The challenges and rewards of urban redevelopment.

New Jersey's urban areas are experiencing a resurgence, and the reclamation of the state's once-great cities has created an exciting new focus for real estate firms.

In fact, declining opportunities for new development in the suburbs coupled with Governor McGreevey's policies have positioned urban redevelopment among the hottest opportunities for multi-family and commercial developers in the Garden State.

Urban redevelopment provides numerous potential advantages over suburban development.

For example, infrastructure already exists in the cities, including essential items such as sewer, water, road infrastructure and utility systems.

In addition, state government has become increasingly involved in creating a regulatory climate more supportive of urban redevelopment.

Conversely, the same existing infrastructure components in cities are typically older and oftentimes in need of rehabilitation.

This often necessitates large outlays of capital at the onset of the project for items such as replacement and/or relocation of sewer lines, upgrading of telephone, electric and cable wiring, repaving and re-routing of roadways, demolition of older buildings, and major environmental site clean-ups.

In addition, many areas being redeveloped will first require the relocation of residents and/or businesses--another costly up-front expenditure required of the redeveloper.

For example, our firm is currently developing The Landings at HarborSide, a 49-acre, mixed-use redevelopment project in Perth Amboy, New Jersey.

The project includes extensive utility upgrades. Prior to the commencement of construction on the first of the 21 buildings, we had to replace approximately 600 feet of 48-inch combined sanitary/storm sewer lines to clear the initial building sites of any utilities that might have been disturbed by the construction. This particular stretch of sewer line carried approximately one-third of Perth Amboy's sewage.

This work modernized and upgraded the entire city's infrastructure, thus benefiting the residents of Perth Amboy.

Additionally, the development of Landings will require the relocation of 30 businesses and 85 residences, a process that has already begun.

Due to the nature of redevelopment--which often involves projects with multiple hurdles to clear before work can begin--financial staying power is a prerequisite.

In the case of our Cranford Crossing project in Cranford, New Jersey, Kushner Companies waited four years between our initial involvement and investment in the project and the launch of site work. In this case, the property required site remediation, which necessitated multiple stages of testing, cleanup and approvals from regulatory agencies.

Our Cranford and Perth Amboy experiences underscore the importance of staying current with the ever-changing regulatory environment.

The maze of multiple and often conflicting governmental jurisdictions, inexperience of personnel with redevelopment matters in the regulatory agencies, historic preservation constraints, relocation issues, complicated financing opportunities and many other complex issues require tremendous internal coordination and project management.

While the state has improved communication between its various departments and is helping to facilitate the approval process, a myriad of local, state and federal government entities remain involved. As with any other specialty niche, urban redevelopment is not a "one size fits all" practice.

Ultimately, those developers who possess the experience, personnel and financial resources to tackle redevelopment's many inherent challenges will achieve the most success. Despite the many technical and regulatory complexities and considerable pre-development costs, urban redevelopment can be rewarding on many levels: It can tuna underused or abandoned properties into viable housing and/or commercial ventures--providing a better quality of life for New Jersey residents and putting quality ratables back on the municipal tax rolls.

It can convert environmentally tainted properties into valuable real estate assets, and in doing so, relieve development pressure in other parts of the state.

And, when done properly, redevelopment can provide experienced redevelopers competitive financial returns.