DuPont's Chambers works in Deepwater, N.J., will celebrate its 90th year in operation in 2007. Employing 1,000 in the making of 500 products, the site includes a 200-acre (81-hectare) wildlife preserve on the grounds that were previously home to "Plant 1," where most of the explosive powder used by Allied forces in World War I was manufactured.

by MARK AREND mark.arend bounce@conway.com

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ompetitive analysis released in May by The Brookings Institution, the Washington, D.C.-based think tank, pulls no punches in its assessment of New Jersey's economic outlook. For all its strengths – proximity to the New York and Philadelphia metro areas, top-notch higher education resources, extensive physical infrastructure and industrial assets – New Jersey is losing its competitive edge, and state government must act now to turn the tide. Such is the challenge put forth in "Prosperity at Risk: Toward a Competitive New Jersey," a Brookings Institution Metropolitan Policy Program.
   Among the forces causing weeds in the Garden State are rising housing costs (New Jersey has the fifth least affordable housing in the nation), demographic disparities and "unbalanced development patterns," according to the Brookings analysis.
   One of these factors, the cost of housing, is proving to be a bonanza for the development community with demand for residential space near the New York metropolitan area skyrocketing. Huge developments are springing up along the west side of the Hudson River. Parcels earmarked for major corporate developments are being sold to developers of high-rise housing, because there is more value in condominium development than in office development. Between the gleaming new office towers and the skyscraping condos, the formerly gritty stretch from Weehawken to Bayonne has been transformed into a live/work destination that can be thought of as an extension of Manhattan – the "Other Lower West Side" perhaps.
   It's Manhattan salaries that are making it possible for residents along the Hudson to afford to live there. Statewide, in 2000, more than 20 percent of New Jersey residents spent more than 35 percent of their income on housing costs. Part of the problem is exclusionary zoning that limits construction of new housing and drives up development costs. Whatever the reason, high housing costs – including high property taxes – can stymie an area's ability to attract high-skilled jobs.
   New Jersey's growth is primarily converting rural land to low-density exurban land with little growth in existing places, the Brookings Institute analysis maintains. High property taxes are driving people away from metro areas, limiting population growth and shrinking the labor pool.