A Rutgers Clime study, The ‘Other’ Cities, recently analyzed three NJ cities in Essex, Hudson, and Passaic counties that are currently seeing migration and gentrification trends. These powerful socioeconomic forces can directly shape property values, demand, and investment opportunities across various commercial real estate sectors.
But the authors noted that while all three cities have experienced increased immigration and population growth, a decrease in Black residents, and ongoing challenges with affordable housing, these mid-sized cities’ transitions don’t follow the traditional descriptions of migration and gentrification. The authors suggest that the cities may be “bellwethers of urban life across the U.S.”
Jersey City: The bedroom city
This city exemplifies the significant impacts of gentrification, transforming into a “bedroom city” thanks to its proximity to New York City job centers. This transformation has dramatically reshaped its real estate landscape, attracting a more affluent population. Some of the substantial changes the city has undergone since 2000 are evident in the city’s demographics and real estate market.
- Real estate transaction rents increased by over $500 and hover near $2,000 per month. Median home values surged from $380,645 in 2015 to $635,660 last year—a 60%+ increase after inflation.
- The median income of new residents moving into Jersey City stands at $88,000—significantly higher than the $51,000 median income for those who’ve lived in the same unit for at least a year.
- Data reveal a notable increase in white non-Hispanic and Asian residents and a decline in Black residents. The city remains remarkably diverse, with a population comprising 41% Hispanics and 41% foreign-born individuals. Just over 40% of the immigrants living in the city moved from Asia, with India (23%), the Philippines (10%), and China (9%) representing the largest groups.
- The city has experienced a dramatic increase in residential development, particularly luxury units, with the city issuing over 6,500 Certificates of Occupancy for new and improved units between 2015 and 2019 and over 9,600 since 2020. Since 2015, the number of owner-occupied units rose from 28,744 to 35,907, and renter-occupied units grew from 64,905 to 94,113.
- Developers have invested billions, especially along the waterfront referred to as Jersey’s “Gold Coast,” where median incomes exceed $200,000.
- About 40% of Jersey City’s workforce commutes to NYC for their primary job, cementing the city’s status as a bedroom community.
- The percentage of residents with bachelor’s degrees increased from 42% to 53% over the last decade, with 83% of interstate movers and 69% of local movers holding bachelor’s degrees, compared to 50% of non-movers.
- Those moving into and within Jersey City are more affluent and educated. The per capita income for those moving from another state is $88,000+ and for local movers, $83,000+, contrasting sharply with the $51,000+ per capita income for residents who didn’t move.
Jersey City initially incentivized development with over 70 tax abatements between 2013 and 2017. But the city largely discontinued those abatements in late 2017. In 2021, it introduced an inclusionary zoning ordinance, which requires developers of projects with 15 or more units seeking variances or zoning amendments to allocate 10% to 15% of the units as affordable housing.
Newark: Experiencing jobless gentrification
Significant real estate investment and rising prices without the corresponding job growth typically seen in urban transformation characterize Newark’s unique gentrification process. This phenomenon, referred to as “Jobless Gentrification,” primarily affects specific areas while the wider city experiences different dynamics. Newark’s real estate market shows distinct patterns.
- Recently, Newark has become a hub for large-scale apartment building construction, particularly concentrated downtown near the train station and in the Ironbound neighborhood. This new development, which has accelerated since 2020 with the issuance of 723 new Certificates of Occupancy (up from 540 between 2015 and 2019), is driving up property values.
- The city’s median home value has nearly doubled over the last decade, from $242,548 in 2015 to $465,000+ in 2024.
- While there’s no evidence of a large-scale influx of a more affluent population, new arrivals in Newark have slightly higher incomes ($10,000 more) than long-term residents. The city has also seen modest increases in income and education, with the share of residents holding college degrees rising from 13% to 17% and the median household income rising from $42,000 to $53,000.
- Most people moving to Newark come from nearby areas in New Jersey or are part of an ongoing international migration from the Caribbean, South America, and West Africa. The city is 45% Black and 37% Hispanic/Latino.
- Despite rising property values, transaction rents for tenants have largely kept pace only with inflation, and just 14% of units rent for more than $2,000 per month. However, 55% of Newark residents are cost-burdened and spend more than they’re comfortably able to afford on rent. Homelessness is a growing concern, with the percentage rising 24% from 2023 to 2024.
- The dramatic decrease in housing units from 17,493 to 6,694 suggests a tightening market. Owner-occupied units increased from 21,695 to 28,231, and renter-occupied units from 69,719 to 86,368, but limited availability has intensified displacement.
Newark’s gentrification process differs from more traditional models. Because new residents move into the city primarily for housing, housing prices have increased without a corresponding boom in job growth. About 24% of Newark workers have their primary jobs within the city.
The downtown and university areas, particularly the Ironbound neighborhood, show evidence of new development-driven gentrification. Other areas—especially the West and South Wards—have seen increased real estate prices primarily driven by investor activity in 1-4 unit homes, which raises concerns about affordability and displacement.
Paterson: The migrant metro
Paterson is a mosaic of working-class immigrants. This “migrant metro” is also facing an acute affordability crisis driven primarily by its population density and continuous influx of residents rather than significant new job growth or large-scale development. The city, with a population of 156,452, features some unique real estate dynamics.
- Despite lacking the extensive developer investment seen in other cities, Paterson’s real estate prices have climbed dramatically. Home values and sale prices more than doubled in real dollars since 2015, but new construction remains restrained, with only 219 Certificates of Occupancy issued annually since 2020.
- Paterson’s rents are comparable to those in Newark, and 57% of households are rent-burdened, spending more than they can comfortably afford on housing. The city also has a surging homelessness rate, with more than double the number of homeless people in 2024 than in 2023. Its record-breaking population density suggests probable overcrowding.
- Paterson continues to attract new residents, primarily through international migration. Its population is at least two-thirds Latino, with large Puerto Rican and Dominican communities. The city also has a growing Arab-American community, centered in South Paterson and extending into Clifton (“Little Ramallah”), and a rapidly expanding Bangladeshi-American community, particularly around Bangladesh Boulevard. The foreign-born population has grown from 32% to 44% since 2015.
- Unlike cities with robust internal job markets, Paterson’s workers commute to nearby cities, including NYC, Clifton, Paramus, and Totowa. The city has a lower ratio of jobs to workers, with nearly 57,000 employed residents but just 38,500 jobs in the city. Approximately one in four Paterson households lives below the poverty line.
- Unlike other gentrifying areas, Paterson doesn’t show evidence of a large-scale arrival of a more affluent population. New arrivals show little difference in income or education levels from long-time residents, suggesting migration to this city is driven by community and cultural ties rather than employment opportunities.
Paterson’s development trajectory reflects specific challenges and strategic efforts. Despite being a Garden State Growth Zone (GSGZ) where all new construction qualifies for tax abatements, developers have expressed reluctance for large-scale capital investment, viewing the city as not yet “ready for institutional capital.” The city’s primary development projects center around the Great Falls, including the Hinchcliffe Stadium redevelopment, which added 75 affordable housing units for seniors, a restaurant, preschool, and a parking garage. Other initiatives include collaborations to build affordable housing for homeless individuals who often use hospitals as shelters.
Mayor Andre Sayegh’s administration has prioritized reducing vacant units, successfully shrinking the number of abandoned properties from 1,200+ to under 200 since 2018. The city hopes to use mixed-income housing, targeted investments around Great Falls, and promotion of the city as the state’s “food capital” to foster and cultivate a more solid middle class. The challenge? Paterson faces ongoing structural budget deficits, relying on state aid. City officials have also highlighted a shortage of resources in planning, with only one city planner and a master plan that was last updated 11 years ago, in 2014.
Paterson’s scenario shows how high density and continuous migration, even without significant new job creation or luxury development, can increase housing unaffordability. For CRE professionals, understanding this dynamic is crucial for identifying viable investment opportunities in a market shaped by culture, community, and persistent socioeconomic challenges.
Overarching trends in mid-sized satellite cities
Jersey City, Newark, and Paterson, NJ, offer a compelling lens through which to understand the evolving dynamics of 21st-century mid-sized American satellite cities (defined as those with populations between 100,000 and 300,000). Their individual narratives, driven by distinct migration patterns and housing affordability challenges, reveal broader trends impacting urban governance in a state largely built for suburbs.
All three cities exhibit clear evidence of intense real estate pressure. Regardless of the volume of new development, each is becoming an increasingly more expensive place to live. To varying degrees, all cities function as bedroom cities, where jobless gentrification fuels a migrant metro dynamic. While Jersey City residents predominantly commute to New York City, Newark and Paterson demonstrate more diffuse, regional commuting patterns. This discovery challenges the traditional notion of cities as primary job centers, emphasizing that immigration, rather than local employment opportunities, drives a significant population influx.
The assumption that increasing housing supply automatically lowers prices is nuanced. Jersey City’s experience suggests a link between large-scale multifamily development and rising rents. While Newark is proactively incorporating affordable unit requirements into new projects—a step now adopted by Jersey City—this strategy alone is unlikely to reverse the trend of escalating housing costs for residents.
These findings underscore the intricate challenges facing mid-sized satellite cities as they navigate population shifts, economic reconfigurations, and the ongoing demand for affordable housing within a broader metropolitan context. For CRE professionals, these insights are crucial for understanding market forces, identifying opportunities, and anticipating potential socioeconomic impacts.
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