Something Old, Something New
Federal Realty’s investments in Hoboken represent something of a departure for the company. Rather than acquiring high street retail space, the company has traditionally emphasized high-quality open-air shopping centers and select mixed-use projects in markets such as Bethesda, Maryland and San Jose, California.
“Most of our traditional portfolio is larger pieces of land that we control entirely,” Biel says. “What allowed us to consider Hoboken was the ability to acquire so much at once. It wouldn’t have been a market we could have entered if we had to pick off individual buildings.”
Today, Federal Realty’s investments in the so-called Mile Square City are part of a larger strategy of redirecting value from mature assets into “dynamic opportunities” that define the next phase of growth. “Typically, we create the environment. In this case, we are plugging into an existing dynamic environment,” McMahon explains.
Small City, Big Demand
It’s not hard to see why such a small city captured the attention of one of the country’s largest retail REITs. Decades of population growth have transformed Hoboken into one of the most densely populated cities in the country.
The city has long been a magnet for young professionals and families seeking a less expensive, more neighborhood-oriented alternative to Manhattan. Nearly a third of its residents range in age from 20 to 34, a demographic driver of robust demand for more modern housing and retail offerings, according to Federal Realty. The city’s median household income ($176,943 in 2023) is more than one and a half times that of the state.
Charming brownstones, parks, and impressive views of Manhattan are part of Hoboken’s allure. Just as importantly, its transportation infrastructure, which includes 24/7 PATH train service and a ferry system, makes it relatively easy to commute to Manhattan.
On the PATH, Hoboken is just one stop away from Manhattan’s West Village, where apartments rent for roughly twice as much. Ferry service connects to Downtown and Midtown Manhattan on the West Side. On the far West Side of Midtown, the Related Companies has revitalized the area with its mixed-use Hudson Yards project, the largest private development in U.S. history.
Hoboken “is an extension of Manhattan in a livable, charming way,” Biel says. “It’s an amazing way to live in the New York metro area without being in the middle of Manhattan.”
While Hoboken is still an affordable alternative to Manhattan, strong demand for apartments and a constrained development environment have driven up rents and led to a tight vacancy rate of less than 4%. In 2024, apartment rents rose by 3.2% on average, exceeding the 1.7% increase for the metro area, according to Federal Realty.
Federal Realty’s mixed-use project at 301 Washington Street is expected to return between 6%-7% in its first year, with substantial growth potential as the neighborhood continues its upward trajectory, according to the company.