Atlantic City housing market heats up as investors look beyond casinos

Atlantic City home prices rose 30% in the fourth quarter from a year earlier, making the New Jersey city one of the country’s biggest gainers, according to the National Association of Realtors. Prices continued to rise in January, jumping 35% compared with a year earlier, according to data collected by real-estate brokerage Redfin. New Jersey gambling revenue, meanwhile, tumbled 17% in 2020.

Atlantic City home-price gains followed efforts by local officials and real-estate investors to transform the town from a place where gamblers would try their luck at table games to a place where more people wanted to live and work permanently.

“They want to build up the Atlantic City economy where it’s based off of businesses and activities that are not casino related,” said Joshua Garay, a New York real-estate broker. Locals have pushed to create more jobs in the cybersecurity industry and to add more family friendly offerings, including a recently announced plan for an indoor water park on the boardwalk.

Mr. Garay is working with the owners of the former Atlantic Club Casino Hotel, which closed in 2014, to renovate its hotel and potentially to develop new condominiums. Other investors have begun building or have plans for new apartments, restaurants, hotels and other family-oriented attractions.
The city’s reimagination was already under way before the pandemic accelerated it. Buyers from the Philadelphia area in particular are helping fuel housing demand, brokers say, as many seek seaside residences to work from home during the pandemic.
A new development 600 North Beach, a 250-unit rental apartment building near the boardwalk, opened in 2019 as the first large market-rate rental project built in Atlantic City in several decades, according to Wasseem Boraie, Boraie Development LLC’s vice president.
His firm is developing a second phase on land it acquired next door and is considering a separate second-home development, he said. “We’re looking at it 10 years out,” Mr. Boraie said. “I just think that the demand is going to be there.”

Atlantic City isn’t so much abandoning gambling as attempting a return to its roots as a popular oceanside destination.

The initial hotels and boardwalk were built in the 19th century and tourism reached a peak in the 1920s, with a proliferation of nightclubs and restaurants and saltwater taffy treats. After the city went into decline in the second half of the 20th century, it turned to gambling in the 1970s to bring back tourists and boost the economy.

Atlantic City offered the first legal casinos in the eastern part of the country. It became a popular destination, at least until nearby states built their own casinos and lured high rollers away.

More investors have taken a chance on Atlantic City since the state took control of the city’s finances in 2016, Mr. Boraie said. At that time, the city faced possible bankruptcy following the collapse of the casino industry after the last financial crisis.

New projects like Bourré, a New Orleans-inspired restaurant and concert venue built on the site of a former strip club, reflect the city’s reformed image. The developer, Pat Fasano, has plans for hotels, apartments and office space in the works as well.

Developments such as these have been further encouraged by the federal Opportunity Zones program, which allows investors to defer taxes on real-estate investments in the city and other select areas under guidelines from the U.S. Treasury Department.

Many property investors look to the recent revival of Asbury Park, another once-rundown town on the Jersey Shore where developers now flog $1 million condos. They believe Atlantic City is ripe for a similar rebirth.

“It’s essentially the last pocket on the Jersey Shore that has vacant land,” Mr. Garay said.

One of those vacant plots is the site of the recently imploded Trump Plaza Hotel and Casino. The site is owned by investor Carl Icahn, who has yet to release any long term plans for it. For now, the site is to be paved and used as parking.