South Jersey's Biggest CRE Names Forecast A Turnaround For The Area

According to some top movers and shakers at Bisnow’s fifth annual Future of South Jersey event on Tuesday, the area has a bright future that is only just beginning to take shape.

The mayor of the struggling Atlantic City, Donald Guardian (above, center) spoke of the sweeping improvements the city has made to pivot away from being made only for gambling and appeal more to Millennials.

“Bringing a university, corporate offices, retail spaces and second homes is where Atlantic City’s future is,” he said.

As for higher learning, Stockton University has broken ground on a 500-bed dormitory for a location in the city and will be able to admit 1,200 students in its first class, and Rowan University has had discussions about an osteopathic medical center and a coastal resilience research institution.

“Having advanced educational opportunities is critical in order to make it a good urban area,” Donald said.

He also boasted of Atlantic City’s broad infrastructure improvements over the past two years, such as paving 50% of the city’s roads (more than had been paved in the previous 50) and becoming the first city in New Jersey to have all LED streetlights—brighter and cheaper to operate than their predecessors.

LPMG president John Longacre (above, right), who is converting an old armory building into a 35-unit loft apartment building in Atlantic City, spoke to the necessity of those improvements to the city, even though they represent increases in government spending.

“[Donald] is trying to undo 50 years of horrific policy,” John said. “In order for him to correct it, he has to do everything to assure he isn’t re-elected.”

Diversity is the key ingredient to the revitalization potential of a city that boasts 24 million visitors per year but only about 30,000 permanent residents. In order to do that, John says, “you just have to build something that isn’t there yet.”

Those soon-to-exist projects—the university, the new HQ of South Jersey Gas in 2018, a new, $150M entertainment center built around a 350-foot vertical roller coaster—are what Atlantic City is banking on to drive interest.

“These are the anchors that people are waiting to see happen before they invest,” said Atlantic City director Elizabeth Terenik (on the left in the first photo).

Tourism is still going to be far and away the city’s biggest income driver, and as the casino business continues its downward trajectory, Elizabeth pointed to restaurant business, which hit a record high in the past year, as reason for optimism that the city can continue to bring visitors.

“With 24 million visitors a year, there’s no reason you can’t fill any sort of amenity market for those people,” John said.

Elsewhere in New Jersey, another city with a negative national reputation is also poised for a highly visible turnaround in the coming year—Camden, with Liberty Property Trust’s Camden Waterfront Master Plan.

Dranoff Properties CIO Julia Gutstadt (above, far right) outlined the plan, which will involve 1.5M SF of offices, a new hotel, retail and residential properties meant to create a new mixed-use community almost from whole cloth.

Liberty’s Mark Goldstein (above, far left) credited Victor Lofts, the 341-unit complex Dranoff bought in 2014, with laying the groundwork for the massive upcoming project.

“I believe that the [Waterfront Master Plan] has enough scale at this point to make a dramatic difference in Camden,” Mark said.

The combination of new-construction, market-rate retail with a walkable commercial community is built with the one demographic that panelists at every Bisnow event will mention at least once in mind: Millennials.

“[Millennials] want walkable and/or transit-oriented product with high-quality amenities, and they don’t mind smaller spaces,” Julia said. “Those ingredients will make the Camden waterfront more successful going forward.”

As for greater South Jersey, Millennials are still on developers' minds as they look to the future. Though they have been moving to and living in the cities at much-discussed high rates, their influence on the general economy is felt everywhere.

“Everyone seems to mention Millennials, but I think it’s really starting to take hold when you look at the economic picture today,” Joe Aristone of PREIT (above, with mic) said.

Retailers are justifiably concerned with the joint assaults of online purchasing and Millennials’ lack of spending on goods relative to previous generations, but their true impact has yet to arrive. Joe anticipates their spending power to fully actualize in the early 2020s—which means there’s still time for savvy businesses to get ahead of what they do next.

“We do believe that eventually those Millennials will have families and move to the suburbs,” Joe said, “but hopefully we’re picking the right suburbs to capitalize on that.”

South Jersey has plenty of suburbs that are appealing, based on their proximity to Philadelphia and New York City, and the structure to capitalize on that advantage.

“[South Jersey] has everything—great places to live, a great employment base—and I think, to a certain extent, that sets it apart as a distinctive enclave,” Joe said.

Two major concerns—areas that could siphon away residents and business from South Jersey—did arise over the course of the second panel, however. The first is Pennsylvania’s Lehigh Valley, with comparable commute times and a competitive cost of living. DLC’s Chris Ressa (above) called the area a “stressor” on South Jersey’s long-term health.

“A high level of focus needs to be paid [to the Lehigh Valley] or it will definitely turn into a more dominant suburb of Philly than it is today,” Chris said.

The second concern, noted by Greater Trenton CEO George Sowa, is the proposal by New York developer Jeffrey Gural to build a casino in North Jersey—a decision George urged South Jersey to fight.

“If you add a couple of new casinos to North Jersey, it’s going to be even more devastating to this region,” George said.

Even with those concerns, every panelist remains bullish on South Jersey’s prospects, and Julia laid out the simplest reason why.

“People who are looking to live in the Philadelphia area are spilling out," she said, "and they’ll continue to spill out east.”