Jones Lang LaSalle


Space Race or Space Glut?

Princeton's last experience with a building boom was followed by a bust, comparable to a game of musical chairs where the same child is left standing time after time. From its completion in 1991, Crossroads Corporate Center was famously unoccupied. Standing sentinel on Route 1, just north of I-295 with access from a back road near the Department of Motor Vehicles, it remained vacant for six years.

Now three big projects are in various stages of completion. One is built and two are well under way, but meanwhile the market for office space has softened. Softened is a euphemism, actually, because some say it is worse than soft. "It's flat," says David Knights of Picus Associates at the Forrestal Center, which hosts the most recently competed building.

Pull up your chairs to watch this contest. When the music stops, which building will be left empty?

The list of competitors starts at the Forrestal Center, where the Patrinely Group has finished a five-story, 166,900 square-foot building at 1100 Campus Road, accessible from Scudders Mill Road. It is called Princeton Corporate Campus at the Forrestal Center. The Houston-based Patrinely organization has a good track record at the Forrestal Center, because its previous buildings on College Road West earned a tidy profit for everyone involved. The Patrinely strategy is "Build and Sell."

But the Campus Road building has stood empty since its completion date last October.
If you go south on Route 1 to just before MarketFair, Hilton Realty is finishing a 136,000 square-foot Class A building at Carnegie Center West (the MarketFair side of Route 1). Like the Patrinely Group, Hilton Realty is a private company. It is owned by the George Sands family, known in Princeton as the principal donor for the new Princeton Public Library building, and it is also the Nassau Street-based landlord for 7 million square feet of office, retail, and residential space. The Hilton strategy is "Build or Buy - and Hold."

Driving back north on Route 1 to the Alexander Road overpass you will see, looming over the highway, a humongous building. At 313,000 square feet, it is bigger than the first two put together. Reckson Associates is developing this property, which accesses Route 1 from Alexander Road.

Reckson owns more than 20 million square feet of Class A properties in the tri-state area and though it began as a family firm, it is now publicly-traded real estate investment trust (REIT). "The absolute shocker to the system is Reckson's building - it is bigger by itself than the two other buildings put together," says Knights. It also has the advantage of deep pockets. "Reckson is not a developer that is going to go away."

So three new five-story buildings, all on Route 1, all with the fabled Princeton zip code, will come into the Princeton market in one calendar year.

"The trick is, there is only so much demand for absolute Class A properties and yes, there are three buildings," says Matt Malatich of Hilton Realty. "But each has its distinguishing factors."
What critical factors will make one building successful but perhaps leave another building empty?