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Powerhouse Featured On CBS MarketWatch
Wall Street Moves West: Jersey City's Role Continues To Grow
Standing in the midst of this commercial renaissance is the Powerhouse, which recently survived efforts by the Port Authority of NY & NJ to have it demolished and replaced by an office tower.
John Gomez, president of the Jersey City Landmarks Conservancy, was interviewed for this piece, as was real estate mogul, Sam LeFrak.
Gomez explained how the Baltimore Power Plant was transformed from an abandoned industrial shell of pollutants to a major tourist destination located in the heart of the commercial Inner Harbor. "It can be done," he says.Wall Street Moves West: Jersey City's Role Continues To Grow
By Steve Gelsi, CBS.MarketWatch.com
The 50-foot, octagonal face of the Colgate Clock has been a landmark on the banks of the lower Hudson River directly across from Wall Street in Jersey City, N.J., since the early 1900s.
Now it marks the locale of a new Goldman Sachs skyscraper under construction nearby as Wall Street continues it move west in search of cheaper space.
When completed, the 40-story tower will be the tallest building in the Garden State.
The marquee investment bank that embodies the Wall Street elite plans to move about 1,200 jobs to Jersey City from New York starting in two years, when the building opens.
An internal Goldman Sachs memo cited in press reports said the move is necessary because of, "the increased importance, after the terrible events of Sept. 11, of distributing our major businesses in New York beyond the boundaries of Manhattan" and added that the investment bank's space needs have outpaced available real estate in New York City.
Already a haven for back office operations such as trade execution firms Pershing, a unit of DLJ, and Knight Trading, Jersey City's supporting role is growing in the wake of the Sept. 11 terrorist attacks that wiped out millions of square feet of office space at the World Trade Center.
The attacks also knocked out the Exchange Place subway station on the PATH subway train that links Manhattan to Jersey City, but other stations, plus ferry, bus and light rail trolley service have helped take up the slack.
Since Sept. 11, some 3,000 jobs have moved to Jersey City from lower Manhattan, bringing the total waterfront employment up to more than 30,000, according to local officials.
The Jersey-bound subway trains from Manhattan used to be empty in the mornings. Now they're crammed with commuters heading out to jobs at firms such as Lehman Bros., which moved its bond trading operations to Jersey City.
Vacancy rates in lower Manhattan have climbed, meanwhile. A report by Grubb & Ellis and Merrill Lynch cited by Reuters estimated that vacancy rates in the financial district could climb as high as 16 or 17 percent this year, up from 7.5 percent before Sept. 11 and 10.6 percent late in 2001.
Granted, some firms will stay. American Express plans to keep its headquarters in the city, however. Others will likely move back.
But the proximity of Jersey City, with its views of the water and lower Manhattan, and its infrastructure with railroad, subway, tunnels, highways, and even historic Ellis Island, will likely remain an integral part of the region's commerce machine.
Lefrak
For developer Sam Lefrak of the Lefrak Organization, the opportunities for Jersey City remain rich. He was one of the first to recognize the potential of the shoreline, which offered nothing more than industrial ruin in the post WWII era as depicted in the Marlon Brando film "On theWaterfront."
Working with federal, state and local authorities, plus bankrupt railroads that owned the property, he sank hundreds of millions in the 1980s to clean up several hundred acres along the water just south of the Holland Tunnel.
The privately held Lefrak Organization, already known for developing Lefrak City in Queens and Battery Park in Manhattan, then offered the land for cheaper office space for Wall Street in a $10 billion residential and commercial complex dubbed Newport.
Meeting in a Lefrak office surrounded by architectural renderings, aerial photos and charts, the bombastic 83-year-old said Newport will be his legacy.
"This is really Wall Street west," he said. "This is really part of the west side of Manhattan. You gotta realize that after World War II, lower Manhattan started to develop because there was no room on the east side. (Here) we could build large spaces and build them at a price that's very attractive."
Chase, for example, bought 1.2 million square feet at Newport, which it rented out at $18 per square foot, a fraction of the cost across the harbor.
UBS Warburg is building a 1 million square foot skyscraper to expand operations at Jersey City's Newport, at nearly half the roughly $50 per square foot rental cost in Manhattan.
Lefrak, who will mark the 100th anniversary of his family's business this year, said the UBS building will be the flagship of Newport. The design of the skyscraper includes a bank of windows that protrude along one corner of the tower like a billowing sail on a tall ship.
"Those windows are like the spinnaker for all of Newport," he said.
Datek
Online broker Datek moved its headquarters to Jersey City about a year ago, not at Newport, but about a half mile south along the waterfront to Exchange Place.
"It's very convenient," said Datek CEO Ed Nicoll. "Especially with the PATH (subway). It's much easier to go back and forth than just about anywhere. In fact, I'm on my way over to New York right now. I'll hop on a ferry and I'll be there in 20 minutes."
Long lines are now more common at Jersey City lunch joints, like the Kitchen Café, located at the foot of several new office buildings.
Nanda Pennello, ower of the café, serves up juicy hamburgers, smoothies and salads as hungry customers line up outside.
"Here, it's crazy at lunch," said Kitchen Café customer Anne Marie Karbownik. "If you come at noon, you can barely get a seat. It's kind of nuts and hectic, but a lot more places are opening up so it's starting to even out a little bit."
A New Jersey native, Karbownik said she's not sure if she'll like all the changes in town with the influx of Wall Street. "I don't want to see a bunch of suits running around," she complained.
Powerhouse
With all the glittery skyscrapers under construction, a group of residents has bonded together to save a relic of the city's industrial past. The old Port Authority Powerhouse on the waterfront is a Gothic-styled monolith with a steel frame and exterior brick walls 28 inches thick.
President Theodore Roosevelt sent orders to throw the opening switch in 1908 in the opening ceremony for the plant, which powered the PATH trains and platform lighting under the Hudson River.
After a long battle, it was placed on the National Register of Historic Places late last year.
John Gomez, president of the Jersey City Landmarks Conservancy, said the building will help attract interest to the area.
"We need economic development, but we also feel that history can be a part of economic development," he said. "It's been proven before. There's a great power house in Baltimore that was turned into a tourist attraction, so it can be done. It's been proven."
Overall, there's no doubt that Wall Street has moved to Jersey City in a big way. What remains to be seen is whether it will move back again as office space opens up in Manhattan.
The fate of Jersey City continues to be tied closely to its rich uncle across the water.
Copyright 2002, CBS