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On the Waterfront

TAKE a good look at New Jersey's Hudson River waterfront and you can almost see them. The shimmering ghosts of the Gold Coast are back: phantom luxury apartments and office buildings lining the river in Jersey City, Hoboken, Weehawken and Edgewater.

But this time, it seems, these phantasms are not being blown away, as so many 1980's dreams were, by the variable winds of demographics, economics and politics. In fact, the 90's Gold Coast is building -- sometimes quite literally -- on the groundwork laid in the 80's.

''We sold it as the Gold Coast, but it might have been silver or tin at that time,'' said Thomas Leane, a planner for Jersey City in the 80's who is still deeply involved in the waterfront's fate. ''Now, it has sort of reached the massing necessary to be gold.''

People with money want to be on the waterfront: Aging baby boomers with empty suburban nests; would-be Manhattanites deflected by ridiculous rents; flourishing Wall Street businesses that want to expand.

Investment money is accessible again. Interest rates are low, and with the Asian crisis, banks are looking for local borrowers. Insurance companies and pension funds have regained enough confidence in real estate to reinvest. A newly fashionable kind of company, the real-estate investment trust, seems to offer boundless capital. And the recession in the late 1980's and early 1990's drove away most of the newcomers; most of the surviving developers have long histories in the clubby, competitive world of construction.

With a few exceptions, the court battles have been settled and the political storms have calmed. So has New York City's combative stance, because there is much less empty office space in Manhattan and Brooklyn.

During the recession, much of the infrastructure along the Hudson River waterfront was quietly upgraded. Sewer systems were revised and replaced; roadways were built or rebuilt and the local ferry system was reinvented. . Now, New Jersey Transit is building -- not planning, building -- a light rail system from Bayonne to Hoboken. Cities are in, and Governor Whitman has promised to help them grow.

''The pioneering is over,'' said Richard S. LeFrak, the president of the heavyweight Lefrak Organization of Queens. ''We're into the developmental phase. It's a lot of chemistry. You can't just plant your flag like Columbus and then all of a sudden you get a Starbuck's.''

The reference isn't rhetorical. A Starbucks is opening this month in one of his office towers at Newport City, a development sprouting shopping malls, apartment towers and office buildings that Mr. LeFrak calls ''the biggest piece of the pie'' on the Jersey City waterfront.

Empires in the Air And a Hedging of Bets

But will the Gold Coast really happen this time? Will 18 miles of abandoned warehouses, railroads and shipyards along the Hudson be transformed into a vast stretch of office towers, vertical neighborhoods and shopping malls? And if it is, what will that mean for Hudson and Bergen counties?

More than a dozen developers contacted for this article discussed project after project, painting empires in the air, talking about New York City's sixth borough.

That's their job. To live, Tinkerbelle needed believers to applaud. To build apartments, developers need believers to loan them money. To build offices, they need corporate believers to sign leases.

It is telling that, of the myriad development dreams hovering along the waterfront, it is residential and retail projects that are under construction. No new office projects have broken ground in five years. And most of the residential units are rentals. The watchword is caution.

''It's easier not to go broke with rentals,'' explained Fred Daibes (pronounced DAY-beez). His company, Daibes Enterprises, bought waterfront properties cheaply when the first Gold Coast evaporated, and has already spent $22 million out of a projected $100 million to turn the old Alcoa site in Edgewater into St. James Towers, a 460-unit residential complex -- all of it rental.

''If you can't rent an apartment for $2,000, you can rent it for $1,800 or $1,700,'' Mr. Daibes said, ''and as long as you can rent it, you have money coming in to pay off the interest. But with condos, you can wait there a long time with it empty.''

In the 80's, new condos went begging for so long that developers turned to auctions, where deluxe suites sold for a fraction of their original asking price.

Another error: bad timing.

The miles where the Gold Coast is supposed to appear were once jammed with shipyards and factories served by railways. But after World War II, the nation began abandoning rail in favor of the federally subsidized interstate highway system. The union-heavy North began losing industry to the Sun Belt. Container shipping consolidated dockwork to fewer and fewer spots.

By the early 80's, much of the waterfront was fenced off, idle and abandoned. Municipalities became major property owners. And the buyers started collecting: Leonard Stern's Hartz Mountain with 75 acres of Edgewater, Arthur Imperatore Sr.'s Arcorp with miles of Weehawken, the Lefrak Organization's 600-plus acres at Newport. Daniel K. Ludwig, one of the world's richest men, bought scores of acres to the south.

During the bad years, Lefrak and Hartz hung on, at a cost. Gene Heller, the president of Hartz's real-estate branch for 25 years, believed in building, not waiting. Leonard Stern, the company's president, was determined that Hartz would lie low until the economy turned. In a rift that fueled real-estate gossip for years, Mr. Heller left Hartz, bought a chunk of its property, and with his son Tod built Edgewater Commons, the first shopping center along River Road. That center, completed in the summer of 1996 with a huge Pathmark, Barnes & Noble, Bed, Bath & Beyond and assorted other stores, has been credited with giving the first breath of revival to the waterfront.

Mr. Ludwig, who earned his billions in part by inventing the supertanker, died in 1992, before the homes and offices he hoped to build next door to Newport City could become reality. With the estate left to charity, the decision to sell the waterfront land was obvious, said Ed McDermott, the president of Mr. Ludwig's trucking company, National Bulk Carriers. ''There was simply no market at the time,'' he said.

Thomas Leane, the former Jersey City planner hired to oversee Harsimus Cove, found himself selling it off to an assortment of the waterfront's current players.

''It was bought for $58 million,'' Mr. Leane said. ''We won't make a tremendous amount. We'll try to get out whole.''

Sales are going well, he said. He expects to need a new job by the end of the year.

Of the early buyers, Mr. Imperatore was hardest hit. Even as his ferry company grew from a tiny operation to the impressive NY Waterways, which collects millions of fares every year, his real-estate bid faltered, and Roseland Property Company ended up controlling much of it.

In hindsight, many developers say, financing for buying and for building was just too easy to come by.

''There's an old joke,'' said Peter Mangin, the president of Garden State Development, which has plans for a Jersey City tower that, at 850 feet, would be New Jersey's tallest by far. ''Developer comes back from a meeting at the bank and says to his partner, 'I have some good news and some bad news. The good news is, we got that $20 million loan. The bad news is we have to put up $5,000.' ''

Loose lending practices were encouraged by unregulated appraisers, Mr. Mangin said. ''They would rate a $5 million project at $7 million,'' he said, ''and then the bank would say, you want $10 million?''

Now, banks don't do that, and appraisers are state-licensed. ''Nobody's doing anything stupid,'' Mr. Mangin said.

The signature Gold Coast failure was Port Liberte, a debacle begun in the mid-80's that was intended to be a vast townhouse and condo development. Jutting out into New York Harbor south of Liberty State Park, it was supposed to have a Dutch streetscape, the feel of a Mediterranean village and a Venetian-style canal system. In 1989, its banker (CityFed of Somerset) reported a $52.7 million loss on the project and was seized by Federal regulators. With about 300 of its 1,674 units built, the project went belly up, leaving scores of pioneering residents in an unhappy partnership with the Resolution Trust Corporation.

That same project stands to become the revival story of the 1990's. The Applied Companies, a Hoboken developer founded by a former tenant lawyer, Joe Barry, has bought Port Liberte, has finished selling the already built units and plans to start construction on a modified version of the original plan this summer. The plan includes a nine-hole golf course.

(No one needs a crystal ball to see golf in the waterfront's future. Bayonne wants to put in an 18-hole course. Plans for an 18-hole course in Liberty State Park were abandoned, after much controversy, in 1995.)

Words Don't Make It So (But They Sure Help)

The developers are well aware that talk is talk, not steel and concrete. After estimating current office space in Jersey City at 6.5 million square feet (the equivalent of three World Trade Center towers), Brant Cali, a vice president of the Mack-Cali real-estate investment trust, calculated that if all the Jersey City developers' grand plans were turned into reality, there would be 16 million square feet of new office space.

''Do I think it's all going to get built? Not really,'' he said. But the point of such outlandish estimates is not prediction. ''What fuels the marketplace is what could be, not what is. Realistically speaking, you can't sell pessimism.''

Dozens of fantasies were announced with great fanfare in the 1980's, often accompanied by glowing newspaper accounts untouched by skepticism. There was the Harsimus Cove residential project south of Newport, the huge housing-and-office complex along the Weehawken waterfront, the bulky conference center with hotels, offices, and retail and residential space on the Hoboken piers. They didn't happen. Most didn't even get as far as Port Liberte.

''The Gold Coast didn't happen because the economic climate didn't let it happen,'' said Edwin H. Cohen, a director at Cushman & Wakefield who supervises leasing for Lefrak's Newport office projects. ''It started happening and then the recession hit.''

Asked if there were any guarantees this time, he laughed. Hard. ''Nothing is a guarantee,'' he eventually said. ''But all signs are pointing to its happening, and there are not any signs that it's not happening.''

A couple of existing buildings have changed hands, based on expectations that office rents will be rising and that unoccupied spaces can be filled. Lefrak just sold the one-million-square-foot Newport Tower to TrizecHahn, a Canadian company, for $159 million. And miles upriver from ''Wall Street West,'' as developers like to call Jersey City, a Long Island company called Crown Properties just bought 300 Boulevard East, a 300,000-square-foot tower, for $15 million. The tower, built by the junk-bond giant Drexel Burnam in 1987, went into foreclosure when junk bonds collapsed.

A dozen new projects have been designed and approved, but most won't break ground until lease agreements have been signed with anchor tenants. Developers need signed leases to get financing.

A deep-pocketed developer with enough confidence in the market to risk his own capital can build speculatively, without lease commitments. Emanuel Stern, the 34-year-old president of the real-estate arm of his father's company, Hartz Mountain, is the first waterfront developer to announce a speculative office tower, saying that he will break ground in June on a Hartz-financed 400,000-square-foot office tower by the Colgate clock in Jersey City.

There are insiders who say that Mr. Stern is just dangling the start date like a carrot, and that he won't really start building without tenants. Mr. Stern acknowledged, as every developer did when asked, that plans often don't come through as announced.

''But there are two things you can look at,'' he said. ''A developer's reputation. Does he live up to his word? I think, if you look, you'll see that when Hartz said it was going to do something, it did.''

The other thing, he said, is money. He paid $10 million for the Colgate property. ''Paid!'' he said. ''Cash!''

''I know one thing,'' he added. ''I know we're going to be in the ground in June.''

Further off are plans that would turn Jersey City into enough of a Tallville that somebody might start keeping official statistics. (At the moment developers and architects keep a loose count.) Garden State Development's 850-foot-tall building would upstage 101 Hudson, the 550-foot art deco tower at Exchange Place, as the tallest building in New Jersey, the company says. And that would knock the Newport Tower, at 528 feet, down to third place, and 10 Exchange Place, at 460, to fourth.

The planned skyscraper, the American Financial Exchange, is a joint venture between an up-and-coming youngster, Garden State Development, and a national behemoth, Mack-Cali, which was created at the end of 1997 by a merger of two old, family-run New Jersey developers.

Once office construction begins in earnest, it's a race. Low vacancy means rising rents. That increases the value of stock in investment trusts, the real-estate equivalent of mutual funds. It also gives impetus to new building. But the more office space available, the greater the likelihood rents will stabilize or descend.

So the developer wants to build fast before there's too much competition. ''The first guy gets the worm,'' Mr. Stern said.

The Infrastructure: Ready for Prime Time?

Suppose the worm-nabbing moment arrives. What about the residents, new or old, of the waterfront communities?

One focal question is whether the infrastructure is ready for a population gain of thousands. Not everywhere, it seems.

Jersey City started developing a master plan back in the 60's, so that even during slow economic times, the sewers and roadways and substations that major development would require were rolling into place. ''Planning takes a long, long time,'' said Robert D. Cotter, the director of city planning for Jersey City. ''And implementation is now into, what, a third of a century?''

But other municipalities didn't get that kind of head start.

Some have played a good game of catch-up, getting developers to install firehouses and sewer systems along with their apartment towers. And most Mayors, like Bret Schundler of Jersey City and Peter LaVilla of Guttenberg, say that the increased tax base more than pays for any increase in municipal services, like garbage collection.

Still, there are big question marks. Concerns about River Road, which runs along the waterfront lowlands, grow with each plan announced for West New York, Guttenberg, North Bergen and Edgewater. The road is being widened and lengthened, but it already carries so much traffic that neighboring Cliffside and Fort Lee are anxious and angry. Cliffside closed off Oxen Hill Road for a while, so traffic from River Road couldn't exit through the town.

Mayor Jack Alter of Fort Lee said he had turned away developers who saw shopping malls in the town's future because it couldn't handle any more traffic.

''It would be ironic,'' he said, ''if we get jammed by their traffic because they build the shopping centers we won't allow. But that's the way it's going.''

And what would thousands of new, well-to-do residents mean to politics in Hudson County, where the majority of the waterfront lies?

These municipalities have long been heavy with working-class immigrants. In the old days, they were Irish, German, Polish and Italian. After decades of being blocked, black residents finally won footholds. Newer groups are Indian, Asian and Hispanic -- people who are just starting up the economic ladder.

The economic split will presage a political split, according to James W. Hughes, the dean of Rutgers' Edward J. Bloustein School of Planning and Public Policy and an appointee to the state's Property Tax Commission. ''In effect,'' he said, ''you really have two Hudson-Bergen counties, the old parts that are creatures of the industrial economy, and a new waterfront that's part of the information age.''

Dr. Hughes believes, surprisingly, that it is the older parts of the county that are the future bastions of political power. New residents are likely to be childless, he said, and lobbying for schools is one major reason citizens bother to vote. The kinds of problems new residents might face -- mail delivery or sanitation, say -- would be addressed with a building manager, not a politician.

There have already been some political shifts. In the optimistic years of the first Gold Coast, the older ethnic groups started feeling left out, and an anti-development sentiment took hold just as development was taking off. In 1985, mayoral elections in Jersey City and Hoboken swung on whether voters thought a candidate was likely to ''sell out'' to developers.

Development didn't stop, but it took a few unusual turns.

During the ''pro-old-timers'' term of Mayor Anthony Cucci of Jersey City, it was decided to put at Exchange Place a monument to the 1940 massacre of Polish soldiers in the Katyn forest. The 17-foot statue, a cavalryman with a bayonet through his back, is in the middle of what planners call ''the view corridor,'' framed by the World Trade Center Towers. That placement is itself a sort of memorial to the bygone strength of the old ethnic groups.

Interests Converge, And Developers Salivate

Mayor LaVilla says he does not expect much of an electoral impact in Guttenberg when people fill the townhouses on his waterfront that K. Hovnanian, New Jersey's largest homebuilder, just broke ground on. A third of the town's 9,000 citizens already live in one development, the gargantuan, three-building Galaxy Towers, built in 1976.

Inside and outside the towers, Mr. LaVilla said, his constituents care about two things: cutting taxes and reducing crime. The Hovnanian development, he said, will bring more people who want the same -- and will, at the same time, cut taxes and reduce crime.

''Development on dormant land brings in new taxes,'' he said, ''and, assuming the new units don't cost more in terms of municipal services than they pay out, homeowners' taxes should drop. And crime? Well, townhouses selling for a quarter of a million to half a million, that doesn't exactly bring in a bad element.''

Mayor Schundler expects new Jersey City residents to slowly switch, as he did, from apartments to brownstones, from renters to homeowners, from singles to married with children. ''Their impact to date has been minimal,'' he said of the new arrivals, ''but that's not to say it's not there.''

He said that with both an Urban Enterprise Zone designation and new development, Jersey City is moving in the right direction for older and newer residents, with lower property taxes and a fund for refurbishing decaying areas like Central Avenue, Martin Luther King Boulevard, West Side Avenue and Journal Square.

There is at least one down side, he acknowledged. ''Rents rise as a function of rising property values,'' he said, ''and property values are rising, no doubt about it.'' But he said that ''rent control should mediate that for most old-time residents.''

Such rosy views only brighten the gleam in developers' eyes.

Emanuel Stern, on a tour of Hartz properties along the Hudson, was asked to imagine the best of all possible futures.

''If things go well,'' he mused as his car whizzed by cranes, ''we'll build multi-thousands of units of residential units and large amounts of commercial real estate, and this will become the sixth borough.''

And the worst case? He paused. ''Basically, I see the same thing,'' he said, shrugging. ''Just taking longer.''

A version of this article appears in print on  , Section NJ, Page 14 of the National edition with the headline: On the Waterfront. Order Reprints | Today’s Paper | Subscribe

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