"More than 30 percent of all commercial and multifamily development in the entire state is happening in Newark."
Cory Booker on Tuesday, March 5th, 2013 in a State of the City address
Cory Booker claims Newark represents a third of state's real estate growth in 2012
There’s a boom happening in Newark that puts the Brick City in a category all its own, according to Mayor Cory Booker: real estate growth.
How big is the boom? In 2012, Newark was responsible for at least a third of the state’s real estate development, Booker claimed during his State of the City address on March 5.
"In fact, based on reported data from the 4th quarter of 2012, Newark is currently the hottest market for construction in the State of New Jersey," Booker said. "More than 30 percent of all commercial and multifamily development in the entire state is happening in Newark. Let me say that again: more than 30 percent of all of the commercial and multifamily development under way in the State of New Jersey is happening in Newark."
Claiming a third of the state’s real estate growth is a staggering statistic that PolitiFact New Jersey wanted to double check. It’s correct -- but only when measured a particular way.
Before looking at Newark’s numbers, let’s first explain how real estate growth is measured.
Generally speaking, experts told us the real estate industry standard is to measure residential growth in building permits issued and commercial development in square footage. Why?
The barometer for growth in residential real estate is number of units, which is tracked by building permits. That shows demand for households, said Rosemary Scanlon, divisional dean at the New York University Schack Institute of Real Estate and a former chief economist for the Port Authority of New York and New Jersey.
"You could have one McMansion in Hunterdon County with 20,000 square feet or you could have 20 households at 1,000 square feet," she said.
Size matters more in commercial real estate because space can be made to fit the needs of firms moving in, and it’s also an economic indicator of business activity in the community, said Ken Danter, CEO of the Danter Company, a real estate research and consulting firm based in Columbus, Ohio.
The state Department of Community Affairs, however, tracks data by building permits because permits show "the beginning of the process," said John Lago, the DCA’s housing research manager.
"If you’re mixing standards, it’s like mixing centigrade and fahrenheit," he said.
While there’s nothing technically wrong with using one measure for all real estate growth, it’s not exactly conventional, Scanlon noted. Danter said he wouldn’t mix the two.
So there are differing opinions about mixing building permits with square footage to measure growth.
Now let’s look at the numbers.
Real estate development firm Jones Lang LaSalle used a database known as CoStar to crunch numbers for Booker that were also shared with PolitiFact New Jersey. Those developments were measured in square footage, according to Adam Zipkin, Booker’s deputy mayor for economic development.
For 2012, New Jersey had projects under construction totaling 3,306,551 square feet. Of that, Newark was responsible for projects totaling 1,168,793 square feet – or 35.3 percent of the state real estate development total, according to the data.
So based strictly on square footage, Booker is correct that Newark represents 30 percent of the real estate development going on in New Jersey.
Jersey City is first, however, when looking at building permits and dollar value of new construction, according to preliminary DCA data for 2012. Jersey City’s construction was valued at $391,016,932 compared with Newark’s, at $276,225,281, according to a report prepared by Lago.
Booker said, "More than 30 percent of all commercial and multifamily development in the entire state is happening in Newark."
Data from Jones Lang LaSalle shows that in terms of square footage, Newark accounted for 35 percent of the residential and commercial real estate growth last year in New Jersey. Experts, however, told us that the industry standard is to measure residential growth in building permits and commercial growth in square footage. Given that caveat, we rate the statement Mostly True.
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Published: Thursday, March 14th, 2013 at 7:30 a.m.
NJ.com, Booker aims to hire police, set up review board and shore up legacy in ‘State of the City,’ March 4, 2013, accessed March 5 and 11, 2013
Phone interview with John Lago, housing research manager, New Jersey Department of Community Affairs, March 7, 2013
Phone and e-mail interviews with Adam Zipkin, Newark deputy mayor for economic development, March 6 and 7, 2013
Phone interview with Reginald Ross, forecasting manager, Jones Lang LaSalle, March 7, 2013
Phone interview with Ken Danter, CEO, The Danter Company, March 11, 2013
Phone interview with Rosemary Scanlon, divisional dean, New York University Schack Institute of Real Estate, March 11, 2013
E-mail interview with Allison Rosen, marketing and public relations director, New Jersey Association of Realtors, March 11, 2013
National Association of Realtors, Newark-Union Area Local Market Report, Fourth-Quarter 2012, accessed March 11 and 13, 2013
National Association of Realtors, Expectations and Market Realities in Real Estate 2013, Feb. 8, 2013, accessed March 11 and 13, 2013
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