Hoboken / Manhattan Real Estate Blog

Monday, February 6, 2006
By KEVIN G. DeMARRAIS
STAFF WRITER

Special Report: Forecast ‘06: Real Estate / Transportation

LONG BRANCH — The giant claw of the earth mover chomped at the whitewashed side of what used to be the Fountain Motel, opening a gaping hole.

Within hours on a late December morning, the Long Branch beachfront motel that had degenerated from an oasis for generations of summer tourists into a flophouse had been transformed into piles of cinder blocks, wires and pipes.

Shortly, they too were gone, leaving an open field on which several dozen shiny new condominiums each costing a half-million dollars or more will be built.

Such is the real estate market on the Jersey Shore. From Cape May to Sea Bright, construction is turning communities of vacation bungalows and rental units that sat idle for much of the year into mansions, condominiums and town houses.

And price seems to be no object — if there’s an ocean view.

In the Wildwoods, ’50s-era motels are being converted to condominiums. In Manasquan, decades-old bungalows are giving way to multi-story homes. And in Sea Bright, multimillion-dollar homes line the beachfront.

But those transformations are minor compared with what is happening in Long Branch, which is counting on a $1 billion public-private redevelopment initiative to turn what had become a tired, run-down summer resort back into the showcase of the Shore.

It started with the 15-acre Pier Village, which includes 420 rental units along the ocean and 100,000 square feet of commercial space, and continues with hundreds of condominium units in developments on both sides of Pier Village as well as into the city’s main business district.

“The condo market is very, very hot,” said Liz Scott, manager of a Murphy Realty office two blocks from the beach.

When The Bluff, the first condo units in the redevelopment zone opened two years ago, the introductory price was around $450,000, and people were saying they’ll never be able to sell those, Scott said. By the time the complex opened, prices were in the $750,000 to $850,000 range.

“Now those same people are saying I should have bought two,” Scott said.

Long Branch is a natural for development because it is the northernmost town with lots of beachfront property. The Jersey Shore starts with Sandy Hook, which is federally owned, and Sea Bright and Monmouth Beach have little property east of Route 36, the main road through the towns.

But the highway bends slightly westward near the Long Branch-Monmouth Beach border, creating additional land with ready access to the beach and Seven Presidents Oceanfront Park.

Until three years ago, much of the land was abandoned or rundown. A century earlier, Long Branch was a prominent vacation spot. But it had deteriorated over the decades, and a 1987 fire destroyed the fishing pier and boardwalk.

Go-go bars are often a sign that an area is deteriorating, “but our oceanfront was so bad the go-go bar closed,” said Howard Woolley, Long Branch’s business administrator.

Although work is far from completed, the redevelopment has already had a significant impact with gated communities and sparkling new multi-unit dwellings popping up along Ocean Boulevard.

The result has been surging prices. Prices for the Renaissance at Long Branch development — a mix of single-family homes and town houses — are around $5 million, nearly three times the $1.8 million they drew when the development opened about five years ago, Scott said.

And the real estate market is experiencing a domino effect. On the west side of Ocean Boulevard, for example, The Kleiner Group has started work on Diamond Beach, a 96-unit luxury condominium complex where prices range from the high $500,000’s to $1.9 million, a sales agent said.

The smaller units are about 1,600 square feet, including two bedrooms, two baths and a balcony, while top dollar will buy a two-level penthouse of almost 3,000 square feet.

Diamond Beach is due to open in March 2007.

Prices are up “even in areas where there was not much demand previously, eight blocks from the beach,” Scott said. “It’s amazing what people are getting for them.”

There is, however, a down side, which Joanne Fallone and dozens of other longtime Long Branch residents face.

Fallone lives in a small, neat, trim blue Cape across Morris Avenue from the Fountain Motel and Astor Gardens, which also is scheduled for razing.

The property has been in Fallone’s family for 80 years, but it could be next for the wrecker’s claw as Long Branch officials use eminent domain to assemble large parcels of land for the new condos in what will be known as Beachfront South.

“I’m not thrilled,” she said.

Neither are residents of 23 other properties who are fighting to save their homes — or to get what they consider fair compensation — from the second phase of development. They live in Beachfront North Phase 2, a project being developed in a joint effort by Hoboken-based Applied Development and a K. Hovnanian subsidiary.

Scott, a lifelong resident of Long Branch, says she sympathizes with the homeowners, but the redevelopment has saved the city.

“A lot of things fell apart,” Scott said. “It was truly a ghost town. Without revitalization, it would have continued to go down. Until they did all the redeveloping, the properties weren’t worth much.”

A similar redevelopment is under way in Asbury Park, which has fallen on hard times in recent years. The city is working with Asbury Partners LLC to develop a 56-acre waterfront tract that will include 3,164 town houses and other residential units.

Long Beach Island, like much of the shore, is dominated by single-family homes, and buyers can expect to pay $1.6 million “on the low end,” with nicer oceanfront homes going for $2 million and up, said David Sheridan, an agent at Prudential Zak Realtors in Ship Bottom.

If satisfied with Barnegat Bay waterfront property at the west side of the barrier island, buyers can expect to pay at least $1.25 million, he said.

Price increases have slowed somewhat, but that’s to be expected, he said. “Over the last five years, prices have gone up so much. You have to take a break now and then.”

Move off Long Beach Island and homes on the lagoons are selling for $500,000 and up, said James Joeriman, immediate past president of the Ocean County Board of Realtors. The nicest homes in Lacey Township with a water view are going for $1.2 million to $1.3 million, although a few can fetch as much as $2 million, he said.

The real estate market is still good, but it has slowed somewhat, Joeriman said.

What that means is that houses may stay on the market a bit longer, and sellers who have seen double-digit price increases will be satisfied with increases in the 6 percent to 7 percent range.

With home prices rising faster than salaries, “the pool of buyers is smaller,” Joeriman said. “But it is still there.”

Copyright © 2006 North Jersey Media Group Inc.