market could have been the reason Toll Brothers has taken longer to file its formal project application.

In Perth Amboy, officials said Kushner Cos., developers of the $600 million Landings at HarborSide project, have delayed the start of the next phase of the project until spring because of the market.

"The question looking back historically is -- were the success stories based on regular market pressures or the housing bubble?" said James Hughes, the dean of the Edward J. Bloustein School of Planning and Policy at Rutgers University in New Brunswick. "We won't know that for several years because this downturn will last several years."

Hughes said he expects the uncertain housing market to continue to decline through 2008 and maybe longer.

"The market is almost paralyzed right now," he said.

Carteret Mayor Dan Reiman and Perth Amboy Mayor Joseph Vas said they are willing to work with developers to tweak projects and make them more marketable in today's climate.

"We have to work to accommodate the needs of the market," Reiman said. "We're fortunate that we have so much going on, not only residential but commercial. We have 13 independent projects. While some have slowed, others have not."

Reiman said the borough worked with Kaplan Cos. to redesign the Gateway at Carteret, the largest redevelopment project in the borough, to reduce the number of the townhouses offered, and their price. The borough also has seen the amount collected from building permits drop $300,000 this year, Reiman said.

Vas acknowledged that effects of the national housing slump have been felt in his city, but he said the impact has been minimal.

"It's difficult to be isolated from a national trend," Vas said. "But I'm confident about what Perth Amboy has to offer."

The next phase in the Landings project has been put off until the spring, and Vas said that the project's developer, Charles Kushner, is taking advantage of the lull in the market to fine-tune the project's specifics.

He said Kushner was examining ways to make the housing units more cost-effective than the first three buildings, so that the development can offer more for less.

Still, Vas maintained that he is not worried by the lagging sales in the national housing market. The first three buildings in the Landings at HarborSide project sold out, and he expects similar success with the additional buildings planned.

Staff writer Allison Steele contributed to this report. Sue Epstein may be reached at sepstein@starledger.com or (732) 404-8085.

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