Carl Dranoff, founder and CEO of Dranoff Properties, and John Schreiber, CEO and president of the New Jersey Performing Arts Center in Newark.
By Joshua Burd
Patience can go a long way in the real estate business — not to mention a sense of humor.
Carl Dranoff has proved that he has both, especially when it comes to a much-delayed redevelopment project around the New Jersey Performing Arts Center. Asked how he felt after recently closing on the complex financial and property agreements that will allow construction to finally get started, the developer kept it light, while also keeping it in perspective.
“I felt like we were an overnight sensation after nine years,” said Dranoff, founder and CEO of Dranoff Properties. “The day that we closed, the plaudits started to come in because it’s truly a game-changing project for Newark.”
It’s why Dranoff and other stakeholders in the city are now looking ahead to a long-awaited groundbreaking for One Theater Square, a high-profile, mixed-use project that was conceived more than a decade ago. The $116 million proposal calls for a glassy, 22-story luxury apartment tower sitting atop street-level retail space, aiming to transform a 1.2-acre lot across from NJPAC.
And while a formal ceremony will likely take place next month, construction crews are not wasting any time. Dranoff said “the shovel is in the ground,” adding that the next step is to relocate the police substation on the site and then demolish the building.
Within 30 days, he said, he expects to be “going into deep foundations.”
The 245-unit project comes 19 years after the opening of NJPAC, a building that was meant to be a catalyst in downtown Newark as much as any other part of its mission. One Theater Square was first pitched around 2005 by Larry Goldman, the center’s founding CEO, but ran into roadblocks such as the real estate crash and skepticism about the market in Newark.
But the passage of time has resulted in a robust demand for luxury apartments — especially in walkable, urban locales — creating an opportunity for cities where developers can still see potential. For instance, barely a block from the theater, a developer is converting the historic Hahne & Co. department store into a complex with 160 apartments and a Whole Foods.
“The market is at a very ripe tipping point right now for residential,” said John Schreiber, the current CEO and president of NJPAC. “I think the odds for success for this building are overwhelming now, based on everything that’s happening in the economy and in the marketplace. I’m not sure if, five years ago, that would have been the case.”
There is new commercial development to augment the additional residential units in the neighborhood. A newly rehabilitated Military Park sits just across the street from the theater, while some two blocks away, Prudential Financial has opened a gleaming new office tower.
The newfound excitement over One Theater Square follows a milestone reached by stakeholders earlier this month. Dranoff said “all of the money was put on the table for the entire project,” including a grant from the city of Newark and a $33 million state tax credit, along with financing from Prudential, Fifth Third Bank, his own development firm and NJPAC.
That step allowed NJPAC to take control of the land from the state and to then effectuate a ground lease with Dranoff, he said. The Philadelphia-based developer now expects to raise steel by the winter and top off in September 2017, with the first occupants moving in around spring 2018.
“Great things are worth waiting for, and I think the ingredients are much more in place right now. There’s much more pent-up demand than nine years ago, and I really believe Newark is ready to take off.
“It is taking off,” he added. “We’re just going to be more of a catalyst to make it go faster.”
Updated plans call for 22-story building with 245 apartments, 12,000 square feet of retail and 285 parking spaces. It’s a far cry from the 44-story tower that stakeholders once envisioned, but Dranoff noted that the final product will be “a more efficient building” with only about 90 fewer units, despite being half the height.
If all goes well, NJPAC hopes that One Theater Square won’t be a solo act. The venue has “another two buildable sites of significance on our campus that we intend to develop,” Schreiber said, though he could only say that there were “a lot of ideas” for what will go there.
Those plans will be cultivated by Theater Square Development Co., an NJPAC subsidiary of which Schreiber also serves as CEO. Doing so for the past three years has been “a unique experience,” he said, in that he has spent his career in the entertainment and culture business and has had to learn an industry that he had “only sort of understood and observed from afar.”
“And the nature of this transaction, I think, is fairly unique … because of the public-private partnership and all of the partners involved, so it’s been a fascinating journey for me,” Schreiber said. “And I guess the thing that has been most satisfying and most rewarding to me is just the collaborative nature of the project — so many partners are pulling together to get this done.”