Jersey Shore's Extreme Flood Risk Collides With Attainable Housing Drought

Rising sea levels and falling land elevations have led to restrictive building codes and high construction costs along the Jersey Shore as the region faces an attainable housing shortage.

Since Superstorm Sandy rocked the state in 2012, New Jersey has implemented increasingly stringent construction and design standards to protect against extreme flood risks in some areas. The state has fielded pushback from commercial real estate players who say the rules make it too complicated and expensive to build. 

“It’s not that it’s prevented multifamily developments that we’ve worked on, but nonetheless it makes it an arduous endeavor,” said Jack Van Dalen, a land-use attorney at New Jersey-based Van Dalen Brower. “They’re very complicated.”

Tension with developers contributed to a pause on the implementation of the New Jersey Department of Environmental Protection’s new Resilient Environments and Landscapes regulations last month.

The document, spanning more than 1,000 pages, would have raised the base flood elevation standard in tidal areas by 4 feet, as required by the Federal Emergency Management Agency. It would have also mandated the incorporation of forward-looking flood assessments into project designs for at-risk properties.

But the risks that regulators aimed to address with those rules are only expected to get worse.

The property data firm Cotality provided Bisnow with composite “all perils” risk scores for the multifamily sector in U.S. counties bordering the Atlantic Ocean between North Carolina and Maine, where the metric is mostly defined by storms and related flood risks.

“Generally, 71 and more is considered bad,” Cotality Head of Research and Development Anand Srinivasan said of the scale, which runs from completely safe at zero to extremely high risk at 100.

Atlantic and Cape May counties came in at 69 and 70 but are projected to increase to 91 and 92 by 2050. The current scores in Monmouth County and Ocean County are 16 and 14, respectively — which are in line with New Haven County, Connecticut, and York County, Maine, respectively — and expected to reach 37 and 40 by 2050.

As new development regulations have been implemented, multifamily construction costs have grown dramatically in New Jersey.

When permits to build 7,173 units were issued in 2020, the estimated aggregate construction cost was $973.4M, according to data from the New Jersey Department of Community Affairs. While the number of units permitted grew to just 7,405 last year, the estimated construction cost had ballooned to $4.2B.

While rising construction costs have been an issue nationwide since the pandemic, asking rents down the shore have outpaced the rest of the country over the past decade.

They reached $2,150 and $2,726 in Atlantic and Ocean counties, respectively, last month, according to Zillow’s observed rent index, a mean calculated for middle-market properties. Those stats were up 97% and 85% from that time in 2016, while the metric had only grown 58% nationwide over the same period.

Many Jersey Shore multifamily players are catering to the region's upper crust.

Several luxury condo buildings have been constructed in Asbury Park, where units have sold for millions in what was once a working-class town. Developers are now eyeing Atlantic City for a similar revival.

Van Dalen is working on a plan to build 48 luxury apartments in Seaside Heights at the former site of the Bamboo Bar, where the cast of MTV’s Jersey Shore spent many nights filming the reality show. 

The plans from Bamboo Holdings were approved by the municipality but haven’t yet been submitted to the NJDEP, an agency the attorney said he has had issues with before.

Rising sea levels are wreaking havoc on coastal communities worldwide, but the Jersey Shore is facing another key aggravating factor, according to Megalopolitan Coastal Transformation Hub Executive Director Lisa Auermuller.

“Not only is the water rising, but our land is sinking,” the Rutgers University professor said.

Groundwater pumping and ongoing land settling following the recession of ancient glacial ice sheets are contributing to the region’s falling elevations.

The paused REAL rules could ultimately go into effect following a new review period ending next summer, joining a long list of existing regulations that Van Dalen said have elevated construction costs down the shore.

State regulators have already passed a wide array of laws meant to address the deteriorating conditions.

“I’ve seen a lot of changes over the last five to six years,” said Zachary Klein, another attorney at Van Dalen Brower. “The flood rules in particular have undergone massive overhauls.”

After Sandy, the state raised elevation requirements and expanded floodway restrictions throughout the mid-2010s, which limited the amount of developable land on many sites near vulnerable waterways.

Then in 2023, NJDEP issued updates to its inland flood protection rules, which required more stringent stormwater management practices. That meant increased engineering costs and additional infrastructure, which could take up space from the profitable part of a project.

REAL might present yet another burden on that front, Klein said. 

He was particularly concerned about the proposed reinterpretation of the Zane exemption. The rule historically allowed owners of coastal properties that were badly damaged or even washed away by a storm to apply for the chance to rebuild as they existed in 1981 without the need for additional permits.

If REAL had gone into effect, the structures would have had to remain in place for the owner to qualify.

While Van Dalen was happy to see REAL paused for additional review, Klein said the back-and-forth has created confusion and uncertainty for developers.

“I am also a little frustrated by it because I think people underestimate the value of a stable regulatory environment,” Klein said. “That makes it more difficult for businesses to plan and invest.”

Workforce housing is in short supply down the shore after Sandy wiped much of it out, according to New Jersey Flood Institute Director Bill Thomas, who has spent most of his adult life outside Atlantic City in Ventnor Beach.

He agreed with Van Dalen and Klein that the new resiliency standards are at least partly to blame.

“The starter house has kind of gone away,” Thomas said. “You’ve got this toxic brew that has priced the average Joe out of living here.” 

But ultimately, he said he believes the regulations that make it harder to build are the right thing to do given the region’s extreme flood risk.

From Cotality’s perspective, New Jersey’s stringent building codes are a vital and effective mitigating factor for a grim situation.

“You can have the exact same storm hit two houses side by side and have radically different outcomes,” Cotality Principal of Research and Analysis Tanya Havlicek said.

While, on paper, it can be easy to dismiss living in or building on a vulnerable property down the shore as an unwise move, Auermuller said that isn’t the only point of view to consider.

“That’s the head part of the argument, the numbers on the page,” she said.

“We often don’t give enough credit to the heart part of the argument,” the professor added. “It brings in this human factor, that heart pull that people have to wanting to be near water.”