Talk about a quick sellout.

At the beginning of the year, developers Tarragon Realty Investors Inc. and Ursa Development Group LLC broke ground on a new, 118-unit condominium project in Hoboken, N.J. Two weeks ago, the development team began selling units at the five-story building, called 1300 Grand St., which is expected to be completed at the end of the year. In less than two weeks, all the units have been spoken for save the five units the developers decided to hold off on selling. They plan to use those units as models for a 169-unit, five-story condominium building that broke ground last month.

Both buildings are part of what will eventually be an eight-block development in Hoboken called Upper Grand, which will consist of about 1,160 for-sale condominiums and about 240 affordable rental units in nine buildings, as much as 14,400 square feet of retail and enough parking in each building to allocate one space per unit.

"This is the quickest sellout that has ever happened to us," says Bill Friedman, chairman and chief executive of Tarragon Realty, a New York-based developer of for-sale housing and rental apartments. Two weeks ago, the one-, two- and three-bedroom units at 1300 Grand, which average about 1,100 square feet in size, began selling at $350 a square foot. Given the strong demand for the units, the developers increased the sales price to about $385 per square foot. In the end, 1300 Grand generated $44.5 million in condo sales.

Chalk it up to the prolonged period of low interest rates. With mortgage interest rates falling again in recent weeks, home and condo sales in many markets have continued at a brisk pace -- although perhaps nowhere near as brisk as the pace set by the Upper Grand's first condo project.

Each new residential project in Hoboken sells five units every month on average, according to Meyers Group, a real-estate information and consulting company based in Costa Mesa, Calif. Just 129 new residential units have sold in Hoboken during the past year even though comparable-size units in Manhattan sell at prices typically 70% to 80% higher, says Sean Olin, a regional sales director in Philadelphia for Meyers Group. What's more, the condos at 1300 Grand are smaller in size on average and carry a higher price tag than other developments in Hoboken: New residential units on average sell for $487,000 and offer about 2,152 square feet of space.

There are other offerings at Upper Grand that make the condominiums there attractive to prospective buyers, many of whom are singles or couples in their 30s who are currently renting and work for an investment-banking firm, publishing company or pharmaceutical company in Jersey City or Manhattan, Mr. Friedman says. The Upper Grand condo owners will get a break on their property taxes because the development is located within a 14-block redevelopment area in northwestern Hoboken, making the cost of owning a unit lower than in other nearby areas. Moreover, construction of a new light-rail system is underway in the area.

The developers are also using several architects to design the Upper Grand brownstone-style structures "so that there's an architectural style that differs from block to block, and it doesn't look like other urban-renewal projects where people can date the buildings," says Mr. Friedman. The city of Hoboken is also requiring specific design elements for the Upper Grand development, including retail space at the corners of the buildings and a front stoop at each entrance of the buildings.

When construction began on the 118-unit 1300 Grand building, the developers put up a sign at the site announcing the project and the project's Web site. Mr. Friedman says the company was flooded with phone messages and online requests from about 600 people who were interested in the condos. The developers began contacting each of the 600 people, inviting each of them to the project's sales office to look at the plans for the project and get more information. "We planned on doing that for three to four weeks," says Mr. Friedman. "At the end of that time, we thought we'd have a grand opening at the sales center, do advertising and hold a party where we'd offer food to brokers to introduce them to the project and make a real splash."

Tarragon Realty and Ursa Development originally allocated $250,000 for advertising the 118-unit condominium project and throwing an opening party to lure real-estate agents and their prospective buyers. But with one out of every three people coming to the sales office plunking down a $5,000 refundable deposit to reserve a condo unit, the developers didn't even get that far. "We only got to the letter M" on the list of people interested in the project, says Mr. Friedman. Of course, he's not complaining. "We saved a quarter of a million dollars on advertising and marketing," he says.

And that was even after paring down the number of interested buyers. Mr. Friedman points out that Tarragon Realty and Ursa Development are weeding investors from the list of prospective buyers at Upper Grand. "If a buyer in any way seems unlikely to be living there, we won't sell it" to him or her, he says.

Tarragon Realty and Ursa Development were originally projecting that the entire Upper Grand development would be completed over the next five years. "But given the acceptance of our first building," says Mr. Friedman, "we may try to accelerate that schedule" by completing the development in 3-1/2 years.

Bill Gulya, 27, has reserved a one-bedroom condo at 1300 Grand, which is just a few steps away from the apartment where he has lived for five years. Mr. Gulya, who works at Merrill Lynch in Manhattan, boasts that his commute from Hoboken is only 10 minutes via ferry.

A first-time homebuyer, Mr. Gulya wanted to stay in Hoboken because it's "cheaper than Manhattan," he says, estimating that a comparable size condo in Manhattan would cost twice as much as what he's paying for his 900-square-foot condo in Hoboken. What's more, "I like keeping a car and it's cheaper to keep a car in Hoboken " than in Manhattan, he says. The other reason Mr. Gulya decided to buy a condo at the Upper Grand development, he says, is "I only have to carry my stuff two blocks" to move.

-- Ms. Muto is a national real-estate writer for The Wall Street Journal. Her "Bricks & Mortar" column appears most Wednesdays exclusively on RealEstateJournal. She is based in the Journal's San Francisco bureau.