New Jersey Is Beating New York in Housing Production — By A Lot

New York’s losses have become New Jersey’s gain. More than 75,000 New Yorkers packed up and headed across the Hudson River in 2022 in search of less expensive, more spacious homes while housing development in New York slowed to a trickle. The number of young children in New York City specifically fell 18 percent since April 2020 while 35 percent of people leaving the city since the pandemic said they moved because the cost of living was too high, according to recent analyses.

Could New Jersey’s ample supply of housing be starting to make New York … a little jealous?

“New Jersey has done a very good job of taking advantage of its location next to New York,” Vicki Been, director of New York University’s Furman Center for Real Estate and Urban Policy, said. “They have waterfront esplanades, parks, ferries, and they’ve done a good job capitalizing on the jobs and amenities available in New York City while we have not done such a good job making it possible to live near our amenities, and New York’s suburbs have done very little.”

New Jersey’s housing bonanza didn’t happen overnight. 

The state’s suburbs in Hudson, Essex, Bergen, Union and Passaic counties have issued permits for 224,570 units of housing from just after the Great Recession in 2010 through much of the pandemic to 2022 — a figure that comprised nearly one-third of all permits issued in the tri-state area during that period — according to a Regional Plan Association report. That’s a 25 percent increase from the previous dozen years when the region allowed 168,240 permits, the report said.

That output rivals New York City, which issued 267,261 permits, or about 20 percent more than its New Jersey suburbs over the same period despite having double the population. 

Drill down, though, and New Jersey has been far more generous than New York City in handing out permits and has fewer restrictions to ensure buildings actually get erected on schedule. The Northern New Jersey suburbs gave out 42 units per 1,000 residents compared with New York City’s 30 units per 1,000 residents.

“The New Jersey core is pulling more than their weight of housing production by building housing in markets where there is a demand for it,” said Moses Gates, vice president for housing and neighborhood planning at the Regional Plan Association, a civic organization in part dedicated to improving affordability in the Northeast. “It’s really just a matter of political will.”

When New Jersey’s production measures up against New York’s fervid anti-development suburbs, it is even more impressive. 

Those five northern New Jersey counties have been building at such a rapid pace that they gave out eight times as many permits as Nassau and Suffolk counties on Long Island issued and nine times as many that the Lower Hudson Valley distributed over the same period. Even New Jersey’s exurbs and more rural areas have lapped New York’s suburbs, issuing 73,192 permits — or almost three times as many as Long Island and Westchester and Rockland counties.

New York could spur more affordable housing to compete with New Jersey if state leaders wanted to, but the states’ different laws and policies have allowed New Jersey to edge ahead, housing advocates say.

“You have no economic reason why there’s dramatically different results on our side of the river and metropolitan area,” Adam Gordon, executive director of the New Jersey-based Fair Share Housing Center, said. “You would expect that people who want to live near New York City would move to Long Island and western Connecticut, but, because we have different legal environments, we’re the only place building housing.”

New Jersey’s renaissance has benefitted from the comparative lack of building across the Hudson, but it wasn’t a happenstance. 

A series of New Jersey Supreme Court decisions in the 1970s and 1980s created the Mount Laurel Doctrine, a legal framework that required each municipality to provide a fair share of low- and moderate-income housing units based on the area’s population growth. 

For years, governors, legislators and municipal leaders tried to undo the court orders and eliminate the state agency in charge of it. But the law stuck around, thanks to the court reinvigorating enforcement of the doctrine in 2015, and New Jersey’s suburban communities allowed housing development at a pace far greater than their counterparts in Greater New York. If they resisted, developers used a court-imposed judgment, known as a builder’s remedy, to compel towns to comply with the law. 

“A developer could say ‘You haven’t met your Mount Laurel need, and therefore I can build,’ with basically fast-track approval or go to a specialized court that would order the town to do the development,” NYU’s Been said. “Most of the jurisdictions that were out of compliance negotiated settlements and consent decrees to what they had to provide and allow development to go in.”

The state’s housing mandates combined with myriad zoning tools, rent control abatements that can stretch up to 30 years, and an expedited permitting process have lured developers to build multifamily projects in the suburbs. 

Last year, a 101,000-square-foot project in West New York leased up its 100 units in less than five months, according to CBRE (CBRE), which worked on the project. The brokerage is also involved in a 160-unit, 120,000-square-foot site in Belleville and a 100-unit site in Englewood. Meanwhile, rival Colliers (CIGI) helped close a $52.5 million construction loan for a 135-unit complex in North Bergen and a $200 million capitalization to develop a 284-unit condo complex on the Weehawken waterfront. 

Zach Redding, managing director of the Colliers Capital Markets group, said the absence of the 421a affordable housing tax incentive in New York — which the state legislature let expire in 2022 — led his firm to look for opportunities across the Hudson River. 

“New York has been in a period without 421a being a viable option with development whereas New Jersey has not had that as a headwind,” he said. “When you combine the ability to underwrite rent growth and obtain tax abatements, it makes it a little bit more attractive to pivot from one side of the river to the other.”

Sometimes the projects themselves can be less expensive, too. Buildings in New York over five and six stories are frequently made with steel and concrete, which is more expensive than New Jersey’s shorter three-story properties made with wooden frames covered with artificial brick. 

“You can build cheaper, which makes rent cheaper and the price per square foot on a condo is lower,” Redding said.

But there’s also been changes in demand since the pandemic in that more people want to live in suburbia. Tenants with work-from-home arrangements are demanding additional space for home offices while office parks near New Jersey Transit stations, schools and stores have become prime locations for residential redevelopment. 

“In North Jersey, you’ll have a 50-acre office park where the main tenant moved out and nobody really wants that anymore, but those are often in great locations,” Gordon said. “You’ll see developers taking shopping centers with single-story commercial buildings near train stations and redeveloping them into mixed-income housing or 100 percent affordable housing, and 80 percent of that development activity is tied to the legal requirements in suburban communities.”

New Jersey’s suburbs aren’t the only areas benefiting from New York’s housing crisis.

Cities along the PATH train into Manhattan have attracted New Yorkers who are still looking for vibrant urban neighborhoods but have been priced out of New York.

Newark has been able to create more affordable housing by rehabilitating existing buildings on city-owned lots, preserving the existing affordable housing stock, offering forgivable loans and low-cost mortgages to first-time homebuyers, and helping renters with Section 8 vouchers to become homeowners. 

New Jersey’s largest city has also begun to attract new commercial and residential investment led by the audiobook giant Audible, creating a growth cycle where people are moving to Newark in order to live near their office.

Jersey City, the state’s second-largest city, had embarked on an expansive redevelopment plan over the past decade by changing its zoning to allow housing in more places, eliminating height and parking minimums, and expediting how building plans are obtained and reviewed. Steven Fulop, who has served as mayor of Jersey City since 2013, said that removing layers of bureaucracy and adding more certainty to the development process attracted New York-based developers like Tishman Speyer, Related Companies, Silverstein Properties and Spitzer Enterprises.

“People are filling up these buildings as quickly as we are building them, which speaks to the strength of the market,” Fulop said. “The process is pretty straightforward. If you’re building by right, it goes through, and, if you’re looking for an amendment, you’re looking at one board. We’re clear with the standards, and, if you fit those standards, we move it along very quickly.”

As the price of land rose, Jersey City has even been able to phase out market-rate tax abatements and restructure them to set aside units for affordable housing. Fulop said it was “not an easy conversation to have” since the incentive to build became reflected in the land value. But it was a better option than the uncertainty of whether a tax incentive would exist.

“New York City has gotten into a cycle that is a downward spiral since they had a conversation for phasing out tax incentives that existed for a long time with no clarity,” Fulop said. “They have all these layers of bureaucracy, and neighborhood groups complaining about nightlife and restaurants. Those are things that are unfavorable. We’ve tried to be the exact opposite.”