The Port Authority of New York and New Jersey was negotiating a land exchange with the City of Jersey City to relocate the 40,000 square foot PATH Substation #2 to a nearby triangular site to allow for the redevelopment of the historic Powerhouse building by a private developer. Both sites are located the Powerhouse Art District, one of Jersey City’s fastest growing neighborhoods and a desirable location for a variety of potential land uses. However, many factors had to be considered in determining the highest and best use of the new site’s 190,000 square feet of air rights, given that it would be located over this critical PATH train infrastructure.
RESGroup performed the highest and best use analysis, which considered office, rental apartments, condominiums, retail, different types of hotels, and parking. We also managed a consultant team that estimated the cost and feasibility of the proposed development, the financial gap, potential financial incentives, timing, and potential impacts on the surrounding neighborhood. The central objective of the analysis was to determine the amount a developer would be able to pay for the air rights to offset the construction and relocation cost of the Substation, with consideration given to a potential public/private partnership structure. RESGroup worked with many departments in PANYNJ in this engagement, including Real Estate, PATH Operations, and Engineering to ensure that any redevelopment scenario considered the Substation’s security and structural and operational viability. Ultimately, the Port Authority determined that although a public private partnership provided a viable path to redevelopment, the security of maintaining control of the air rights was their greatest priority.