Jones Lang LaSalle
Warehouse tenant battles on fate of building
Firm's lawyer alleges 'insider deal' with Newark arena area redeveloper
Wednesday, March 15, 2006
BY STEVE CHAMBERS
Star-Ledger Staff
The old concrete warehouse has sat near Newark's Penn Station since 1907, a hulking fortress that once received railroad cars on its second floor as part of a state-of-the-art freight-distribution operation.
Times change, of course, and when the city began discussing a downtown makeover that included a new arena for the Devils, it decided the warehouse had to be either demolished or refurbished for some more vital use.
In a quintessential Jersey spat, however, the building's lone tenant is fighting back, arguing the city is unfairly trying to seize the building and hand it over to a politically-connected businessman, Jerome Gottesman, who owns Edison Parking.
Edison was named the redeveloper of roughly half the city's 23-acre downtown makeover -- including the warehouse -- as part of a complex property swap that allowed construction of the arena to begin last summer.
"This is such an insider deal," said William Ward, a lawyer for Iron Mountain, a document-storage company that rents the warehouse. "Their (Newark's ) own experts said they could take this building or not take it as part of the redevelopment, but all of a sudden they take it. Why? Because they made a deal with Gottesman."
City officials deny they are singling out Iron Mountain and argue that such a strategically located building cannot remain as a ghostly presence in a redevelopment breathing new life into the city.
"We need a vibrant downtown core," said City Administrator Richard Monteilh. "Our plan calls for office, retail or commercial uses that create jobs. Presently on that site, there are few jobs and no activity, whatsoever. The entire building is taken up with paper."
Although Iron Mountain has kept the building in good, secure shape -- its own planning expert argues it doesn't meet the legal definition of blighted property -- there is little question that the area cries out for sprucing up. Fences topped with razor wire and surface parking lots dominate the landscape.
The city would like to see all this replaced with a park that includes a pathway linking Penn Station to the $310 million arena -- currently under construction -- as well as parking garages and several high-rise residential or office buildings with stores and restaurants on the ground floor.
Combined with the arena, the plan would dramatically reshape the entire stretch between City Hall and Penn Station. But to make it work, the city signed an agreement with Gottesman. He gave up land on the arena site, and the city in turn named him redeveloper of everything east of Mulberry Street -- about half the entire makeover zone.
Gottesman declined to comment, but Thomas Banker, a consultant to Edison, said the designation of redeveloper came with financial risks and contractual obligations that could cost the company its land if it fails to deliver.
"As a landowner, Gottesman had no obligation to build anything," Banker said. "He's stepped up and said, 'I want to be part of this.'"
Both Banker and Monteilh noted that neither Iron Mountain nor the warehouse owner ever approached city officials with a similar offer. But Ward said the state's sweeping redevelopment law -- which gives Newark the right to seize the warehouse and hand it over to Edison -- works much better for politically-connected people.
Gottesman has long been a powerful player in Newark by virtue of his large downtown land holdings. But he has not been shy about protecting his rights. In the late 1990s, he sued the city to stop the redevelopment plans, because he felt he was surrendering too much of his land. He held up the plans and eventually forced the city to move the arena.
Iron Mountain is battling the seizure of the warehouse in court, and Ward said he would seek to make the agreement with Gottesman an issue.
But Monteilh said it made perfect sense to put the site in Edison's hand. The company owns much of the surrounding property and was an experienced developer that has built high-rises in New York City.
The building's owner, David Berkowitz of Central Lewmar Corporate, has so far not gotten involved in the battle. A call to his lawyer was not returned.
Iron Mountain leased its warehouse 10 years ago and the company said it spent $3 million making it suitable for storing documents from a wide array of businesses, from financial services to hospitals to law firms. The lease gave Iron Mountain the right to purchase the building this year or extend the lease for 10 years.
"It's not like we've never had to move facilities, but it's very expensive," said Melissa Mahoney, a company spokeswoman. "It's an arduous undertaking that takes lots of time and money. For obvious reasons, we'd like to stay."
Banker, who headed the Essex County Improvement Authority for more than a decade, said that Iron Mountain would be fully compensated for its relocation expenses. But he said Edison is hopeful the city will soon prevail so the redevelopment plans can move forward.
"You're going to have a spanking new arena and park and roads, and next to it you'll have something that is, aesthetically, a nightmare," he said.
Steve Chambers covers land-use issues. He may be reached at schambers@starledger.com or (973) 392-1674.
© 2006 The Star Ledger
© 2006 NJ.com All Rights Reserved.
Warehouse tenant battles on fate of building
Firm's lawyer alleges 'insider deal' with Newark arena area redeveloper
Wednesday, March 15, 2006
BY STEVE CHAMBERS
Star-Ledger Staff
The old concrete warehouse has sat near Newark's Penn Station since 1907, a hulking fortress that once received railroad cars on its second floor as part of a state-of-the-art freight-distribution operation.
Times change, of course, and when the city began discussing a downtown makeover that included a new arena for the Devils, it decided the warehouse had to be either demolished or refurbished for some more vital use.
In a quintessential Jersey spat, however, the building's lone tenant is fighting back, arguing the city is unfairly trying to seize the building and hand it over to a politically-connected businessman, Jerome Gottesman, who owns Edison Parking.
Edison was named the redeveloper of roughly half the city's 23-acre downtown makeover -- including the warehouse -- as part of a complex property swap that allowed construction of the arena to begin last summer.
"This is such an insider deal," said William Ward, a lawyer for Iron Mountain, a document-storage company that rents the warehouse. "Their (Newark's ) own experts said they could take this building or not take it as part of the redevelopment, but all of a sudden they take it. Why? Because they made a deal with Gottesman."
City officials deny they are singling out Iron Mountain and argue that such a strategically located building cannot remain as a ghostly presence in a redevelopment breathing new life into the city.
"We need a vibrant downtown core," said City Administrator Richard Monteilh. "Our plan calls for office, retail or commercial uses that create jobs. Presently on that site, there are few jobs and no activity, whatsoever. The entire building is taken up with paper."
Although Iron Mountain has kept the building in good, secure shape -- its own planning expert argues it doesn't meet the legal definition of blighted property -- there is little question that the area cries out for sprucing up. Fences topped with razor wire and surface parking lots dominate the landscape.
The city would like to see all this replaced with a park that includes a pathway linking Penn Station to the $310 million arena -- currently under construction -- as well as parking garages and several high-rise residential or office buildings with stores and restaurants on the ground floor.
Combined with the arena, the plan would dramatically reshape the entire stretch between City Hall and Penn Station. But to make it work, the city signed an agreement with Gottesman. He gave up land on the arena site, and the city in turn named him redeveloper of everything east of Mulberry Street -- about half the entire makeover zone.
Gottesman declined to comment, but Thomas Banker, a consultant to Edison, said the designation of redeveloper came with financial risks and contractual obligations that could cost the company its land if it fails to deliver.
"As a landowner, Gottesman had no obligation to build anything," Banker said. "He's stepped up and said, 'I want to be part of this.'"
Both Banker and Monteilh noted that neither Iron Mountain nor the warehouse owner ever approached city officials with a similar offer. But Ward said the state's sweeping redevelopment law -- which gives Newark the right to seize the warehouse and hand it over to Edison -- works much better for politically-connected people.
Gottesman has long been a powerful player in Newark by virtue of his large downtown land holdings. But he has not been shy about protecting his rights. In the late 1990s, he sued the city to stop the redevelopment plans, because he felt he was surrendering too much of his land. He held up the plans and eventually forced the city to move the arena.
Iron Mountain is battling the seizure of the warehouse in court, and Ward said he would seek to make the agreement with Gottesman an issue.
But Monteilh said it made perfect sense to put the site in Edison's hand. The company owns much of the surrounding property and was an experienced developer that has built high-rises in New York City.
The building's owner, David Berkowitz of Central Lewmar Corporate, has so far not gotten involved in the battle. A call to his lawyer was not returned.
Iron Mountain leased its warehouse 10 years ago and the company said it spent $3 million making it suitable for storing documents from a wide array of businesses, from financial services to hospitals to law firms. The lease gave Iron Mountain the right to purchase the building this year or extend the lease for 10 years.
"It's not like we've never had to move facilities, but it's very expensive," said Melissa Mahoney, a company spokeswoman. "It's an arduous undertaking that takes lots of time and money. For obvious reasons, we'd like to stay."
Banker, who headed the Essex County Improvement Authority for more than a decade, said that Iron Mountain would be fully compensated for its relocation expenses. But he said Edison is hopeful the city will soon prevail so the redevelopment plans can move forward.
"You're going to have a spanking new arena and park and roads, and next to it you'll have something that is, aesthetically, a nightmare," he said.
Steve Chambers covers land-use issues. He may be reached at schambers@starledger.com or (973) 392-1674.
© 2006 The Star Ledger
© 2006 NJ.com All Rights Reserved.
posted by Jones Lang LaSalle NJ News Blog at 11:11 AM
<< Home