A major apartment project is moving on to a new phase in Jersey City, New Jersey, marking a bet by Brookfield Properties and G&S Investors on the city nicknamed "Wall Street West" and "the sixth borough" of New York City that's just across the Hudson River.

The two developers are introducing the second stage of Hudson Exchange with 420 Marin Blvd., a massive multifamily development expected to change Jersey City's skyline — as projects before it have done during the past decade —with New Yorkers continuing to flee higher rents.

The 60-story mixed-use tower is set to feature 802 luxury rental units and 115,000 square feet of retail space, including 85,000 square feet on its second floor that is pre-leased to a neighboring ShopRite supermarket. The building will have 1.3 million square feet in total.

The project represents a further transformation of Jersey City, the Garden State's second-largest municipality, which was once a hardscrapple blue-collar town with industrial facilities and rail yards. But during the past several decades it has been reborn, a beneficiary of its location across the river from Manhattan. Some Wall Street firms, such as Goldman Sachs, opened back-office sites and other facilities there, as well.

With its various transit options to commute to New York City, lower rents than the Big Apple and vibrant downtown scene, Jersey City welcomed the young professionals who flocked to live — and in some cases work — there. Multifamily high-rises sprouted on the waterfront and by the Journal Square area, a transit hub. And demand for apartments hasn't let up.

“We are an unapologetic pro-growth city," Jersey City Mayor Steven Fulop said during a groundbreaking ceremony for Hudson Exchange Phase II on Tuesday. "We’re proud of the results we have. ... It really is one of the best renaissance stories in this country.”

The latest building marks the third multifamily property that Brookfield and G&S Investors have partnered on within the Hudson Exchange master plan, according to Abe Naparstek, a G&S Investors partner. Located two blocks from the waterfront, Hudson Exchange is an 18-acre master-planned development that will have 6 million square feet and 5,500 residential units when completed. The site is now home to two 36-story luxury apartment buildings, VYV North and VYV South, which include a total of 850 residential units, 20,000 square feet of retail and 450 parking spaces.

Both Robert Pears, a Brookfield Properties vice president, and Naparstek said they expect the new apartments they are building to be quickly leased up in the market because demand is so strong and supply still scarce. In a statement, Pears said both VYV North and VYV South were fully leased in record time.

At the same time, they acknowledge the headwinds that the uncertain economy presents, with high interest rates, concern about a potential recession and tight lending. And the project gets underway a little more than three years after the pandemic reminded the commercial real estate industry of how quickly fundamental aspects and assumptions about property market dynamics can change.

“In the normal economic environment, these projects are challenging," Naparstek told attendees at the groundbreaking. "Anything of this size and scale is. Jersey City is somewhat unique though. On the one hand, the Jersey City multifamily market is doing phenomenally well. In any given year, 5,000 to 10,000 new apartments are getting absorbed into the market. On the other hand, it’s one of the most challenging financing markets in recent memory, particularly to capitalize large-scale projects such as this."

There are now already about 10 new apartment buildings near the Hudson Exchange area, "transforming the skyline into the success story it is today,” Naparstek said.

Since 2010, the Jersey City waterfront apartment inventory has roughly doubled, according to a CoStar report on the area, with the city's population growth of more than 40,000 over the past decade helping to spur demand. About 390 units have been completed in the past year, the report said. Vacancy levels are at near historic lows of 2.6%, according to CoStar.

"The Jersey City waterfront submarket is extremely tight by historical standards, as tenant demand has far outpaced supply recently," Mateusz Wnek, associate director of market analytics for CoStar Group, said in an email.

Wnek said that even with Tuesday's groundbreaking, which "will bring 802 luxury apartments to market, there should be ample demand upon the project’s completion for its units from New Yorkers migrating west to find value, as Manhattan rents hit all-time highs."

While Jersey City's apartment market is strong, Fulop — who has been in office for 10 years — took issue with and rebutted a New York Times story last summer that reported, citing data from the listing portal Rent, that the Hudson County municipality was the priciest in the nation in terms of rents, at an average of $5,500 a month.

"That's not true," Fulop told CoStar News, adding that the survey didn't include "some of the most significant cities in the country."

In fact, the Rent survey didn't include data for New York City, saying it didn't have enough listing information to make an accurate calculation for the city.

The average monthly rent on the Jersey City waterfront is $3,940, with annual rent growth of 3.6%, according to CoStar data.

"Rents in popular submarkets in Manhattan and Brooklyn top $4,000 per unit while markets that have witnessed an influx of new inventory in recent years like Long Island City and Jersey City sit just below that mark," according to CoStar's report on New York.

“Anybody that takes a step back and actually thinks about it would realize it is silly to say that Jersey City [rent] is higher than New York, because it’s not," Fulop said. "And when they reference $5,500 as the average rent throughout the city, that’s also just not true. Now, I’m not going to say that we don’t have [housing] affordability issues, but that data point is from a survey that was flawed from the get-go.”

The fact is there is a lot of demand for apartments in Jersey City, according to the mayor.

"People want to be here," Fulop said. "That’s created pressure, because it’s a desirable place in the past five or six years. It’s an accomplishment we have.”

Naparstek told CoStar News that Jersey City has one of the strongest apartment markets in the country.

"You continue to see these large-scale buildings being built without really a hiccup in the market,” he said.

Brookfield Properties and G&S Investors were able to find three lenders to help finance the second stage of Hudson Exchange, namely Union Labor Life Insurance Co., or Ullico, Washington Capital and AFL-CIO Housing Investment Trust.

At the event, Herbert Kolben, a senior vice president at Ullico, said the lenders are providing $420 million for the $650 million project.

The Metro Plaza ShopRite supermarket, owned by Inserra Supermarkets, will relocate from a nearby building to the base of the new tower, adding 20,000 square feet to the size of the original location.

“It’s one of our top-volume stores,” Larry Inserra Jr., Inserra's CEO, said at the groundbreaking.

Hudson Exchange Phase II will feature over 20,000 square feet of publicly accessible green space that includes plazas, a new dog park and the Sixth Street Embankment Plaza, which will serve as the gateway to Jersey City’s forthcoming Sixth Street Embankment, an elevated rail line that the city is transforming into a public park.

The new residential tower, designed by the architecture firm Beyer Blinder Belle, will rise 634 feet, giving tenants views of the Manhattan and New Jersey skylines. Each residence is set to have quartz countertops, walk-in closets and in-unit washer/dryers, along with access to an expansive collection of indoor and outdoor amenities that include a rooftop pool, a social lounge, a fitness center, a game room, a dining/conference room and a coworking lounge, among other spaces.