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Courtesy: Blue Onyx
some flexibility.”
Blue Onyx’s strategy will also hinge on cities outside Paterson. The
firm in 2017 completed a major renovation of a 75-unit, prewar apartment building in East Orange, at 18 Summit St., in a project that allowed it to grow beyond the investments that it had made to that point. It’s now developing the adjacent site with a new ground-up, 78-unit apartment building.
“I realized that we could have more of an impact on a block with scale,” Kelman said of the firm’s first building in East Orange, which it acquired in 2014. “That began
a natural evolution to looking at redevelopment and development projects throughout Jersey.”
That’s also meant growing beyond the “lean and mean” operation that
served Blue Onyx well in its early days and “building a core team that could really carry us into the next 20 or 30 years of growth,”
he said. Kelman has bolstered the firm’s senior leadership group, adding a combined 60 years of industry experience since 2020 with the hiring of Tom Lardieri as chief operating officer and Michael Marron as chief financial officer.
In late November, it announced the arrival of Jim Driscoll as its senior vice president of development and acquisitions,
citing its push to expand
its Northeast portfolio
and shift to
larger-scale
multifamily
and mixed-use
Jim Driscoll developments.
He comes to the firm with more than 20 years in the industry, including senior-level development posts with Waypoint Residential, LCOR and K. Hovnanian Homes. And the move followed the addition of Shane Brethower, a longtime entrepreneur, as president of emerging platforms, as it looks to infuse technology
into the company’s portfolio and operations.
“Putting together a very strong leadership team has always been our goal,” said Kelman, who also noted the importance of finding strong mentors in the industry. “That’s what we’re doing, we’ve invested heavily in that.” RE ”
18 JANUARY 2023
Levi Kelman and Blue Onyx Cos. joined East Orange city officials and other stakeholders in mid-2017 to mark the opening of 18 Summit Street Apartments, a newly renovated apartment building in the Essex County city.
but knowing that we’d build out a redevelopment plan as we went through.”
That site was 241⁄2 Van Houten St.,
a two-acre tract along the Passaic River that is home to seven former mills and warehouses. In 2020, Blue Onyx unveiled a plan for a sweeping adaptive reuse of the complex, with rehabilitated commercial spaces and new construction that will
offer a mix of residential units, plus amenities such as a community theater, a food hall and a distillery and beer garden. The project has faced delays caused by the pandemic and environmental issues, he said, but he expected the bulk of the site to be residential, with around 15,000 square feet allocated for commercial and community uses.
Kelman added that the firm was close to submitting a proposal to the city, while it has drawn serious interest from would-be operators for the hospitality and community spaces.
In the meantime, it’s careful to
not let the property sit idle. The developer in September 2020 refashioned part of the site as a sort of urban beach, complete with 500 tons of sand, umbrellas and walking paths, drawing residents and city officials for an event with food, live music and activities. It has since hosted other events at the property,
which it calls 24+Half, such as a fall festival and an installation for local artists. That’s allowed Blue Onyx to build a rapport with stakeholders and organizations such as the YMCA and Boys & Girls Club of Paterson, along with the Greater Paterson Chamber of Commerce, outside the typical entitlement process. And he expects the community’s input to be reflected in the finished product.
He also believes that, “with the right mix there, we can further that impact in the neighborhood and
the community. And to do that I felt that you have to engage at multiple levels.”
Kelman’s plan comes in a time of growing opportunity in Paterson, where local officials have become more open to development and builders can secure valuable tax incentives. That’s helped attract larger-scale projects and put the city on a path to becoming an emerging market.
“That’s where Paterson is today,
and this transition from being a tertiary market to being a secondary market historically takes about 25 years to be realized,” said Jeffrey Otteau, president of Otteau Group and managing broker of Hudson Atlantic Realty Advisors in Matawan. He noted that apartment vacancy
in the city, at about 0.9 percent at
year-end, has fallen faster since the start of the COVID-19 crisis than in
Jeffrey Otteau
northern New Jersey at large. Net effective average rent per unit in Paterson was $1,463
in the fourth quarter of 2022, compared
with $2,305 in
northern New Jersey, he said, adding that rents in the city were less volatile throughout the pandemic. That bodes well for the municipality as apartment dwellers look for lower-cost options.
Building in such a market does come with challenges. One such hurdle, Kelman said, is that local officials can be rigid when it comes to minimum unit sizes, “so when you have a big move in construction costs or interest rates ... it begins to make them more challenging.”
“We know that, over the years, many of the more mature markets have accepted and gone to smaller units,” he said. So there is much time
spent educating local officials, their professionals and their consultants that, “if they really want to see that diversity and they really want to see new development, they have to understand the challenges and have