NEWARK, NJ—A long track record of building successful boutique multifamily properties in Philadelphia and its distressed neighbor across the Delaware, Camden, NJ, helped developer Carl Dranoff win the bid to develop One Theater Square, Newark’s first ground-up luxury multifamily construction in more than half a century, Dranoff told GlobeSt.com last week.
“It’s a carefully calculated risk,” says Dranoff. “It’s just a bullseye location, you just can’t get a better location.”
Dranoff Properties, the New Jersey Performing Arts Center, and city officials broke ground last week on Newark’s first luxury living address, One Theater Square. The building is expected to top out next fall, with the first tenants moving into apartments in June 2018, Dranoff says.
The 22-story skyscraper, with a signature curved glass tower, will contain 245 apartments, 12,000 square feet of ground level retail, 285 parking spots and amenities that include: 24-hour concierge service, a state-of-the-art fitness center, club rooms, and an outdoor entertainment space outfitted with soft seating, TV’s and fire pits.
Apartments in the tower will rent for significantly less than comparable properties in the very hot multifamily markets of Hoboken and Jersey City, but with similar amenities and urban access, Dranoff says. The project includes 24 affordable housing units that will be marketed as artist residences, although they will be available to anyone who meets the financial criteria.
“Our rents will be one-third less than Hoboken and Jersey City,” he says. “You’ll be able to rent a two-bedroom for what a one-bedroom costs. Anybody who wants more space will be able to come to One Theater Square and get basically the same walkable location, the same access, everything.”
In an exclusive interview with GlobeSt.com at Philadelphia’s Union League Club, Dranoff explained that his successful redevelopment of the Victor Lofts in Camden, formerly the home of RCA Victor’s record plant, and properties like One Riverside and Symphony House in Philadelphia, gave his firm the credibility necessary to get the nod for the Newark project.
“We’ve constantly been looking for areas to expand into and bring our playbook into,” he says. “We’ve diversified our company, we’ve gone from historic reconstruction to ground-up construction, from midrise to high-rise, from apartments to condominiums.”
Dranoff heard about the RFP for the property adjacent to the NJPAC in 2008, and realized it was similar to the Symphony House project, which was also connected with a nearby arts and culture venue, Philadelphia’s Kimmel Center.
“South Broad Street was not a residential street at all, but we thought we could develop the site, and do a major anchor project, and people will want to live there because they are interested in walkability, arts and culture, it’s lively,” he says.
Located a block from the Kimmel Center, which has some 300 days of performances a year, Dranoff’s Symphony House sold out its condominiums even during the recession, he says.
“So when I saw Newark, NJPAC, and this site, right across the street, not even down the street, I thought, why can’t I do what I did at Symphony House, in Newark?” Dranoff says. “Frankly, that’s why we were selected as the developer.”
Of 20 responses to the RFP, the selection committee narrowed down the list to four, including Dranoff, and when the team visited Philadelphia and saw Symphony House, “they got it right away,” Dranoff says. “They said, ‘This is the guy, he’s got the playbook, he knows how to do this.’”
Certain fundamentals of Newark help ensure the project’s ultimate success, Dranoff believes. The site is a short walk or light-rail ride from Newark Penn Station, which itself is just a 20-minute train ride into Manhattan. Trains from the station also serve the Amtrak Northeast Corridor to Boston and Washington, with Newark Liberty International Airport just 12 minutes from Newark’s central business district.
“Start with the big picture. Fifty thousand people are working downtown every day,” Dranoff says. “You don’t think we can fill up 250 apartments just with people who would like to walk to work?”
The project fits well with the redevelopment of the Military Park area adjacent to the NJPAC, the former Hahne’s Department Store building is being redeveloped into a Whole Foods, with connected retail shops and multifamily developments, and Prudential Financial recently completed a second office tower in the area.
The $116 million project has been realized through a unique public private partnership, which includes contributions from the city of Newark; the state of New Jersey; Prudential Financial; Fifth Third Bank; the developer and NJPAC.
“One Theater Square embodies a vision of downtown Newark more than a quarter century in the making,” says John Schreiber, president and CEO, NJPAC. “This is a transformative moment in a great city’s advance toward an even greater future.”
Plans for the ground floor include 12,000 square feet of retail space. Apartment rents are expected to start at $1,250 for a studio, $2,000 for 1-bedroom, $3,150 for a 2-bedroom and $4,500 for a 3-bedroom.
“One Theater Square is an important step forward for Newark,” says Newark Mayor Ras Baraka. “The pace of change downtown continues to accelerate as our central business district becomes more of a residential, artistic, and retail hub in addition to its strength as a regional business center.”
Dranoff expects to look for other opportunities for development in Newark.
“We think Newark is an undiscovered destination,” says Dranoff. “I see Newark as like Philly was ten years ago.”