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Developers are rushing to build four Jersey City waterfront office projects in an effort to take advantage of Manhattan businesses' burgeoning demand for space.
Two of them intend to start construction by this summer without signed leases in hand. The decision to go ahead is a gamble that New York companies that need room to expand or relocate will be forced to cross the Hudson to find economical rents.
"We believe if we build it, they will come," says Emanuel Stern, the president of Secaucus, N.J.-based Hartz Mountain Industries Inc., the developer of one of the speculative projects.
For Mr. Stern and his competitors, the new wave of Jersey City development means a chance to make money on office construction after years of recession-enforced abstinence. For Jersey City, it means drawing attention from high-profile prospective tenants like CBS, which is considering the area for 1 million square feet to replace its outmoded facility on West 57th Street.
"Jersey City will benefit from the fact that there isn't any trophy space left in Manhattan," says Joe Hilton, a managing director of CB Commercial Real Estate Group Inc.
But for Manhattan landlords, the new developments pose a threat to the vibrant recovery of the downtown office market, where the vacancy rate in Class A buildings has shrunk to 8%, the lowest in 15 years, and the average rent has topped $33 a square...