Carl Goldberg, founder and managing member of Canoe Brook Associates — Courtesy: Aaron Houston
By Joshua Burd
To Carl Goldberg, the need for moderately priced, workforce housing continues to grow in New Jersey, but the cost of structured parking can be a significant hurdle.
It’s why he sees an opportunity for the state to help local officials solve that equation.
The veteran developer, the founder and managing member of Canoe Brook Associates, has seen the dilemma firsthand in recent months through conversations with the designated redeveloper of an area near the East Orange train station. The neighborhood is exactly the type of high-density, urban setting that many builders view as an emerging market, but where rents can be uncertain and underwriting the cost of structured parking can be far more difficult.
Goldberg believes there is a role for the Economic Development Authority to provide assistance such as low-interest loans, grants or other types of incentives to help municipalities build structured parking in the context of mixed-use redevelopment.
The idea is even more appealing, he said, given the new federal Opportunity Zone program and his feeling that Gov. Phil Murphy hopes to continue to see the revival of areas that still have not seen a major revitalization during the current cycle.
“These are communities that could support quality workforce housing at rent levels that are affordable and provide a viable price alternative to the Hudson River waterfront or, even now, Harrison,” said Goldberg, who co-chairs the executive committee at the Rutgers Center for Real Estate. “But to do so, you have to figure out how to park these projects, where acreage is limited and the cost of structured parking is a very big detriment to the pro forma.”
Structured parking can cost upwards of $20,000 per space, Goldberg said. In places such as the Hudson waterfront, where he has built thousands of luxury apartments as a co-founder of the former Roseland Property Co., the rents rationalize those costs, but that is not the case in most other submarkets.
In fact, when Roseland spearheaded the development of the former Epstein Department Store site in Morristown more than a decade ago, the firm partnered with the Morristown Parking Authority. Doing so ensured that the firm could underwrite the cost of the large, multistory parking deck that serves the apartments and condominiums that stand there today, as well as the businesses that occupy the revitalized downtown.
“And the tenants will pay for the parking spaces, so you can amortize the debt necessary to build those parking spaces if you do it in a way that’s cost-efficient,” Goldberg said. “And I think that’s an area where the EDA potentially could come up with an innovative, urban-targeted program.”
The concept could be all the more important as developers ramp up their interest in the federal Opportunity Zone program, which offers favorable tax treatment on capital gains to steer investors to certain low-income areas. The program has fueled new interest in places such as East Orange and Orange, he said, adding to the potential for new housing and mixed-use development that doesn’t equate to high-priced luxury apartments.
“There happens to be a huge correlation between those locations and the designated Opportunity Zones, which makes the whole thing much more attractive,” Goldberg said.
Developers can find a way to create workforce and market-rate housing that still offers the same types of amenities, upscale architecture and street-level retail and restaurant options, he said, but there is no getting around the issue of structured parking.
“I think that’s the challenge that needs to be overcome,” he said.