Kushner’s Nicole Kushner Meyer and Laurent Morali Talk Going Big in New Jersey

For Kushner, a multi-generational development and management firm with a long history in the state, their New Jersey success is a point of pride, with One Journal Square set to showcase how the company is designing projects that appeal to tenants who can further animate cities. One Journal Square, for instance, comes complete with features such as a bowling alley, a climbing gym and a movie theater.  

“So much has changed in regards to people’s behaviors: where they like to go, where they like to live, where and how they like to shop. People want more mixed-use communities,” said Nicole Kushner Meyer, the company’s president. “So for us, it was a process to educate the town on the fact that what existed was not the best and greatest use for the neighborhood and the community at large.”

Commercial Observer spoke with Morali and Meyer on July 18 about One Journal Square and their other projects in New Jersey and elsewhere, and how the company views development in the current economic environment. (Disclosure: Meyer is married to Joseph Meyer, chairman of Commercial Observer owner Observer Media.) 

This interview has been edited for length and clarity. 

Commercial Observer: You recently landed a second round of financing for One Journal Square. Talk about how that project is coming along.
Laurent Morali: One Journal Square consists of a podium with two towers and 1,723 apartments, and 40,000 square feet of retail which is 100 percent leased to Target. We closed the financing on Phase 1, which consisted of the podium and the first tower, in June 2022. We topped out that tower three months ago, three months ahead of schedule, and we just closed the financing for Phase 2, which means the project is fully capitalized.

It’s a $1 billion capitalization, taking into account the financing of Phases 1 and 2 plus the equity we put in the project — the Kushner family owns the majority of the project. We’re excited, because there are not too many people closing large construction deals these days.

How did you bring this in three months ahead of schedule?
Nicole Kushner Meyer: We have a great team and great partners. We’re using AJD Construction, who are prolific in Jersey City, and we have built up a very large development team over the last few years and streamlined the process.

What is the targeted completion date for One Journal Square?
Morali: We’re going to start leasing up apartments in Phase 1, the first tower, as early as January 2025, and the first residents will occupy it in April 2025. The completion of Phase 2 is a year behind.

Talk about the motivation behind this project. How did it come to be, and why did you want to do such an enormous project there?
Morali: We always look for the best neighborhoods. If you look at everything we’ve done across the country, but specifically in the New York metro area, we look for two things. One, you want an affordability component. We’re in Astoria, Queens, because it’s an amazing neighborhood and the rents are at a significant discount to comparable product in Manhattan. In Jersey City, you have the same thing, where rents are consistently 40 percent below what they are in Manhattan for comparable product. That’s No. 1. 

No. 2 is transportation — commuting. In the case of Jersey City, our Journal Square project is essentially right next to the PATH train station that takes you from Journal Square in Jersey City to Wall Street in 10 minutes, or to Midtown and Hudson Yards in 25 to 30 minutes. If you look back at the history of our projects, we’re always focused on those components: proximity to transportation and affordability.

Meyer: Our renter is typically a professional, so access to employment is key. In all of our markets, even in Florida, that’s the target demographic in our newer, more urban high-rise product. That’s our urban strategy.

What amenities can people expect at the Journal Square property?
Meyer: We have 40,000 square feet of amenities, including an indoor basketball court, indoor and outdoor swimming pools, a spin-yoga studio, a spa. We also have a large coworking area and library. We envision a lot of people having a bit more flexibility, and there are a lot of students and a large coding community in Jersey City. We have a game room, a movie theater, a bowling alley, a rock climbing wall and a squash court. It’s a lot. We always try to think through the lens of who our target demographic is and how they would love to live — how we would love to live.

When you’re delivering that many new apartments, it’s almost like you’re designing a whole new neighborhood.
Meyer: The property is the center of gravity of that neighborhood. Laurent usually refers to it as the hole of the doughnut. We envision this being the center of the community, not only by having 1,700 residents, but by activating the retail at Target and having this plaza that people getting out of the PATH will be living and breathing in.

Morali: Also, it took a vision to finance it, because you don’t have many lenders with the capacity to absorb such a big exposure and be your lending partner over a long period of time. From the time you put a shovel in the ground for Phase 1 to being able to stabilize Phase 2, we’re talking four or five years. We came up with the two-phase financing structure, convincing lenders that they should be comfortable financing Phase 1 with collateral, including the land for Phase 2, and then convincing the Phase 2 lenders that there was enough equity invested in the project to date so that they would feel comfortable financing Phase 2. That’s what I keep in mind in terms of the challenge and how we resolved it, and that gives me a lot of satisfaction.

What will this project cost?
Morali: Just shy of a billion dollars.

You encountered some snags trying to get this project off the ground. A series of political and legal disputes with local authorities made the project’s status questionable as far back as 2017, but all was resolved by 2020. I’d be curious to hear more about that, and how you got past these issues.
Morali: There were some snags, but development deals always encounter some unforeseen circumstances. It’s all public information that this project became the center of a political campaign for the mayoral elections in Jersey City. Like many other situations, sometimes you have to let time do its thing. We ended up with a project that was embraced by the mayor, the City Council and the residents of Jersey City.

How does this project tie in with the rest of your Jersey City portfolio?
Morali: It’s all part of the same vision from an investment standpoint, which is that you invest in the New York metro area without being in New York City. Jersey City has been called the sixth borough of New York City, because that’s really what it is, right? It’s a bedroom community for the New York City commuter. You’re closer to Wall Street from Jersey City than from the Upper West Side. 

So, for us, it’s a great way to bet on the dynamism of the New York metro region as an engine, and to take advantage of demand-driven rents at a significant discount to equivalent product in Manhattan or Brooklyn. For many years, there was a mental barrier for New Yorkers in thinking about Jersey City, probably because it is across the river. But you also have to cross a river going to Brooklyn, and it’s the same distance. 

Also, for many years, Jersey City did not have the same culture, history and grit as a Brooklyn neighborhood can have, but that has changed dramatically. For instance, there’s [arts center] Mana Contemporary, which is a 15-minute walk from Journal Square.

Meyer: It has over a million square feet of art storage and studios for some of the most amazing artists. They have one of the largest Warhol collections in America. It’s like this whole underground art scene with exhibits, and they have collaborations with the community. So it’s a very culturally infused area.

What is your take on the current health of the Jersey City housing market?
Meyer: The fundamentals of the Jersey City housing market are strong. We do have an affordable component in most of our projects, like in our four-story garden apartments throughout New Jersey. But the market is very supply-constrained, and it’s very hard to get land entitled, so that poses a challenge. If cities are responsible and enable developers to build when they need to, I think it’s easily solved, but that’s one of the challenges we see.

What else do you have going on in New Jersey outside of the Jersey City developments?
Morali: We have several projects of garden-style apartment communities that we started two years ago that are being delivered as we speak. The first is 265 apartments in East Hanover, N.J. There’s also 307 apartments in Fair Lawn. The two projects are four-story multifamily product. 

We just broke ground in Long Branch on a project called Lower Broadway, which is also four stories, and 300 apartments. We broke ground a few weeks ago on our Monmouth Square project in Eatontown, also four-story multifamily. That one’s going to be 1,000 units. And, then, today, we’re closing on financing for one that is a three-story multifamily, 360 units. We’re breaking ground next week. That’s well over 2,000 units. 

On top of that, we have a pipeline of land that’s being entitled as we speak, also in New Jersey, in various other towns where we will also build similar product. So the total pipeline for New Jersey alone, including Journal Square, is over 5,000 apartments.

Did the general scarcity of housing these days impact your strategy in delivering so many units?
Morali: I don’t think it’s so many units, because it’s scattered among various communities. We are always focused on enhancing communities, and I strongly believe that whatever we’re bringing to the community will be a relief to the neighborhood. But we’re also investors, and we have a fiduciary duty as investors to invest our money where we think we’re going to get the best returns. The fact that you have a housing shortage in a submarket that happens to be supply-constrained means you have less competition.

Meyer: We view our product as enhancing the community. We put a lot of thought into creating beautiful, simplistic designs that feel more like a condo product. So maybe for a newly married couple who can’t afford a home but need to live in that area, or maybe your kids are in college and you don’t want to take care of a house anymore — you want to move into an apartment.

We’re trying to solve for a beautiful lifestyle for someone who maybe can’t afford a house yet, or maybe is no longer in their house. That’s the goal: to provide a beautiful living environment and enhance the community without displacing the person from what they love.

Morali: It’s a lifestyle.

How does the development process for projects in New Jersey compare to the process in New York?
Morali: We have not done a project of such large scale in New York City. But I can say that the cost to build in Jersey City is probably 40 to 50 percent of the cost to build the same product in New York City. Most of the vendors and contractors are based in New Jersey, so for them to mobilize and cross the river adds costs. It’s much more expensive. So we can afford to rent apartments for less than in Manhattan and get similar returns. I would argue that the returns are actually better in New Jersey.

Who do you consider your primary competition in Jersey City?
Meyer: I don’t view it as competition. We’re building a community together. Look at Hudson Yards. For many years, being from New Jersey, I would drive by the Lincoln Tunnel, and you’d look out to the left and see nothing but railyards. Now when you look out, you see Hudson Yards. So, if you say to Related and Brookfield, who’s your competition — they’ve built something together. 

In my mind, when I think about all the buildings that are going up in Jersey City — whether it’s Spitzer’s building, KRE, Urby —  I view us all building this story together, and the fact that it’s happening and delivering at different points in time enables the buildings to fill up. Then, you don’t want to be the only building with no one else around you. So I’m excited for everyone. I view us all as partners as opposed to competitors.

What do you think Kushner is bringing to the area that might otherwise be lacking in the market?
Meyer: I think we’re bringing a more elevated product from a design standpoint. We did that at 65 Bay, which has Urby across the street. And, by the way, we built 65 Bay first, so Urby wasn’t there. And, now that it’s there, it’s so great and creative. But our product is a little bit more elevated in regards to design. We focus a lot of time on that. That brings in a more mature customer, and enables someone to stay there longer. It doesn’t make you feel like this is a rental and you need to get out. 

At 65 Bay, people are staying longer. They’re starting in a studio, then they’re getting married or finding a partner and moving to a one-bedroom, and then having kids. When we put a kids room in our building at 65 Bay Street, we toured all the other comps in the market and there were no kids rooms. Everyone was like, “No, this is not a family-oriented market.” Now, our kids room is packed and filled with families.

Let’s talk about some of your other active markets. Talk a bit about some of your recent moves in South Florida.
Morali: We’ve been in Florida for close to 10 years. We started looking at the Florida market because we’re always looking to add multifamily properties to our portfolio, and we knew it was an attractive market with very strong fundamentals, demographics, growth, employment, etc. But we couldn’t find product at a price that we thought made sense. That’s when we pivoted and started looking at land to develop properties there. 

We started buying land around 2015 to 2017 with the goal of building multifamily there at a yield on cost that would be super attractive. So, instead of buying multifamily properties at a 3 to 4 percent cap rate, we would identify land and work on a budget such that we would build into a 6 percent yield on cost, which is very comfortable, especially for this particular market. We established a team there because we didn’t want to be New York developers just doing one deal there. We wanted to be a local developer. 

We then did it very incrementally, organically, methodically, similar to what we’ve done in the Northeast — one project at a time. We started in Wynwood in Miami with a fantastic local partner, Block Capital, who had been educating us on the submarket. We learned that neighborhood block by block, and delivered our first apartments a little over a year ago with a mixed-use product consisting of 150 apartments, 40,000 square feet of retail, and 40,000 square feet of office that’s very well leased. It’s been very successful. 

We later added two projects not far from there in the Edgewater area, on Biscayne Boulevard and 19th and 20th streets. Then the vision was, “Let’s see if we can go to the next level and build product similar to what we did for 65 Bay in Jersey City,” which would be more like a 50-story-type tower. So we developed 2000 Biscayne, which is approximately 400 apartments, and we just delivered it a few months ago. We’re in lease-up today, and it’s going very, very well. 

We also bought land in Fort Lauderdale, right across from the Brightline train station. So, again, very focused on commuting and transportation. We bought three pieces of land across the street from the train station with Aimco, our partner, 50-50. We have sold two of the lots and kept the last one, and paid off all of our debt, so we own it free and clear with Aimco, and we’re going to develop something when we are ready to do so. 

We also have a project in Surfside that we bought a year ago, a distressed situation between Collins and Harding avenues and 93rd and 90th streets, across from the Fendi project and the Four Seasons. We came across an opportunity where the lender was going to take over the site, and within two weeks we made a deal with the lender and the existing sponsor to take over the project. We rezoned it in record time to develop a high-end multi-family project in what is otherwise known as a condo submarket. We’re very excited to bring that product to the market in the next couple of years.

How many different markets do you have established teams in?
Meyer: In our existing multifamily portfolio, we operate in 14 states. We own and operate over 21,000 apartments, a number that will increase as we fold our development pipeline into our operations. We have about 128 properties.