My husband and I recently traveled from Chicago to New Jersey for a weekend full of family festivities, and we decided to say in Newark. Even though I grew up on Long Island and lived in Brooklyn for 6 years post-college, the only time I spent in Newark involved traveling through the city by train or around the city by car. Before our trip, family and friends asked – “why are you staying in Newark?” And their immediate follow-up question became – “what is happening in Newark?” By the end of the trip, the same family friends asked whether I would consider investing in Newark now. Well, here are a few thoughts.
First, we decided to stay in Newark because we could use our hotel points and stay several nights for free (thank you Starwood). It did help that we previously read about Newark’s revitalization efforts, which have been somewhat significant. After talking to some locals, driving around, and checking out the sites, I now wonder whether Newark could truly represent a great real estate investment opportunity. I asked myself why the city hasn’t attracted the same level of investment interest as Detroit, but more buzz than places like the Southside of Chicago.
Back in 2008, I got priced out of investing in real estate in Park Slope and it left a bad taste in my mouth because I had been living in the neighborhood six years prior. I told myself that I would always be on the look out for a new opportunity to invest in a neighborhood before gentrification takes over. Here are a few factors that I considered when seeing if I would invest in Newark real estate:
Local presence. I think living in (or at least somewhat close to) the community you’re investing in is important. Unless I had some feet on the ground to keep an eye on things, manage the property, and be in the know with the development of the surrounding neighborhoods, it’s hard to be committed to ensuring a return on your investment. The real estate investors that I have known to be successful are present locally.
Big business. When the businesses start coming, it’s time to take a deep look at opportunity. In Newark, Prudential and Audible.com had the most visible signs of big business anywhere in the downtown area. And while Teacher’s Village was a bright spot on our trip, it took us several minutes to realize we were actually in the place. We also stopped in a local Kmart on the outskirts of the business district, and I thought I went back in time about three decades. It was apparent that the store had not been updated in years and still had inventory from three years earlier. It’s comforting to here that Panasonic has moved its headquarters there, but I think the City still has a little ways to go.
Reviving arts and culture. Chicago’s own Theaster Gates has been championing the impact of art and culture on community revitalization, and I could not agree more. You cannot escape seeing the New Jersey Center for the Performing Arts in your view when driving around the City. Many residents and visitors frequent the center daily, and it is clear of its impact on helping the city get beautified.
The diversity. You must ask yourself whether a community of color, like Newark, will eventually become more diverse. Yes, this is the sad truth of gentrification. While we fight to change a housing market that systemically favors white economic mobility, we must be cognizant of this truth. When traditional communities of color get infused with other ethnicities outside of black and brown people, things change all around. Restaurants pop up, amenities appear, and the neighborhood will often lose its stigma of being “the hood.” While these are all good things, the same community of color usually does not participate in the wealth generated as a result of the neighborhood’s revitalization. So, you must be honest with yourself and see whether you want to invest in a community that has the promise of getting revitalized, yet a fighting chance of not getting too gentrified. For others, your investment returns because of gentrification might outweigh the social costs borne by the existing residents.
After giving the Newark opportunity some deep thought, the local presence factor is big enough to keep me from seriously considering Newark right now. I will keep my eyes on it, however, and concentrate on opportunities a little closer to home in Chicago. But, my newfound Newark excursion has sparked in me a desire to closely examine other neighborhoods that are prime for revitalization.
What will you do, and have you ever made an investment bet on a City ripe for revitalization?