Learning from Jersey City

When New York City politicians invoke New Jersey, they don’t usually offer words of praise. But recently, one small slice of the state has been feeling the love from across the Hudson. 

Jersey City has become a source of housing inspiration for its much larger neighbor. Mark Levine, the Manhattan borough president and New York City’s all-but-certain next comptroller, has tweeted enviously of Jersey City’s home building boom. So has state senator and former mayoral candidate Zellnor Myrie, along with the Democratic nominee for mayor, Zohran Mamdani.

“We need to interrogate why Tokyo is building 10 homes for every thousand people, Jersey City is at seven, and New York is barely at four,” Mamdani said on Bloomberg’s “Odd Lots” podcast in May. 

In fact, Mamdani understated the discrepancy. In 2024 — New York’s biggest year for housing production since 1965, as developers scrambled to take advantage of expiring property tax abatements — the city did in fact produce about four new homes per 1,000 residents. But Jersey City actually produced 13 homes per 1,000 residents. Last year, this city of 300,000 added twice as many apartments as all of Queens, whose population is 2.3 million. 

The discrepancy is even greater compared to more suburban parts of the region. Last year, Hudson County, the county of 700,000 where Jersey City is located, issued permits to about 5,000 new residential projects. Nassau County, with its 1.4 million residents sprawled across Long Island, issued permits to about 800 projects.

It’s worth interrogating: How does Jersey City build so much housing? And beyond that, how has the building boom affected city life, particularly the central concern of housing policy: affordability? 

While an undeniable good for the region, Jersey City’s growth spurt has come with some growing pains. And affordability remains a huge challenge despite all of the new development, though the situation on the ground is complex.

What Jersey City does show, unequivocally, is that when municipalities clear the way for building massive apartment buildings right next to transit stations in the New York City area, developers will do so. Jersey City also shows that a building boom can coexist with rent control and inclusionary zoning. It’s a model that, if repeated across the region, could someday go a long way toward addressing the housing crisis. 

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Jersey City is, by some measures, the fastest-growing city in the Northeast. Its population increase of more than 20% between 2010 and 2024 puts it in a class with Sun Belt cities like Phoenix and San Antonio.

However, compared to its high-growth peers, Jersey City is tiny. Its 15 square miles of land (not including the watery surrounds of Ellis Island, most, but not all, of which is technically within city limits), were completely built out long ago.

Jersey City leaders knew that to accommodate more people, the city had to grow up rather than out, especially near the PATH train stations that whisk commuters directly to Manhattan’s business districts. The groundwork for this vertical growth was laid in the 1970s, when downtown and adjacent industrial areas were rezoned to accommodate as many as 60,000 additional residents. 

The Exchange Place redevelopment plan, passed in 1974 and amended in the 1980s, allowed projects to reach a floor area ratio (FAR) — a measure of building size and density — of 15 or even greater in certain cases. Subsequent rezonings around PATH stations were even more permissive. The Journal Square plan, initially adopted in 2010, has a maximum FAR of 25 on lots closest to the station. 

These zoning regulations meant that for the past half-century, the highest allowable densities in the region were not in Manhattan, but across the river in Jersey City. New York City’s 1961 zoning ordinance capped FAR at 12, requiring developers to assemble complex air rights packages or build large plazas to reach greater densities. (The state legislature lifted the cap last year.)

Jersey City is “a rare example of a city that has, of its own accord, without state mandate, pursued real transit-oriented development,” said Alex Armlovich, a housing policy analyst at the Niskanen Center. “These are big buildings going up on top of the train stations.”

Armlovich describes Jersey City’s development pattern as “missing massive,” in contrast to the “missing middle housing” idealized by many urban planners. It’s a pattern that’s commensurate with housing need in a region with an extreme shortage, and complementary to a high-frequency-rail rapid-transit system like PATH, he said.

Much of Jersey City’s zoned capacity went unused until the region’s economy hit its stride around the turn of the millennium, when employment growth in Manhattan resulted in housing demand overflowing outside the five boroughs. Not only could developers build larger buildings than they could in New York, but they were also greeted with handsome tax breaks and a streamlined approval process.

“I​n the ’90s and early 2000s, the development community here got pretty much whatever they asked for,” said Annisia Cialone, director of housing, economic development and commerce for Jersey City. Typically that meant generous property tax abatements or payments in lieu of taxes, called “PILOTs,” that effectively reduce a project’s tax bill and increase its value. By 2010, a state report found that $2 billion worth of real estate in Jersey City — owned by big names like LeFrak, Kushner and Trump — was exempted from the property tax rolls.

Since then, Jersey City has steadily demanded more from developers. In 2013, when Mayor Steven Fulop took office, he created a tiered system of PILOTs, making them less generous in the most desirable parts of the city. The city also began asking for community benefits agreements, through which developers paid for improvements to parks, schools and other infrastructure. Then, in 2021, the city adopted an inclusionary zoning ordinance that required projects seeking zoning variances to dedicate 10% to 15% of units to affordable housing, depending on the neighborhood.

Nonetheless, the building boom continued. Between 2010 and 2022, nearly 26,000 new homes were constructed in Jersey City, growing its housing stock by 24%, according to an analysis by the Regional Plan Association. And the development applications keep on coming, with 68,000 units approved since 2015, many of which have not yet broken ground. “Our planning board agendas are full,” Cialone said. “We’re backed up.”

Even as it has asked for more from developers, Jersey City has maintained a broadly prodevelopment posture, with permissive zoning and a planning process geared toward efficiency and speed. Many developers that work in Jersey City are New York-based firms attracted to the more favorable development climate. “We meet with them, we talk with them, we work together,” Cialone said of the city’s relationship with developers. “We’re not impossible.”

City staff independently review project financials to see how much they can extract from a developer without pushing them away. The city is also helped by state-level policies that require less environmental review; there’s nothing resembling the cumbersome New York City Uniform Land Use Review Process, or ULURP, here. And when it comes time for developers to seek approvals, projects tend to sail through in a single planning commission meeting because everything’s been negotiated in advance.

So the Jersey City growth machine grinds on. “It has been producing housing at an incredible rate, but in spite of that, the affordability conditions kind of have remained stagnant,” said Marcel Negret, author of the RPA report. “Jersey City cannot resolve the housing problems for the metro area on its own.”

For most of Jersey City’s building boom, its housing costs have risen along with the skyline. Median market-rate rents increased 50% between 2015 and 2024, roughly matching increases in the metro area overall, according to the RPA report. Jersey City has taken on the region’s housing burden, but it hasn’t always felt the benefits.

For many locals, it’s a frustrating dynamic. “We hear the concerns of the residents,” Cialone said. “It’s hard to see how much we build and still see the prices where they are.”

However, median rents may not describe the average tenant’s experience, since, in Jersey City’s case, that figure is pulled upward by a large proportion of recently constructed higher-end homes. Meanwhile, most older units in Jersey City are under a rent-control ordinance that limits annual rent increases. It’s possible the new buildings are acting as “yuppie fish tanks,” absorbing demand from high earners and preventing them from competing for the older homes of more working-class residents.

Census reported “transaction rents” that existing leaseholders pay have grown much more slowly than median asking rents for newly available apartments in recent years, according to a study from the Rutgers Center on Law, Inequality and Metropolitan Equity. The study also found that the number of rent-burdened households in Jersey City declined slightly between 2015 and 2023.

That could be evidence that longtime residents are not being hit as hard by higher housing costs; on the flip side, it could be a reflection of the fact that the average resident is now wealthier and in a better position to afford the high rents.

Jersey City’s demographic change during its development boom is also a complex story. While the city’s Black population has declined in recent years, its Asian, Hispanic and foreign-born populations have continued to grow. It remains one of, if not the most, racially diverse cities in the country, with white, Black, Hispanic and Asian residents each making up about a quarter of the population. The sidewalks and storefronts of Little India are overflowing with shoppers, while 50-story towers rise up a stone’s throw away.

It’s also possible that supply is finally catching up with demand and providing tenants some relief. Vacancy rates are up slightly, Census data show, and some builders have begun grumbling about an oversupply in the market. The latest data from real estate platform Zumper show Jersey City rents have declined 9% over the past year, with one-bedroom rents declining by 17%. New York City rents have decreased by 2% overall and 6% for one-bedrooms over that same period, according to Zumper data. (Rental price data are notoriously fickle: Other real estate sites show rents in both cities being relatively flat.)

There have also been other growing pains. As Jersey City prospered, state aid for schools declined, shrinking by nearly $300 million since 2018. New Jersey calculates its subsidies based on property values and median incomes, a formula intended to favor poorer districts. But as with housing affordability, median incomes and property values do not convey the full picture. Jersey City remains socioeconomically diverse, with many high-need students from underprivileged backgrounds.

The city’s ability to absorb state funding cuts is exacerbated by the many high-value properties that remain off the tax rolls, as well as PILOT windfalls that were spent immediately, instead of being saved for the long term. To close the gap, the city raised property taxes by 50% between 2021 and 2023.

Katie Brennan, the Democratic nominee for the state Assembly seat representing Jersey City in the November election, has campaigned on rejiggering the school funding formula by weighting median income and property values less, and weighting the number of students in poverty and students for whom English is a second language more.

“The state is punishing us for growing,” said James Solomon, a Jersey City councilmember and a candidate for mayor in the November election. Solomon, a frequent critic of Fulop, the three-term mayor he hopes to replace, also feels that for much of the building boom, the city did a “poor job maximizing the public benefit of that development, leveraging that development for infrastructure, for affordable housing, for the types of public goods that can come through the development process.”

He’s one of several mayoral candidates calling on the city to do more to specifically promote affordable housing construction. Solomon, along with other candidates like former New Jersey governor Jim McGreevey, councilmember Bill O’Dea and former school board president Mussab Ali, is calling for increasing the inclusionary zoning rate to 20% or more in certain cases. (All are running as Democrats in the nonpartisan general election. Despite being eligible to run for a fourth term, Fulop declined to enter the race in order to mount an unsuccessful bid for governor.) Solomon also spearheaded a recently passed development fee that will fund ultra-low-income housing and the city’s right to counsel program for tenants facing eviction.

Notably, none of the major candidates are calling for reducing new development in the city. Even Solomon, the progressive standard-bearer, concedes that “rents would be higher if a lot of those (new buildings) hadn’t been built.”

But there’s a risk that Jersey City is pushing the limits of what it can demand from developers to the point where they stop building. The city’s inclusionary zoning ordinance has yielded about 500 below-market-rate homes as of the end of 2024. However, no project has yet broken ground at the 15% inclusionary rate, Cialone said. She believes a few are poised to do so soon.

To keep housing production going through tough economic times, you have to “err on the side of generosity” toward developers when it comes to inclusionary zoning, Armlovich said. That’s “not always politically attractive,” he added.

In recent years, Jersey City has walked a fine line. It has rolled out the red carpet for developers with high-density zoning and an easy planning process. Simultaneously, it has steadily increased public benefits developers are required to contribute. And it has done all this while maintaining a strong rent-control program for older units.

Perhaps the city could have asked for more from developers. Perhaps it’s already asking for too much. Either way, “It would make our lives so much easier,” Solomon said, “if New York City got its shit together and started adding supply commensurate with demand.”