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Date: May 25, 1994

Location: Hoboken

Title: Real Estate/The Developer Who Is Bringing Port Libert Back to Life

Author: Mukul Pandya

Subject: After years of focusing on urban housing, Joseph Barry and his firms are branching out

Few housing communities have symbolized the glittering real estate ambitions of the go-go 1980s as much as Jersey City”s Port Libert . Based on the Hudson”s western shore, the 363-unit condo project, with its canals and boat slips, was modelled on the wealthy residential enclaves of Europe. In its heyday, Port Libert was hyped as Venice on the Hudson and had prices to match its image. Even a two-bedroom apartment went for more than $300,000.

Then boom turned to bust, and everything changed. Construction at the project stopped in 1989, and its lead lender, City Federal, New Jersey”s biggest thrift, collapsed into the arms of the Resolution Trust Corp., the federal savings & loan bailout agency. When Port Libert Partners, the developer, declared bankruptcy in January 1991, it was as though a dream had died.

Now the dream may be coming back to life. Joseph Barry, a residential developer who heads The Applied Companies in Hoboken, struck a deal earlier this year with the RTC and a group of other lenders to take over the unfinished portions of Port Libert. These include 174 unsold condo units and 60 acres of prime waterfront land. Valued at $13.9 million for the condos and $18 million for the land, the properties went under contract in January, and the deal is expected to close over the next few weeks.

The Applied Companies in late June will hold what Barry”s son David, a senior associate, calls a “kickoff, rebirth auction.” Conducted by Kennedy-Wilson, a California firm, the auction will aim at establishing the present market value of Port Libert”s condos. The Applied Companies also plans a joint venture with the RTC to develop the vacant land after filing a new master plan. “The original plan involved a canal system whose infrastructure costs don”t make sense in today”s market,” says David. “We”ll scale back the project. We want to first get sales going. That”s the key to Port Libert”s rebirth.”

The revival of Port Libert fits into a pattern that Barry established nearly three decades ago. Ever since 1967, when he became a developer, Barry has focused on reviving depressed real estate projects and communities. During the 1970s, The Applied Companies–so named because Barry wanted to emphasize the practice rather than the theory of producing decent homes–built affordable multifamily rental housing in depressed urban areas like Hoboken. During the 1980s, as federal support for subsidized housing programs dwindled, the group began to construct market-rate and luxury homes.

Today, having built some 3,000 apartments worth more than $200 million all over the state, Barry and his companies are snapping up projects like Port Libert from the RTC and other institutions. Among them: Bethlehem Steel”s former shipyard in Hoboken, which Barry is turning into a mixed-use residential and retail project, and the Essex and Sussex Hotel in Spring Lake, which is being revamped into a senior housing community. Says Jay Trien, senior partner in Trien, Rosenberg, a Morristown accounting firm, who was at Rutgers Law School with Barry during the 1960s: “In those days Joseph talked about going to Hoboken to do good. He has also done very well.”

Barry”s work as an attorney who handled low-income housing projects during the 1960s prompted him to enter real estate. “I began to believe that changing laws doesn”t make a difference if housing deteriorates,” he says. Applied Housing Associates, his first company, which he founded in 1967 with his father Walter, constructed subsidized housing in Newark. “We were rank amateurs,” he recalls. By 1970, he decided to move to Hoboken, which seemed to have retained more of a social fabric than inner cities like Newark. At a time when many other developers favored so-called clear-and-build construction, Barry believed rehabilitating old buildings was the way to promote urban renewal. Says Joseph Cicala, vice president of development: “We wanted to make money, but we also wanted to revitalize neighborhoods.”

Many developers have found that building homes for the poor, however well-meaning it might be as a social goal, can be a minefield because of the high risk of default on rents or mortgages. To minimize this risk, Barry established strict screening procedures for potential tenants. “We did extensive checks and credit investigations. That allowed us to select people based on their potential for being good citizens,” he says. That philosophy also kept The Applied Companies solvent and growing.

By 1985, rental rates had begun to soar and condominium construction was booming. “We did no condo development during the 1980s,” says David. “We saw the market was getting inflated, so we pulled back and did not commit ourselves to anything stupid. We didn”t miss a single mortgage payment during the recession.”

That track record is now helping Barry acquire plum properties like Port Libert, the Bethlehem Steel shipyard and the Essex and Sussex Hotel. At the shipyard, Barry plans to build 390 residential units and 110,000 sq. ft. of retail space anchored by a 60,000-sq.-ft. Shop-Rite supermarket. The project has been winding its way through the approval process since December 1992. “We expect to start in two months,” David says. Another top-priority project is the hotel, which Barry bought last September from NatWest. Plans call for its conversion into 170 luxury units for senior residents.

Barry sees the group”s future primarily in urban housing. “We are experts at urban multifamily housing development. A city renaissance is coming, and we want to be the pre-eminent firm in New Jersey in the field,” he says. Barry has no plans to wander far from the state, however. “We”ll stay close to home,” he adds. “Once you buy a plane, you”re in trouble.” That is a maxim a lot of real estate people and bankers should have followed in the 1980s. u

BOX: Also a Press Lord

Joseph Barry, president of The Applied Companies, is not just a developer–he is also a publisher. Barry runs The Hudson Reporter, a chain of five weeklies with a combined circulation of 75,000. Barry”s publishing business grew out of his real estate activities. “In 1983, we had become a major developer in Hoboken. I noticed that the town was becoming chichi, so I started The Hoboken Reporter as a weekend paper,” Barry recalls. Over time he added other publications, all of which are distributed free. Barry claims he believes in not interfering with the editorial content of his newspapers. That seems to be true. A recent issue of The Hoboken Reporter published a poem opposing the Bethlehem Steel shipyard, a project The Applied Companies is developing.