The “homeless billionaire,” a world-renowned architect and the future of Brick City.
By JASON NARK/Politico
Newark is building again. Yes, that Newark—the city in Jersey that burned after the ’67 riots, the one that helped to define “white flight,” that struggles still with almost impenetrable unemployment and homelessness and crime. That city is building.
And here it all is—its past and present and future—pouring through Irene Hall’s floor-to-ceiling windows downtown: the whites and browns of the Old First Presbyterian Church, founded in 1666; haggard red brick facades with windows sealed off by cinderblock; the neon blue lights of Hotel Indigo, which opened last year in a long-vacant, century-old building near the busiest intersection in Brick City.
The five-year-old Courtyard Marriott, just up the block, doesn’t take Hall’s breath away, it is the first new hotel built in Newark’s downtown in 40 years.
If the story of Newark’s revitalization is all about buildings, Hall, a 60-year-old principal at a charter school here, is living inside one of its newest characters. Her eclectic, fifth-floor apartment is one of the residential units in Teachers Village, a $150 million, mixed-use project financed through a consortium of private and public investments and blessed with mammoth government tax credits. The development lives along five blocks of Halsey Street, just off of the city’s main thoroughfare and was designed to convert into residents some of the 6,000 teachers and administrators who commute to this city of 280,000 each workday.
“When we started thinking about middle income housing,” says Ron Beit, the project’s lead developer, “we thought, ‘Whoa, wait a minute. We have this crop of teachers coming into Newark every day and the energy they bring would be a great catalyst for our plan.’”
Beit started buying up downtown Newark in 2005 with financing from private investors, including Nicolas Berggruen—the chairman of private equity firm Berggruen Holdings who has pledged to give away most of his fortune. (Berggruen is sometimes referred to as “the homeless billionaire” because he lives mostly in posh hotels.)
Thirty-three transactions and $130 million later, Beit and partners had amassed 79 properties, eight of those destined to become Teachers Village. The rest lie in wait for the next phases of the plan: a hotel; more residential, retail and office space; even an aeroponic farm smack in the middle of the city.
When the first Teachers Village buildings debuted in 2013, Beit was joined at the ribbon cutting by Sen. Cory Booker, then the city’s mayor, New Jersey Gov. Chris Christie and a host of public officials, investors and students. There were also protestors, chanting “We need real jobs” and wondering why the city wasn’t as enthusiastic about pouring millions of dollars into creating employment opportunities for its beleaguered residents. When construction’s done in 2016, Teachers Village will consist of eight, low-rise buildings housing three charter schools and a daycare facility, 65,000 square feet of retail, and 205 residential units designed by the world-renowned Richard Meier, Newark’s native son and architect of the Getty Center in Los Angeles and the Barcelona Museum of Contemporary Art in Spain.
Ron Beit, once called the “James Brown of development,” is leading the charge to revitalize Newark | Mark Peterson/Redux for Politico Magazine
Beit, who was once described by Booker as the “James Brown of development,” uses words like “metaphysical” and “ecosystem” when discussing his vision for Teachers Village. Berggruen is even more elegiac. “Newark basically got abandoned, it was like a blank canvas,” he says by phone from Paris in early March. “My feeling is every neighborhood deserves beauty and quality, not because it’s challenged. Newark needs love. Paris doesn’t.”
But this also is true: The project in all likelihood would not have gotten off the ground without the potential for profit. Investors and financial institutions, after all, rarely throw money at something without the prospect of a return on that investment. There are also some in Newark who are skeptical about the plan. Erecting a few residential buildings in the center of town, they say, does not a community make; it also does little for long-time Newark residents in the poorest neighborhoods beyond the city center. Nor does this type of project create the kind of high-tech jobs in high-growth industries so often needed to kickstart and sustain a modern economy.
But Beit and his partners sensed an opportunity. Newark’s relatively cheap land prices and its proximity to New York City—20 minutes or so by train—had attracted new investors and development to the city for the past decade. But there was still a “doughnut hole” in the center of Newark’s downtown, a circle of blight ringed by the city’s more established businesses and government institutions. What this urban abyss needed most, Beit thought, was middle-income earners willing to live and spend money there.
Soaring real estate prices in Manhattan pushed people to Brooklyn, then over the Hudson River into Hoboken and Jersey City. Newark, Beit wagered, would be next, and teachers would lead the way.
An Education in Downtown Newark: A day at one of the city’s charter schools
People have been trickling out of Newark for years. The exodus started during the 1950s, with the advent of better transportation and the emergence of suburbs that fueled the American dream of home ownership. L. Bamberger & Co., Kresge’s and Hahne & Company—the iconic “Big Three” department stores that in the 1920s and 1930s lured crowds that rivaled Times Square’s—began to sag.
But the watershed for the city came on July 12, 1967, in what the late Rutgers University professor and historian Clement Price called the city’s most defining and most misunderstood moment. On that day, a crowd descended on a police precinct to protest the arrest and beating of a black cabbie by white officers. Protesters looted and tossed Molotov cocktails and police moved in.
Charter school principal Irene Hall, at left, and teachers Stephany Copeland and husband Tyler Dockins, right, in their Teachers Village apartments.
All told, 26 people were killed, and over 1,000 were wounded over five days. White families who hadn’t already left—the poor and lower middle-class Irish and Italian and Jewish populations—fled, raising generations who mostly thought of Newark as a place to avoid
Springfield Avenue, where so much of the violence occurred, now has a Home Depot and some chain restaurants, along with a movie theater developed by Newark native and basketball star Shaquille O’Neal.
There were others with even bigger dreams for Newark’s revival, men like Harry Grant, who proposed a 121-story tower near city hall in 1986. It would have been the tallest building in the world at the time and part of a project Grant called, without irony, “Renaissance Mall.” Grant went bankrupt and the mall sat half-finished for nearly two decades. It was torn down in 2005 and replaced by the Prudential Center, which was completed in 2007 through a private-public consortium.
“That Harry Grant project was an individual’s dream, and it reminds us of how individual dreams often fall,” then-Mayor Sharpe James said in 2005.
Most officials in Newark point to the New Jersey Performing Arts Center as the first project that coaxed outsiders back to the city’s downtown when it opened in 1997.
“It was seen as a cultural symbol and reinvestment and one of the first new buildings in the downtown area when it opened,” says Jeffrey A. Robinson, academic director at the Center for Urban Entrepreneurship & Economic Development at Rutgers Business School. “That’s where it starts, but you’ve got to get people to live downtown. You’ve got to build restaurants and venues. There’s lots of people who come into Newark to work but what happens after 5 p.m. is that most of them leave.”
Beit’s initial foray into Newark came almost by accident. Raised in Englewood Cliffs, an affluent New Jersey borough across the Hudson River from the Bronx, Beit was studying at New York Law School in the mid-1990s and was taking a stab at property management to earn a few bucks. His first assignment: overseeing a single-room-occupancy hotel in Manhattan. The deal came with one condition: He also had to become a landlord in Newark.
Beit wasn’t concerned about Newark’s image at the time as a crime-infested, economically depressed wasteland. “I saw all the statistics and I always felt safe,” he says, adding that he feels the same way today.
Yet the city still wrestles with real challenges on both fronts. Newark’s homicide rate has always been high for a city its size, although it has been inching down in the last few years. According to the Star-Ledger newspaper, there were 93 homicides in 2014, down from 111 the previous year. In Newark, there are approximately 12.99 violent crimes per 1,000 people; in New Jersey as a whole, that number is 2.88 per 1,000.
The citywide economic indicators are just as sobering. Roughly 50 percent of Newark’s residents live below the federal poverty line, according to a 2013 study by Legal Services of New Jersey; a tally that same year found that Essex County—where Newark is based—had 14.7 percent of the state’s homeless population, the highest of all of New Jersey’s 21 counties.
“The city of Newark is still struggling with the same things it always struggled with,” says Darold Hayes.
That’s why Hayes, 32, his 9-yer-old son and a bunch of other boys from the Patterson Wolves basketball team, are carrying groceries into the basement of a housing complex less than a mile from Teachers Village on a Saturday morning. Hayes, there with the non-profit FP YouthOutcry, says the rising tide of downtown Newark hasn’t lifted all boats. It’s nice to look at, sure, but he’s got cots to move and bacon to cook.
Beit remembers when he first saw Newark’s “doughnut hole.” It was 2004 and he was on the roof of a building he managed on Washington Street. He noticed the sun shining down on “entire blocks” to the south of Market Street that had unobstructed views.
The area was encircled by Newark’s busiest intersections and shopping areas, its government buildings, its train stations and universities and nearly all of its long-established employers like Prudential Financial Inc., which was founded in Newark in the late 19th century.
The first person Beit convinced to invest in that doughnut hole was financier Warren Lichtenstein and his firm, Steel Partners of New York City. Lichtenstein introduced Beit to Berggruen and the two went for a drive through Newark on a Sunday afternoon in 2005. Berggruen basically said “buy it all.” “He immediately got it,” Beit says.
Beit says RBH paid $130 million for 79 parcels—or roughly $20 per square foot for a total of 6 million square feet of buildable area. It was, in relative terms, a steal. In the non-prime areas of Brooklyn, for example, Beit says comparable property sells for $175 to $250 per square foot; in Manhattan, property is anywhere from $400 to $600 a square foot.
“The largest urban area in New Jersey seemed like a natural place to invest,” Beit says. “Just simply at a base level, the cost of land was cheap and it’s remained pretty stable.”
He and his team also landed $117 million in federal tax credits and an additional $39.5 million in tax credits awarded by the state Economic Development Authority.
“These projects hinge on dollars, and these tax credits go to fill the gaps and make the difference,” Beit told NJBiz.com in 2012 as Teachers Village broke ground.
Beit and Berggruen studied cities all over the world, including Frankfurt and Toronto, and found that middle income residents were essential to making mixed-use, downtown development work.
The 79 parcels include eight lots, or four acres, for Teachers Village, but are also part of a larger plan Beit calls SoMa, for South of Market Street. All told, the SoMa properties encompass 23 acres. His “Four Corners” project hopes to add an additional 130 hotel rooms, 705 residential units and approximately 275,000 additional square feet of office and retail space on Newark’s historic Broad and Market intersection, which was once the epicenter of city’s robust shopping district. That project could cost over $400 million. Beit’s “Makers Village” is slated to bring indoor, aeroponic farms to a three-acre industrial site in the Ironbound district. The funding for the Makers Village project was announced in early March; demolition has begun at the site and RBH is preparing the design phase of the Four Corners project now.
Margaret Anadu, a managing director of the Urban Investment Group at Goldman, Sachs & Co., says she noticed Beit’s properties on a tour with Newark’s economic development corporation in 2008 and they later connected.
“We take risks and we take risks that are calculated,” Anadu says. “At the end of the day, we are making a bet on Newark.” Goldman Sachs has invested approximately $120 million into the project.
In Teachers Village, average rents range from about $700 for a studio apartment to $1,400 per month for a three-bedroom. Beit offers 20 percent of the units at 60 percent of the area median income and below. The rest of the units, he says, are priced at market rate. Teachers and administrators who work in Newark—whether in the public, private or charter school sector—get first dibs at the units; the rental application asks for teaching history and current employer. But some tenants not affiliated with schools are also accepted. Beit says 61 apartments have been finished so far and 59 have been leased. Approximately 70 percent of the tenants are teachers or in the education field.
Beit also bet on teachers for reasons having nothing to do with their paychecks.
“The real dream here was that this would become like Silicon Valley, or like the musicians in Paris in the 1940s and 50s, getting together, creating innovations in sound,” he says, waving his hands like a maestro. “That sort of clustering of like-minded people and the innovation that comes from that was literally the dream.”
And Hall is its catalyst. Born and raised near Fayetteville, North Carolina, Hall attended college in Virginia and taught in the Boston area, where she earned a Ph.D. in education at Harvard. She was a co-founder of Discovery Charter Schools in Newark and commutes about 50 yards from her Teachers Village apartment to school, her only traffic the gaggle of kindergarten students that bottleneck at the door.
The night before, Hall says she had several teachers over for dinner. “We laughed and we had fun but we also talked about some serious issues around our practice,” she says. “It wasn’t like an agenda was set or some professional development kind of thing. It was easy. We have so much to learn from each other.”
Hall was also planning to host parents at her home for a late lunch that coming weekend.
“I think there are wonderful families here. Just great people,” she says. “People that have resources are able to have discussions about the world, about books, about ideas and art making and things like that. Our families, a lot of them work two jobs. I want opportunities for them to learn too.”
There’s no disagreement: Luring middle-income residents is essential to reviving a devastated urban core. But will it work in Newark? Will it be enough to turn around its battered downtown?
The Prudential Center arena is one of the few places that makes Newark feel open for business after sunset. Hours before a recent 7 p.m. hockey game there, customers in Devils hockey jerseys fill up bars around the venue and the popular Ironbound neighborhood nearby. In the Courtyard Marriott, Boston Bruins fans gather in the lobby.
Hugh Weber, the president of the Prudential Center and New Jersey Devils, says he doesn’t expect to win new ice hockey fans in Newark. It’s not the most diverse sport, he admits. What Weber would like to alter is the Prudential Center’s image—from a “castle on the hill” into a “town square” and he gets fairly animated when he talks about it. He uses the phrase “transformative change.” It is possible to walk to all these places people in Newark gush over: the NJPAC, the Newark Museum, the Prudential Center, and, in the University Heights neighborhood, a collection of colleges, including Rutgers, that rival the biggest college towns. Panasonic now also calls Newark home after receiving $102 million in tax credits to move its headquarters to Newark from nearby Secaucus. Prudential Financial is building a new $444 million tower on Broad Street that was awarded $210 million in tax credits.
There are other projects under construction that will almost certainly be a draw for downtown tenants, including a Whole Foods that’s scheduled to open next year. The gourmet grocer—a harbinger of renewal—has leased space in the former Hahne & Company department store, which sat as a vacant reminder of how far Newark had fallen from its heyday.
“Some of this has been inevitable, sure, but the inevitable has taken a long time to get here,” Ommeed Sathe, director of Prudential’s social investments, says about Newark’s downtown growth.
Booker recalls the skepticism he faced in trying to attract new businesses when he was first mayor in 2006. “I still remember the first supermarket conference we went to and I met with my holy grail, which was Whole Foods,” he says. “People kind of laughed at us, but we worked really hard to drum up attention to Newark.”
Donald Katz, the founder and CEO of Audible.com, was one of the first to take notice. Katz was “manna from heaven,” Booker says, and Audible.com was one of the first companies to move there under his regime.
Katz, 63, founded the company in 1995 and took Audible, the world’s largest seller and producer of downloadable audiobooks to Newark in 2007, sharing the One Washington Park officer tower with Rutgers Business School. He heard dire warnings. Detractors said his employees would all quit or be mugged outside. He also didn’t accept incentives, such as tax credits, for moving his business into the city.
“The investors asked me what the hell I was thinking,” he says, with a laugh in a conference room at Audible named after Stephen Crane, the Newark-born author of “The Red Badge of Courage.”
A former journalist who wrote for Rolling Stone, Esquire and the New Republic, Katz wasn’t deterred by Newark’s reputation and didn’t want to be a distant observer either. Audible.com’s paid interns are high school students from a nearby charter school, Katz says, and the company also implemented a “Reading Pals” program that pairs employees with struggling middle school students.
“I knew,” he says, “that changing Newark was one of the most important American stories.”
Yet Katz is concerned that Newark’s promise will not be realized without more of a focus on creating high-tech, 21st century jobs.
“I worry,” he wrote in an April 2013 op-ed in the Star-Ledger. “I worry that there has not been an influx of other tech-driven, job-growth economy companies like Audible since we arrived.” And he questions the wisdom of throwing hundreds of millions of dollars at the Panasonics and the Prudentials and the Teachers Villages of the world to convince them to settle or stay in Newark.
“Our government-level urban economic policies continue to offer tax incentives to very large companies, usually those with healthy bottom lines but limited job growth, to move from one place to another,” he wrote. These policies, he continued, “do not engage the job growth economy” of start-ups and entrepreneurs and instead focus attention and dollars on “larger companies that grow jobs relatively slowly.” This approach, he feared, “could cause Newark to miss out unless we change course.”
This isn’t Brooklyn,” says Newark Mayor Ras Baraka.
Well, at least not yet.
Baraka, a lifelong resident whose father was the poet and activist Amiri Baraka, is responding to concerns raised about Teachers Village. A popular New Jersey education blog questioned whether the rents there would only attract inexperienced teachers. A few commenters on the blog thought Teachers Village just sounded creepy.
There’s also the “g-word”—gentrification—that can accompany a blitz of urban redevelopment.
“We are definitely trying to transform our downtown into a neighborhood,” Baraka says. “Newark can add to its population. We have space.”
So much so that on Valentine’s Day, Newark offered couples the opportunity to purchase 100 empty lots, mostly in the more distressed South and West Wards beyond downtown. The price was $1,000 but it came with the stipulation that a home be built there in 18 months.
Julio Colon, Newark’s director of real estate and housing, says couples camped in frigid temperatures. He says 32 of the buyers were from Newark; 45 were from elsewhere in New Jersey, and 22 came from New York.
“We had white, black, Latino, Portuguese, Indian, African, you name it,” Colon says.
There’s a combination of culture and history in the businesses around Teachers Village, too. At Source of Knowledge, a store that sells African art and books on Broad Street, owner Dexter George told me how he became a master welder in his native Tobago. He fears Teachers Village won’t connect with the neighborhood.
At Dan’s Hats and Caps on Branford Place, owner Dan Phillips showed me why Italian hats are so expensive. In Hobby’s deli, a Newark landmark, co-owner Marc Brummer points the indecisive in the right direction.
“Everybody orders the number five,” he says.
That’s pastrami, corned beef and Russian dressing on rye, something sanitation workers and senators have eaten there for decades in what is arguably the most diverse setting in Newark. There’s a block of steel doors and plywood windows across the street, but Brummer doesn’t worry, preferring to think of what Newark could be, not what it was.
“Newark’s got great bones,” he says, and hockey fans and residents of Teachers Village have only added to the interesting mix.
There are other signs that tenants are out and about, attempting to terraform a community in the heart of downtown.
“There’s way more people walking dogs in the neighborhood now,” Beit says.
One of those dogs is Finnick, a slightly overweight English bulldog with an under bite, who lives in a Teachers Village penthouse that looks primed for a catalog spread. During those brief, awkward moments when Stephany Copeland has to bend down behind him on the sidewalk, the St. Louis native sometimes runs into other dog owners, both of them wishing there was somewhere better for their dogs to, well, you know.
“It’s been nice to walk the dog and to see someone else with a dog and we’re both like, ‘We really need more green space or we need more poop bag stations around here,’” says Copeland, who’s sitting at her kitchen tabletop while Finnick lounges on her couch. “Isn’t there also something about bringing in the middle class that also means bringing in dogs?” Copeland jokes.
Copeland and her husband, Tyler Dockins, met through a Teach for America program in Phoenix and both now work in Newark charter schools. They commuted from Jersey City, the state’s second largest city, and put their names in a lottery for a top-floor unit. It offers them views of the golden dome atop Newark’s city hall.
They live next to Irene Hall, whom they adore, and they’re saving $500 a month for a unit that’s 200-square feet bigger than their previous apartment in Jersey City.
Copeland and Dockins were able to lie in bed sometimes and watch crews demolish an old, brick building from Newark’s past. Now there’s a bare hole where it stood and the site is getting prepped for something new in Teachers Village. They’ve both got their fingers crossed.
“Do you know what it is?” Copeland asks, looking out at the dirt below. “I really, really hope it’s green space.”