Jones Lang LaSalle


NexMed raises capital

NexMed, a Robbinsville-based medical technology company, said it has raised $8.3 million from a private placement of its securities to institutional investors, including Southpoint Capital Advisors and Loeb Partners Corporation.

NexMed agreed to sell 9,347,191 shares of its common stock at $0.89 per share. The investors will also receive four-year warrants to purchase 3,738,876 shares of common stock at an exercise price of $1.11 per share.

The warrants will be redeemable by the company at $1 per share if the closing sales price of its common stock is above $5 for 10 consecutive trading days.

-- Star-Ledger staff

Jones Lang LaSalle


Layoffs planned

Konica Minolta plans to cut 220 or more jobs at its New Jersey sites as part of a restructuring effort, the company said.

The company said it expects 140 to 150 workers will be eliminated at its Mahwah-based Konica Minolta Photo Imaging USA operation and 80 more from its film processing plant in Mount Laurel.

The first job cuts at Mahwah will take place in March, the company said, with a complete shutdown expected by the end of the year. The Mahwah facility has been Konica Minolta's base for sales and marketing of cameras and film in North America.

The cuts are related to Konica Minolta's recent decision to exit the camera and color film businesses amid increased competition and the shift to digital cameras. Parent company Konica Minolta Holdings of Tokyo said last week that it planned 3,700 job cuts worldwide, more than 10 percent of its work force.

-- Associated Press

Jones Lang LaSalle


Industry Insider: Garden State dubbed beau of biotechs

Thursday, January 26, 2006
New Jersey is one of five top regions in the world for wooing biotechnology firms, a trade newsletter says in a new survey.

The report, by Washington, D.C.-based FierceBiotech, lists four U.S. regions (New Jersey, California, Maryland and Wisconsin) and Singapore as emerging biotech centers.

"Everybody knows that Boston, San Diego, San Francisco and Seattle are the big U.S. biotech clusters, but which areas are next," FierceBiotech editor John Carroll said in a release.

Carroll said the newsletter took a "subjective approach" in compiling the list.

New Jersey got props for improving business incentives, setting up a life sciences venture fund and providing seed money for stem cell research.

-- Jeff May

Jones Lang LaSalle


Industry Insider: Garden State dubbed beau of biotechs

Thursday, January 26, 2006
New Jersey is one of five top regions in the world for wooing biotechnology firms, a trade newsletter says in a new survey.

The report, by Washington, D.C.-based FierceBiotech, lists four U.S. regions (New Jersey, California, Maryland and Wisconsin) and Singapore as emerging biotech centers.

"Everybody knows that Boston, San Diego, San Francisco and Seattle are the big U.S. biotech clusters, but which areas are next," FierceBiotech editor John Carroll said in a release.

Carroll said the newsletter took a "subjective approach" in compiling the list.

New Jersey got props for improving business incentives, setting up a life sciences venture fund and providing seed money for stem cell research.

-- Jeff May

Jones Lang LaSalle


Lower-paying jobs dominating N.J. market

Thursday, January 26, 2006
By MARK PERKISS
Staff Writer

While the nation's economic picture has improved, with 2 million new jobs created for the second straight year, New Jersey has lagged far behind in creating new employment opportunities.

"Our job growth has slowed and in the last year has been moderate at best," said Rutgers University economist Joseph Seneca, who chairs the governor's Council of Economic Advisers.
"The biggest problem is that the jobs that are being created are no longer the high-paying jobs, but instead much lower-paying ones and for our future economic health we need to reverse that trend," he said.

In 2005 New Jersey employers created what Seneca and Rutgers economist James Hughes estimate will be 35,000 new jobs when the final numbers come out. That's down from the 46,300 new jobs created in the state in 2004.

Those two years are a far cry from the go-go days of the economic boom of the 1990s when New Jersey employers were adding an average of 77,000 new jobs annually.

"Obviously that era has gone and we're slowing down," Hughes said. "The job creation we saw in 2004 was bolstered by extraordinary growth in government employment, which went up 30 percent. Clearly that kind of growth was not sustainable and that's good."

Seneca agreed, noting that most of the jobs created in 2005 were in the private sector. "That's the direction you want job creation to take; now we need to try to change the kinds of jobs being created."

Much of the job creation has been in the lower-paying leisure and hospitality, education, health services and retail sectors.

"That's the exact opposite of the pattern of the 1990s," Hughes said. Then the job growth was in professional and business services, financial activities and information sectors.

"What has happened is that New Jersey has become much less cost competitive in the last three years," Hughes said, pointing to increases in the state's Corporate Business Tax and income tax increases for those earning more than $500,000 a year.

"The state has gotten a reputation of not being business friendly and taking the corporate business sector for granted," he said. "That has led businesses that are expanding to expand elsewhere rather than New Jersey."

In Mercer County, job growth has followed the state trend, said Charles Hill, director of the county Office of Economic Opportunity.

"The main drivers for us continue to be the service and retail sectors," Hill said. "Route 1 continues to attract corporate expansion and new jobs, but development like the Hamilton Marketplace and overall expansion in the Route 130 corridor has allowed the service and retail industry to grow."

That growth along with increases in warehouse employment near interchanges 7 and 7A of the New Jersey Turnpike have helped keep Mercer's unemployment rate lower than the overall state level.

As of November, Mercer County's unemployment rate was 3.8 percent, up from 3.2 percent the previous year and down from the county's high for the year of 4.1 percent in February.

The statewide unemployment rate was 4.2 percent in November up from 3.6 percent the previous month and down from the state's high of 4.9 percent in February.

Hill said he shares the concern of Hughes and Seneca that too much low-paying job growth is not good economically, but said the growth in the service and retail sectors has a positive side.
"It's true that we have to look at the overall economy, but we also have to look at what serves the people who live here. And from that standpoint, the growth in retail jobs is good," he said.

NOTE: Contact Mark Perkiss at mperkiss@njtimes.com or (609) 989-5723.

Jones Lang LaSalle


Plainsboro

The new Plainsboro Village Center that broke ground in 2001 as that township's community hub, should see its first tenant - a First Constitution Bank - open for business early this year, Plainsboro Community Development Director Ernie Freeman said.

Washington Township-based Sharbell Development Corp., the developer of the 16-acre mixed-use project at the corner of Schalks Crossing and Scudders Mill roads, has signed up some commercial tenants and is seeking others to occupy the center's 45,000 square feet of retail space and its 38,000 square feet of office space, Freeman said.

"This space is going to get filled in. I don't think there's any doubt about that," Freeman said.
The anticipated tenants include a New England Soup Factory restaurant, a Cold Stone Creamery ice cream shop, a dental office and a cosmetics shop, Freeman said.

Among other businesses Sharbell is looking to draw to the center are an Italian deli, an Italian restaurant, an Asian-fusion restaurant, an eyeglass store, a children's hair salon, a pharmacy, a small book store, a jeweler and an apparel shop, Freeman said.

He projected that perhaps 15 to 20 retailers will set up shop in Plainsboro Village Center once its space is fully leased.

The center also will host the township's proposed 34,000-square-foot new library, which will cost an estimated $8.5 million but likely won't be under construction before 2007.

In addition, it will be home to about 25 new residences - including five single-family homes, 12 town houses and eight apartments - that Sharbell is building as part of the Village Center.

In part, the center is designed to complement 24 single-family homes and five town houses that Sharbell built as its nearby Plainsboro Village residential neighborhood.

- Robert Stern

Jones Lang LaSalle


Washington Township

In Washington Township, the town center concept has entered a new phase, with the opening of the Roma Bank headquarters on Route 33. The look of the entire stretch of Route 33 from Washington Boulevard to Route 526 may be transformed over the next year.

While August will mark the fifth anniversary of residents signing the first leases to buy houses in Washington Town Center, no retail shops have opened.

That will change in the next year, according to Tom Troy, senior vice president for the largest Town Center developer, Sharbell Development.

At the corner where routes 33 and 526 meet, a restaurant may open in the summer in the first of several buildings Sharbell will build that will include retail space on the first floor and condominiums and apartments on the upper floors.

Troy said upscale retailers, including national coffee shop and ice cream chains, remain interested in Town Center.

"We have a lot interest and I'm very pleased," Troy said.

Troy expects the first Sharbell mixed-use building to be complete by early 2007, the second to be complete or nearly complete, the third to be under construction and a fourth building near the start of construction.

Troy has heard from Town Center residents who are eager to see the long-promised shops.
"They bought into a lifestyle," that included close access to shopping, he said. "It's nice when we're all working toward the same object."

Another expected change in Town Center will be the addition of a traffic signal at Lake Drive, according to Township Administrator Mary Caffrey. This will allow traffic to turn into the Roma Bank building, which can then add ground-floor retail businesses.

"We're really going to see in 2006 the fruition of the commercial development," Caffrey said.
Two other developers - King Interests and Marrazzo - may move forward with commercial development on the south side of Town Center, while the Kushner Companies plan a heavily residential development. The township government has raised concerns with the effect of residential development in that area due to state delays in a proposed Route 33 bypass.

- Andrew Kitchenman

Jones Lang LaSalle


Seeking alternatives to limit traffic

Thursday, January 26, 2006
By DARRYL R. ISHERWOOD
Staff Writer

On Dec. 19, West Windsor Township declared a redevelopment area for 350 acres around the Princeton Junction Train Station in hopes of receiving the state's transit village designation, but this once-popular concept is overshadowed by concerns that the redevelopment statutes bestow power without accountability.

Transit villages are intended to create a village atmosphere by clustering residences, shops and offices around a major transit hub. The concept is designed to reduce suburban sprawl by making better use of existing infrastructure and to reduce traffic congestion by encouraging walking, bicycling and riding public transportation.

Mayor Shing-Fu Hsueh believes strongly in the transit village concept. "As you all know, we talk about a sense of place, a sense of community," Hsueh said, announcing his candidacy for a second term at the train station in March 2005. "We want to have a transit village here."

The public seemed to react favorably to the idea of the transit village. The Princeton Junction Neighborhoods Coalition hosted a series of discussions on the concept, including a talk about the positive aspects by Jan Wells, assistant research professor at Rutgers University.

But residents responded negatively to Well's presentation, saying more housing would lead to more children, and a cycle of school-building and tax increases. Other worries included an increase in crime and noise.

Then, the coalition hosted a discussion with Bill Potter, a Princeton attorney who said the redevelopment designation would be giving the township government power without accountability, allowing it to choose a "master developer" without competitive bidding, to grant long-term tax abatements and to raise money through bonds without being subject to petition and referendum.

Residents seemed influenced by Potter's words, but the redevelopment designation stands. Hsueh says the next step is for the township to determine what kind of governmental body will guide the redevelopment, but most importantly, choosing the master developer.

- Chris Sturgis

Jones Lang LaSalle


Region's office-space market on steady simmer

Thursday, January 26, 2006
By MARK PERKISS
Staff Writer

Ask commercial real estate broker Gerard Fennelly about the strength of the central New Jersey office market and he points to a speculative five-story building going up on Alexander Road in West Windsor with no signed tenants.

Ask Rutgers University economist James Hughes about the strength of the office market in the central part of the state and he points to the same development.

The building in question, the 313,000-square-foot Reckson University Square on Alexander Road in West Windsor, is the largest of three speculative projects currently under construction in the region.

The other two are a 115,000-square-foot building going up in Carnegie Center in West Windsor and a 167,000-square-foot structure in Princeton Forrestal Center in Plainsboro.

Fennelly, who heads NAI/Fennelly in Hamilton, and Hughes, the economist, say the construction burst is a sign of a strong economy and continued interest in the central New Jersey region.

But David Knights, the marketing director for Princeton Forrestal Center, who concedes his view is somewhat provincial, questions whether there is enough demand for almost 600,000 square feet of brand new office space.

"I think there's demand for two of the three of them, but all three may be too much," he said. "If it does all go it will have to be because one of the three projects attracts a new name that we don't know in the Princeton region."

The speculative building comes as Mercer County has a 12.8 percent vacancy rate in Class A office space, the kind sought and used by large companies or professional firms, Hughes said. That's much healthier than the overall New Jersey vacancy rate of 21 percent for Class A office space.

The reason, Hughes says, is obvious. "We have not been adding jobs in the professional, financial services and information sectors, which would prompt companies to take more space," he said. "On a statewide basis that makes for a very soft office market."
But in the Princeton region and Mercer County overall, the situation is much better, experts say.

"The county, particularly along Route 1, remains attractive," Fennelly said. "The Princeton address still counts. It's a brand. You get companies coming who want that address."
That's what Reckson Associates Realty Corp., which is building its mammoth project across Alexander Road from the Hyatt Regency Princeton in West Windsor, is counting on.

"We're confident we're going to be able to lease quality space at that location," said Todd Rechler, the company's senior vice president and managing director. "When you focus on good quality development in strong areas you're going to be successful. We've done that in other parts of New Jersey and we're optimistic here."

The company has just started its marketing effort to recruit tenants for the new building.
Statistics compiled by Fennelly show that the number of office space transactions has dropped slightly in the last two years from the boom of the late 1990s, when dot-com companies were gobbling up office space.

Knights of Princeton Forrestal Center says he's loath to crow too much about the office market, preferring to take a page from Hughes, who once described New Jersey's economy as the Goldilocks economy - not too hot and not too cold, but just right.

"The boom times are over, but we're not in doldrums either," he said. "We're seeing nice steady growth and that's cause for optimism as we go forward."

Charles Hill, Mercer County's director of economic opportunity, says what he sees in the office market makes him optimistic.

"The trend in the Route 1 Corridor at this point is more building on spec, without pre-signed tenants, and that's very encouraging," Hill said. "It speaks to the demand that is out there and untapped.

"We're very happy with the market in the Princeton market and we're seeing movement along the (Interstates) 195 and 295 and Route 130 corridors," he said. "We want to see that across the board and particularly in the city of Trenton, and we see that happening. Things are going well and we're very optimistic for the year ahead."

NOTE: Contact Mark Perkiss at mperkiss@njtimes.com or (609) 989-5723.

Jones Lang LaSalle


Small banks, big growth

Thursday, January 26, 2006
By ANDREW D. SMITH

The growth of mega-banks such as Wachovia and Bank of America may seem to threaten community banks.

But a quick look at the numbers suggests just the opposite.

The area's small banks are growing far faster than their larger competitors. Several of them grew by more than 20 percent last year.

What's more, investors apparently expect the trend to continue. Shares of many small banks trade at higher price/earnings ratios than any of the mega-banks.

Why such optimism about the small banks? Bank executives cite everything from lower employee turnover - which gives customers and employees time to bond - to the Internet - which effectively enables small banks to open a branch in every customer's home.

"In terms of products and services, we have as many relevant offerings as the mega-banks, and we have deep roots in this community that they just don't have," said Peter Inverso, chief executive at Roma Federal Savings Bank.

"Do we have branches in Nebraska? No. Do we have a line of international services? No. But our customers really don't have much use for branches in Nebraska or international services. They do, however, enjoy having nearby branches where the tellers know their names."

Roma's performance seems to prove Inverso's point.

During the past year, Roma opened its eighth branch (and new corporate headquarters) in Washington Town Center, and it announced plans for a ninth branch in Plumsted. Over the same period, the company's assets grew from $672 million to $798 million, a 19 percent increase.

Yardville National Bank enjoyed similar success.

Assets grew only 7 percent, to $3 billion from $2.8 billion during the year ended Sept. 30. But profits grew to $16.6 million during the first nine months of 2005, up 20.4 percent from $13.8 million during the same period in 2004.

Things looked even rosier at Hopewell Valley Community Bank.

Deposits at the bank grew to $173 million during the year ended Sept. 30, a 27 percent increase. Profits, meanwhile, grew to $1.2 million during the first nine months of 2005, a 36 percent increase.

Traditionally, small banks have relied on quality service and the personal touch to best larger competitors, but times are changing.

Small banks still believe they have an edge in service, but all of them admit that the big boys have narrowed the gap.

When Wachovia (then First Union) bought CoreStates and entered the local market, the company got a reputation for lousy service and lost thousands of customers.

In recent years, however, Wachovia has consistently earned excellent service reviews. And Bank of America, which re-branded Fleet branches last year, has always had an outstanding reputation.

Oddly, while big banks have been working to neutralize the small bank service advantage, small banks have been using technology to neutralize the big bank convenience advantage.

"People connect with their bank in (several) ways: in the branches, through the Internet, over the phone and at the ATM," said James Hyman, president of Hopewell Valley Community Bank.
"We obviously don't have hundreds of branches, but most bank customers only ever use one bank branch, so if we have one near a customer's home or office, that's almost as good as having 100 across the state.

"We have Internet banking, of course. We still have live people answering the phone. And as for ATMs, customers can use any ATM free. Not only do we not charge you to use another company's ATM, we refund whatever fee that other company charges you. It's like every ATM is one of our ATMs."

Of course, banks must attract more than depositors; they must also attract borrowers.
Generally speaking, small banks charge higher interest rates than large banks, but they compensate customers in two ways.

First, small banks lavish VIP treatment on clients too small to merit special attention at the big banks. Second, and more importantly, they make decisions faster.

"You've got to be quick to take advantage of many business opportunities, so it makes sense that people will pay us a bit extra for the speed we offer them. A lower rate from a big bank doesn't matter much if you get the money too late to do what you want to do," said Yardville CEO Patrick Ryan.

"When you deal with a bank like us, you deal directly with the important decision makers. I spend a fair amount of my time talking to small business owners who borrow money from this bank. I doubt the CEOs of any of the big banks can say that."

Jones Lang LaSalle


Route 1 Corridor seen as ripe for growth

Thursday, January 26, 2006
By ROBERT STERN
Staff Writer

If the people who came up with the unforgettable Energizer Bunny ad campaign had to devise a slogan for development along Route 1 in Central Jersey, it might be something like: It keeps growing and growing and growing.

Plans along Route 1 unveiled since last summer alone call for building a 269-bed hospital in Plainsboro and for a nearly 60 percent expansion of the 1.1 million-square-foot Quaker Bridge Mall in Lawrence.

Work on those proposed projects likely won't begin until 2007 at the earliest.

The mall expansion and new hospital, if approved, will ramp up an already significant growth spurt that's under way and includes additional retail, restaurant, hotel and office space along Route 1 in Mercer and lower Middlesex counties.

For the first time since 2001, large new speculative Class-A office buildings are sprouting up along this stretch of the busy highway - one in Plainsboro and two in West Windsor.

Plainsboro's fifth hotel, a 142-room Homewood Suites taking shape along southbound Route 1 near Mapleton Road, also is expected to open later in 2006.

Likewise, stores should begin opening this year in a new 209,000-square-foot Target-anchored shopping center in South Brunswick that's in the early stages of construction at Route 1 North just south of Route 522.

For already established but aging retail hubs further south on Route 1, evolution seems to be the name of the game.

The 31-year-old Mercer Mall in Lawrence is in the midst of a $25 million makeover that its Maryland-based owner, Federal Realty Investment Trust, began last year to modernize the 493,000-square-foot center.

Route 1's retail powerhouse - the 1.1 million-square-foot Nassau Park Pavilion shopping center in West Windsor - has just about finished the final phase of construction, which included the opening late last year of a Babies `R' Us and a West Elm furniture store.

West Windsor's 235,000-square-foot MarketFair mall has cleared land for a stand-alone P.F. Chang's China Bistro restaurant that's expected to open by the end of the year.

In Plainsboro, the owner of the mixed-use Princeton Forrestal Village plans to invest about $12 million this year in renovations and restaurant pad-site additions. The work is part of a shift in the property's retail focus from discount outlet shops to upscale stores.

Those and other changes are designed to enhance the Forrestal Village's appeal to the increasing higher-income residential population nearby.

"We're repositioning the balance of our retail . . . to upscale retail," said Fred Knapp, vice president of property and asset management for The Gale Co., Princeton Forrestal Village's Florham Park-based owner. "That's in recognition of the increase to the residential and office demographics over the last several years."

The residential population within a 3-mile radius of Princeton Forrestal Village has grown by 30 percent over the past 10 years and has an average household income of $125,000 per year, Knapp said.

The desire to attract more customers with deeper pockets also is driving the owners of the Quaker Bridge Mall - Indianapolis-based Simon Property Group and Kravco Simon Co. of King of Prussia, Pa. - to seek an expansion and overhaul of that 32-year-old facility.

They want to add about 650,000 square feet to the mall that would include two new high-end retail anchor stores.

Jonathan Epstein, an attorney for Quaker Bridge Mall, said its owners hope Lawrence will begin planning board hearings in the next two months that would set in motion the necessary land-use changes to accommodate that amount of new development on the site.

"If the municipality adopts the master plan amendment and rezones the mall sufficiently . . . we would anticipate that we would be in Lawrence Township with a site plan application later in 2006," Epstein said.

Although it's unknown how much of an expansion Lawrence will allow, the initial reaction to the idea from municipal leaders there has been positive.

"We believe the Route 1 Corridor is doing very well," Lawrence Township Manager Richard S. Krawczun said. "We view this area, particularly in the area of Quaker Bridge Mall and the Mercer Mall as a regional destination."

It's unclear how the proposal to expand the Quaker Bridge Mall will influence a tentative plan to establish a ritzy mixed-use complex on the 653-acre former Wyeth tract on the West Windsor side of Quakerbridge Road and Route 1 North.

Chicago-based General Growth Properties, which owns the Wyeth tract, has had preliminary discussions with West Windsor officials about its future.

"We envision it as a major gathering place combining luxury residences, a full-service hotel and high-end shopping," General Growth spokesman Jim Graham said in an interview this month. "Specifics are being worked out as we talk to our retailing partners. We hope to break ground in the next couple of years but probably not in 2006."

Graham said General Growth will press on with its plan but declined to speculate directly on whether a bigger, fancier Quaker Bridge Mall would undermine its success.

West Windsor Mayor Shing-Fu Hsueh said traffic volume - a perennial concern for commuters and officials along the heavily traveled Route 1 - will help guide the amount of development his township would allow at the Wyeth site.

He noted that General Growth and West Windsor have reached a tentative agreement to limit the Wyeth site's development potential by setting a 21-percent cap on its allowable floor-to-area ratio - lower than the 30 percent existing zoning allows.

"Our major concern here is the traffic side of it," he said, expressing a similar worry about the added traffic burden that could result from a massive expansion of the neighboring Quaker Bridge Mall.

Municipal officials in Plainsboro and South Brunswick also have mentioned traffic as one key issue that will have to be considered before Princeton HealthCare System may build its proposed $350 million new hospital in Plainsboro.

Princeton HealthCare hopes to open the Plainsboro hospital in 2010 as the anchor of what it envisions as a 1.2-million-square-foot medical campus on part of the 160-acre FMC Corp. site at Route 1 North and Plainsboro Road.

"Hopefully, it's an additional catalyst to getting Route 1 widened as soon as possible," said Ron Schmalz, spokesman for South Brunswick, where most of Route 1 has just two lanes in each direction - narrower than its typical width to the south and north.

NOTE: Contact Robert Stern at rstern@njtimes.com or (609) 989-5731.

Jones Lang LaSalle


Hotel plan is given a green light

Thursday, January 26, 2006
By BRIAN X. McCRONE
Staff Writer

WEST WINDSOR - A 160-room Hilton Garden Inn and four office buildings on a site at Route 1 and Meadow Road won unanimous approval from the township planning board last night.
When constructed the hotel will be the fifth along the township's stretch of the Route 1. It is part of the 225,000-square-foot Greenview Corporate Center to be built by Switzenbaum Associates of Philadelphia.

No date for the beginning of construction was announced last night.

The complex will have access from both Route 1 and Meadow Road, though the buildings will be set back several hundred feet from both roads, according to plans presented at the meeting.
Thirty of the 64 acres at the site also eventually could become township property or otherwise be left as preserved wetlands as part of the deal. Those 30 acres will be part of the township's "Greenbelt" region in either case, officials said.

The project was presented to the planning board five times in the past two years, but the initial designs were met with strong objections by the nearby owner of Windsor Woods apartments.
The new proposal for the tract, which stretches between the Lowe's Home Improvement-anchored Square at West Windsor shopping center and Meadow Road, is more in line with township zoning laws. The approved plan does include a variance allowing a shorter buffer zone between the hotel complex and the neighboring apartment buildings.

Objections to the application were again made by an attorney for Windsor Woods.

"There's a risk that this plan is not going to survive a review by the Delaware & Raritan Canal Commission," attorney Christopher Tarr told the board. "The DRCC has not reviewed the application since new stormwater regulations were passed in 2004."

But board Chairman Marvin Gardner said the board would not guess as to how the new regulations would affect the plan. He said the DRCC approved the initial stormwater plan in 2002.

Tarr also argued that the buffer variance does not mesh well with the township's master plan, which states that the normal 85-foot setback zone should actually be expanded to 100 feet when it separates a residential property and a commercial property.

The variance included in the approval would permit parking spaces to be built within what is supposed to be an 85-foot buffer zone between the properties.

Tarr said he was unsure last night if the owner of Windsor Woods, West Windsor Developers LLC, would appeal the decision in court.

The Hilton would join four other hotels along West Windsor's Route 1 stretch - the 107-room Palmer Inn, the 120-room Marriott Residence Inn, the 124-room AmeriSuites and the 348-room Hyatt Regency Princeton - and become the newest of about 30 hotels lining the busy Route 1 Corridor.

Besides the hotel, which would be 98,000 square feet, the two large office buildings would be 54,000 square feet and the other two would be 10,300 square feet.

Jones Lang LaSalle


NYC 01 26 06
HOME DEPOT MEETS HUDSON SQUARE
Peter Slatin

Hot on the heels of news of a likely deal at 7 World Trade Center, another major deal is in the works in Lower Manhattan. But instead of an office lease in a spanking new tower across from Ground Zero, this deal involves a key retailer taking space just north of Tribeca. It would represent a huge corporate embrace of the burgeoning downtown residential market by a leading national retailer: Home Depot is close to signing a lease for a roughly 107,000-square-foot, three-level store at 345 Hudson Street, a block south of Houston Street and a short walk from the West Side Highway, with its great access to links to New Jersey and Brooklyn.

The building is owned by the real estate arm of New York's legendary Trinity Church, which since the late 1990s has been reshaping the 19th century industrial district as Hudson Square, a mixed-use office, creative and residential area. Trinity owns some 6 million square feet in 18 buildings in Hudson Square. Last fall, in an effort to rev up its efforts to rev up the neighborhood's cachet, Trinity hired Carl Weisbrod, a founder of the Alliance for Downtown New York and a well-regarded urban strategist, to head up Trinity Real Estate. Weisbrod's emphasis has been to lay the groundwork for the district's growth as a creative and welcoming residential and commercial neighbrohood and a gateway to other neighborhoods to the north, south and east.



Weisbrod could not be reached, and a broker at Cushman & Wakefield, which represents Home Depot in New York, declined to comment on the prospective deal. But sources familiar with the building in question say its large loading docks and location just west of SoHO, south of Greenwich Village and north of Tribeca and the fast-growing Financial District's residential market are two key factors in the home furnishing giant's decision-making process.

Trinity established the Hudson Square district in 1983; it is bounded by Sixth Avenue and the Hudson River on the east and west, and Morton and Canal streets to the north and south.

To date, retail in the area has consisted of a quirky but generally unexciting mix of furniture showrooms, bars and restaurants and small stores, all catering to the publishing, architecture and advertising businesses that make up most of the office tenancy; the chains have been absent. If Home Depot goes through with this deal, that will certainly change. The company has looked at several other downtown locations to add to its two existing sites in Manhattan, at 731 Lexington Avenue, and on West 23rd Street.

It's not the first time Home Depot has considered a pioneering Manhattan location. In 1996, the company began trying working with a Long Island developer, David Blumenfeld, to build out the abandoned Washburn Wire Works along the FDR Drive at 116th Street, on the eastern border of Harlem. That deal foundered until recentlyl, when Blumenfeld announced that Home Depot and COstco have signed on to move ahead with the site.

Jones Lang LaSalle


NYC 01 24 06
BALANCE OF TRADE SHIFT AT 7 WTC?
Peter Slatin

For the politicians, bureaucrats and Larry Silverstein, it was a banner day.

Surrounded by the former, the latter signed a letter of intent with Beijing Vantone Real Estate Co. Ltd. to lease 200,000 square feet in the top five floors of Silverstein's gleaming 1.7 million-square-foot 7 World Trade Center. Although Silverstein has signed two much smaller leases, with Ameriprise and the New York Academy of Sciences, the preliminary deal announced Jan. 24 was the first serious indication that the developer's Liberty Bond gamble will pay off in the long run.

The shimmering clear glass of SOM's design for 7WTC nearly disappears into the skyline. A lease for the top five floors is approaching reality.

It's also quite fitting that the first major commercial deal in the World Trade Center redevelopment should go to a company representing the country that is rebalancing the scales of global trade. In addition, rather than being a part of downtown's traditional Old World tenant base, Vantone represents a creative and entrepreneurial bent to China's nascent, supercharged capitalism that is reminiscent of but far more likely to persist than the technology tenants that flourished in and fled Silicon Alley five years ago. The landlord's need to reach beyond a traditional tenant base, and to rely heavily on financial incentives and political pressures from government officials indicate that enormous hurdles remain in downtown's struggle to move beyond a boom-and-bust economy. On the other hand, the out-of-the-box nature of the tenancy could presage a healthy changing of the guard in the makeup of downtown Manhattan's commercial base.

Vantone's eventual program is still emerging, though those close to the deal say it will most likely act as a facilitator and executive-suite purveyor for Chinese businesses, and that the buildout could include a club or even sleeping quarters on the top floor. The ultimate scale of its tenancy at Ground Zero is another unknown: Vantone first emerged as a potential tenant for Freedom Tower, and sources say it remains interested in that possibility as well as in additional space at 7 WTC.

Sighs at the signing. New York City and State as well as Chinese government officials and Vantone's CEO join Silverstein.

While the deal is a true source of relief in the long, dry slog to heal the downtown office market, it thrusts a host of critical questions to the fore: first, is this the first wave in a surge? Silverstein spokesman Dara McQuillan thinks so, and tells The Slatin Report that the next deal is "not far off." Since the developer obtained a temporary certificate of occupancy late last year, he says, interest from potential tenants willing to accept the construction site sprawling around and in the building has grown rapidly. McQuillan declined to say whether the next deal would be for a small or large user, but said that Silverstein is targeting advertising agencies and design firms in an effort to get creative juices flowing in the building (and maybe to bring in tenants who will appreciate the huge Jenny Holzer sculpture in the lobby).

The Vantone deal also coincides with increasing talk, on this page and many others, about the tightening Midtown Manhattan market. Will the scarcity there lead tenants downtown? More to the point, it remains to be seen whether the lease, enabled by heavy lifting from all those politicians and bureaucrats, cements Silverstein's now-in, now-out, now-in role in the Ground Zero firmament.

Jones Lang LaSalle


NYC 01 23 06
CONVENTION CENTER MARSHALL PLAN
Peter Slatin

As New York Gov. George Pataki gears up to step down in 2007 and mount a likely presidential bid, he is also hoping to push through the start of development on an expanded Jacob K. Javits Convention Center on Manhattan's still-gritty West Side. If he succeeds in getting the $1.7 billion project underway before he leaves office, it could serve as a counterweight to the ongoing fumbling at Ground Zero. (Even there, it would not be surprising to see a ratcheting up of activity in the months before a new governor takes office; Larry Silverstein, still clinging fiercely to his post, has engaged Sir Norman Foster to begin design on an office building to rise contemporaneously on the site with Freedom Tower.)

A new colonnade supports a roof overhang that extends 80 feet from the Convention Center's exterior wall.

On Monday, Empire State Development Corp. Chairman Charles Gargano unveiled plans drawn up by another British architect, Sir Richard Rogers, teamed up with New York's FxFowle and Chicago's A. Epstein, for an expansion of the convention center that would virtually double its convention exhibiition space, to 1.1 million square feet, and reorient its truck marshalling and security area. The plan also calls for a new convention hotel on state-owned land and the sale of a full-block parcel south of the convention center to a private developer. While adding a convention hotel on state-owned land immediately across the street from the center.

The design, which Rogers stressed is "conceptual" in a public presentation to the Convention Center' Development Corp.'s board of directors, is aimed at addressing some of the Javits' major flaws: Rogers called it a "black box" sitting behind a "moat" of pavement, an apt metaphor for a British knight-architect.

Designers hope to create more appealing public spaces outside the Convention Center.

The convention center, which now stretches from 34th to 38th Street on the west side of 11th Avenue, will be expanded northward two full blocks to 40th Street, creating an unbroken 1,000-foot expanse along which the design team proposed a colonnade supporting an overhang that extends 80 feet out from the glass wall of the convention center; the columns supporting the overhang will be placed at the halfway point between the curb and the wall. The height and transparency of the shelf will allow light to penetrate into the main public space of the convention center, a soaring "room" that FxFowle senior design principal Dan Kaplan says will be 120 feet deep and 130 feet high. The new facade will also include exposed (but enclosed) stair towers and circulation, a Rogers specialty.

The basic scheme of the renovation and expansion: the existing convention center area, between 34th to 37th streets, will be renovated and refreshed internally. From 37th to 38th streets, the renovations will overlap with new construction of an interstitial and operating floor above the existing space. An entire new building containing three floors of convention and meeting space plus interstitial service areas will be melded into the center in the next block,. Finally, at the north end of the project, another building will be built between 39th and 40th streets that will be the marshalling and security hub through which all truck traffic must pass before being deployed to existing and new loading docks. This building, which Kaplan describes as the "workhorse" of the complex, will be set back 190from street 190 feet; a small park in front is intended to lead to cafes and retail within the colonnade.

A new interior room 130 feet high and 120 feet deep, will be the main lobby for the Convention Center.

The CCDC, aided by its owner's rep, Tishman Construction, is expected to come out with two Requests for Proposals critical to the project: the first, likely in the second quarter of the year, will be for the development of a 1,000 to 1,500-room convention hotel on a site across 11th Avenue between 35th and 36th streets. Kaplan says the hotel could also support two stacked 20,000-square-foot ballrooms; conventioneers will be able to travel between the hotel and the center through an existing below-grade tunnel. The state values the land at $150 million, and will turn it over to a developer at a nominal sum on a ground lease; the lessee will no doubt hope to win tax relief or other incentives from New York City.

The second RFP, expected by year's end, will be for the sale of the full-block site immediately to the south of the center, from 33rd to 34th streets between 11th and 12th avenues. The land is owned by the state-controlled Metropolitan Transportation Authority, and was part of the controversial, discarded plans for a football stadium and Olympic facility; it had been proposed tot serve as the "front porch" for that project; a tailgating center and ceremonial park. Now the state hopes that a private developer enticed by rising values in the area and Manhattan's continuing westward push will pay some $330 million for the site and develop as a mixed-use property.

The 1,000- foot-long colonnade will be activated at night from within.

That $330 million is a crucial piece of the $1.7 billion budget. According to ESDC, New York City and State will each contribute $350 million; another $645 million "has been raised through the sale of bonds backed by a dedicated $1.50 per key surcharge that the hotel industry has begun to collect." The state hopes to make up the difference with the sale of the southern parcel.

Will the community buy this plan? It has three important pluses: first, it's not a football stadium. Second, it moves the marshalling area away from its current central location along 11th Avenue. And third, it has relocated the hotel away from 42nd Street to a location more accessible to the convention center. On the down side, the community had pushed to keep 39th Street open, but the new plan doesn't allow for that. Still, sources say that locals are relatively pleased with the proposal. Alternative plans have been floated, including one from the Newman Institute, a real estate think tank attached to Baruch College of the City University of New York, that called for demolishing the existing center and building a new one along 34th Street. But the convention center board had not even looked at that proposal by the time it met to consider its own plan.

The next step: the creation of a so-called General Project Plan that will lay out the procedural steps needed get the project really underway. That should take some 30 days, but in the meantime the architectural team is proceeding to schematic design and demolition contracts will be sought for the properties that now occupy the northern sites slated for new construction. The General Project Plan will need to be approved by the Public Authorities Control Board, the same body that stopped the football stadium in its tracks.

READER WRITES

Dear Slatin Report:

All well and good, but the real question is this:

once all the beautiful buildings and walkways and parks are there, will people come! how about some human behavorialists on the "committee" to consider how people actually behave rather than trying to build things assuming that people will flock to it. I think there's a huge logistical problem with the convention center location that relates to the distance and environs that one has to transverse to get there from where people really are in manhattan and elsewhere. Anyway, nice piece.

Steve Felix
Institutional Real Estate, Inc.

Jones Lang LaSalle

GlobeSt.com UPDATE: Kaplan, Town Sign Redevelopment Agreement
By Eric Peterson
Last updated: January 26, 2006 08:17am

(To read more on the multifamily market, click here.)
HELMETTA, NJ-Officials of the Kaplan Cos. and this Middlesex County borough have formally executed a redevelopment agreement for the site of a former snuff mill. Final plans for Heritage at Helmetta, which carries an estimated price tag of $70 million, are expected to be submitted to community officials by mid-year.

As reported by GlobeSt.com, Kaplan won the right in late May 2005 to negotiate with the community after a run-off with three other potential redevelopers. Moving the project forward also hinged on the acquisition of the site, which had been owned by an affiliate of one of the other three finalists.

Jason Kaplan, president of the Highland Park-based Kaplan Cos, says the agreement with the property owner Helmetta Lenape of Bridgewater avoided litigation that “could have taken years to resolve, which would have stalled the redevelopment project.” The terms of the property sale were not released.

The redevelopment area is made up of five parcels on Main Street where town founder George W. Helme built his snuff and tobacco business in the 1880s. The existing buildings have been closed for more than 12 years and have fallen into disrepair.

The project will be a mix of 235 units of age-restricted housing in two-story townhouses and four-story condo buildings. Also part of the package will be more than 10,000 sf of retail space, public facilities and a private clubhouse. It will be virtually all new construction, with existing buildings “marked with an appropriate monument or other form of honor,” says councilman Peter Karczewski, who’s the council representative to the Helmetta Redevelopment Committee.
The plan is a scaled-back version from an earlier proposal that called for more than 300 residential units. The earlier proposal did not call for age-restricted housing. According to Karczewski, the borough opted for senior housing “to ensure that the project would not be a burden on the local school district, which is facing an enrollment boom.” Mayor Nancy Martin says the project will “breathe new life into the redevelopment area. It will also generate $1 million in tax revenue each year, which is a huge ‘thumb’s up’ for such a small town.”

Jones Lang LaSalle

First Indemnity Agrees to $6M HQ Sale-Leaseback Deal
By Eric Peterson
Last updated: January 25, 2006 09:02am

PASRSIPPANY, NJ-Littleton Road Associates has acquired First Indemnity of America Insurance Co’s 36,308-sf headquarters building at 119 Littleton Rd. here for $6.25 million. The sale price factors out to $172 per sf, and under the terms of the sale-leaseback transaction, FIA will stay in the three-story building, paying rent on a net basis for at least the next decade. The buyer is a locally based private equity consortium.

FIA, an Absco subsidiary, was represented by vice president Nick Savage of CB Richard Ellis. Absco is a holding company for a group of businesses, including a surety bond firm, a healthcare adjustor and a security trading firm. The buyer was represented by Beth Krinsky, Judith Cohen, Aaron Mittleman and Philip Cantor of Weichert Commercial.

“FIA had unrealized value in the building and was able to fully monetize the asset by choosing to remain there on a long-term lease,” Savage says. “The transaction involved a 1031 exchange buyer who understood the value in the transaction, which in turn helped the seller achieve its financial goal after paying a substantial pre-payment penalty to remove the existing conduit loan.” Located on a 2.43-acre site at the intersection of Interstates 80 and 287, the building was originally constructed in 1977 and extensively renovated for FIA in 1998.

Jones Lang LaSalle

Larry Mullin Will Head Borgata
By Eric Peterson
Last updated: January 25, 2006 09:00am

ATLANTIC CITY-Borgata Hotel Casino & Spa, a joint venture of operating partner Boyd Gaming and MGM Mirage, has appointed Larry Mullin as its new president and COO, replacing Bob Boughner. The latter is moving west to Las Vegas to run Echelon Resorts, a new development just announced by Boyd Gaming.

Borgata has simultaneously promoted five other executives: Auggie Cipollini to SVP and chief administrative officer, Tom Balance to SVP of development, Joe Lupo to SVP of operations, Hugh Turner to VP of finance and Chris Rynkiewicz to director of finance. Mullin comes to Borgata with a 20-year career in the Atlantic City market in a variety of management positions.

Cipollini, who will oversee the areas of finance and general administration of the property, replaces Kevin Sullivan, who will similarly move to Echelon Resorts with Boughner in a top executive position.

Balance, meanwhile, will oversee construction and development of Borgata’s next two phases of expansion, currently under way. Lupo will oversee the property’s food, beverage, gaming and related functions. Turner will be responsible for property finance functions. And Rynkiewicz will oversee areas of general cashiering and related financial functions. Borgata, currently being expanded, features 2,000 guest rooms, 125,000 sf of gaming space, a major retail/restaurant component, a 54,000-sf spa, 70,000 sf of event space and parking for 7,100 cars.

Jones Lang LaSalle

Parsippany building to house HSBC's data center operations

Planning board approves changes by banking giant to former Medco facility
BY TIM O'REILEY DAILY RECORD

PARSIPPANY -- What was a major mail-order pharmacy that employed 1,500 people at its peak will be transformed into bank backup data center needing only about 100 attendants.
HSBC Holdings, the London-based banking giant with $1.5 trillion in assets, received town planning board approval Tuesday to make several modifications to the 177,000-square-foot building vacated by Medco Health Solutions in 2004.

The changes include ripping out almost all of the parking and constructing a 46,800-square-foot addition.

HSBC would install rows of servers and mainframe computers primarily as its disaster-recovery center and also for processing credit card transactions, according to the application filed by the company.

HSBC spokesman Stephen Cohen confirmed the bank's move but did not disclose the budget or how much the bank is paying for the buildings and the 22-acre site. Nor did he have a timetable for construction and moving in.

Major financial-service companies, particularly stock brokerages based in Manhattan, have maintained backup data centers and even trading floors in remote locations.

Emergency facilities gained more urgency after the Sept. 11, 2001, terrorist attacks, with the Federal Reserve Board ordering its member banks to submit detailed disaster plans.

In 2002, for example, Deutsche Bank leased space in another part of Parsippany for a data center. The one it housed in a high-rise in lower Manhattan was damaged badly by the collapse of the south tower of the World Trade Center.

Reflecting the changes in use of the former Medco building, HSBC will surround it with a 10-foot-high security fence and create a berm along the part of the property abutting Jefferson Road.

What is now the parking lot will be left as an open field, to be used for parking buses ferrying in employees if the backup center has to be activated.

Medco cleared out of the building as its lease expired in 2004, laying off most of the 900 people who worked there at the time as part of a general consolidation of facilities.

At its peak

At its peak in 2002, Medco had slightly more than 1,500 pharmacists and pharmacy technicians at the site filling prescription orders.

In mid-2005, HSBC announced a retail banking expansion into New Jersey that included a regional headquarters in Parsippany plus branches there and in Morristown.

Founded in 1865 as the Hong Kong and Shanghai Banking Corp., the company since has built an international branch network that includes Beneficial Finance, which was based in Morristown when it was independent.

The Medco building was purchased out of bankruptcy in 2003 by Prism Ventures in Fort Lee for $20.7 million.

One year earlier, Morristown lawyer and real-estate magnate Lawrence S. Berger had put the building into Chapter 11 proceedings as his financial problems mounted.

Jones Lang LaSalle


Tishman Speyer Closes $1.1B Fund Pursuing Office Assets
January 24, 2006
By Colleen Corley, News Writer

Tishman Speyer Properties Inc. has closed its largest investment fund to date, the $1.1 billion Tishman Speyer Real Estate Venture VI. The fund has made nine investments to date, including the purchases of New York City's MetLife Building and 125 S. Wacker Dr. in Chicago, the company said this morning. The fund attracted more than 40 domestic and international investors, the company said. Tishman Speyer Properties' international investments--such as the first joint venture of its kind to develop mixed-use properties in India--piqued foreign investors' interest in the new fund. Tishman Speyer Properties executives could not be reached for comment.

Fund IV will continue to pursue Class A assets in many of the country's strongest office locales, including New York City, Chicago, Los Angeles, Boston and Washington D.C., and in the somewhat troubled markets of San Francisco and Silicon Valley, Calif. But according to market reports from CB Richard Ellis Inc., office vacancy rates in Silicon Valley and San Francisco are improving over 2004's numbers. In the 4th quarter of 2005, downtown San Francisco had just a 12 percent vacancy rate, a number comparable to that of Chicago, Los Angeles and Boston. But at 23.2 percent, one of the country's highest and nearly double the national average of 12.7 percent, San Jose, Calif., remained a sticky point in the area

Jones Lang LaSalle


SL Green Nails Two NYC Deals: $390M Recapitalization and Lease Expansion
January 24, 2006
By Colleen Corley, News Writer Steven Durels

As a further sign that the New York City office market is as tight as ever, SL Green Realty Corp. said this morning it has completed a pair of unrelated deals: the $390 million recapitalization of 485 Lexington Ave. and the 10-year lease expansion and renewal agreement with Ross Stores Inc. at 1372 Broadway."There's obviously growth by businesses, which everybody loves to see," SL Green Realty executive vice president & director of leasing Steven Durels (pictured) told CPN this afternoon.

"The economy is strong, the leasing market is strong and there's continued demand for space."To preempt future rent increases and to manage occupancy costs, discount apparel retailer Ross Stores increased its space in the building by 35,000 feet, Durels explained. The 534,000-square-foot, 21-story building is also occupied by Ann Taylor Inc. and Intralinks Inc. Cushman & Wakefield Inc. represented the tenants."If I wasn't able to accommodate their growth within the building, they would have had to look outside of the building," he said, noting that the renewal allows the Ross Stores to get its long-term costs under control and secure a strong credit tenant for SL Green Realty.

In the other deal, SL Green Realty and partner The City Investment L.P.'s recapitalization of the 921,000-square-foot building at 485 Lexington Ave. comes 19 months after the joint venture purchased and began repositioning it in 2004. Grand Central Square, located at 750 Third Ave., is anchored by Citibank N.A. with a long-term lease signed in October. A 20 percent increase of SL Green's stake in the Lexington Avenue property was included in the underwriting, provided by HSH Nordbank AG.

Jones Lang LaSalle


Johnson & Johnson quarterly profit soars 79%
January 24, 2006

Johnson & Johnson posted a 79% increase in fourth-quarter profit, mainly due to lower overhead costs and a large tax charge a year ago.

(AP) — Johnson & Johnson posted a 79% increase in fourth-quarter profit Tuesday, mainly due to lower overhead costs and a large tax charge a year ago. While the earnings were in line with Wall Street expectations, revenue was below estimates. Its shares fell more than 2%. The maker of contraceptives, contact lenses, prescription drugs and baby and skin care products said that net income totaled $2.2 billion, or 73 cents per share, for the three months ended Dec. 31 versus $1.2 billion, or 41 cents a share, a year ago.

The year-ago figures were depressed by a $789 million charge for repatriating foreign profits. J&J would have earned $2 billion, or 67 cents per share, without that charge. New Brunswick, N.J.-based J&J said sales dipped to $12.61 billion, from $12.75 billion a year earlier, when the quarter had one additional week. Most of the company's revenue growth has been coming from overseas, where profit margins are lower and marketing can be more difficult.

Analysts surveyed by Thomson Financial were expecting earnings per share of 73 cents and revenues of $13.2 billion. The report was released as J&J faces a Tuesday night deadline to raise its bid or let rival Boston Scientific Corp. acquire heart device maker Guidant Corp. J&J officials refused to discuss the Guidant deal during a morning conference call with analysts, and J&J spokesman Marc Monseau said at noon that the company had no comment. For the full year, J&J reported net income of $10.4 billion, or $3.46 per share, up from $8.5 billion, or $2.84 per share, a year earlier. Revenue for all of 2005 totaled $50.51 billion, up nearly 7% from $47.35 in 2004. Johnson & Johnson shares fell $1.44, or 2.4%, to $59.75 in afternoon trading on the New York Stock Exchange.

Jones Lang LaSalle


Venture capitalists boost NY-area investment
by Amanda Fung January 24, 2006

Venture capital firms invested $1.7 billion in 164 companies in the New York area last year, up 13% from the prior year.

Venture capital firms invested $1.7 billion in 164 companies in the New York area last year, up 13% from the prior year, according to a quarterly industry survey released Tuesday. New York maintained its third-place standing in the nation since 2002, behind Silicon Valley with $7.6 billion in 895 deals and New England with $2.6 billion in 385 deals, according to the MoneyTree Survey by PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association.

"The New York Metro region has demonstrated moderate but hopefully sustainable growth over the past three years," David Silverman, New York managing partner for venture capital and entrepreneurial companies at PricewaterhouseCoopers, said in a statement. Nationwide, venture capitalists invested $21.7 billion in 2,939 deals in 2005, slightly more than the $21.6 billion in 2004. The $200 million increase for New York-area tech companies was led by two deals totaling $313 million in the financial services sector and two deals totaling $208 million in the telecom sector. Fourth-quarter investments of $287 million were almost matched from $283 million in the third quarter of 2005.

Expansion-stage companies in the area received $642 million in 79 deals. Later-stage firms got $608 million in 51 deals and early-stage firms gained $112 million in 31 deals. For the year, financial services received $378 million, outpacing the usual front runners in dollar terms. Life Sciences firms got $244 million, software $293 million and IT Services got $195 million. "The activity and diversity speaks to the opportunity all sectors have in obtaining funding in the New York metro region," said Mr. Silverman.

Jones Lang LaSalle

DRS Technologies Sells $600 Million in Bonds

Parsippany-based DRS Technologies (NYSE: DRS) today announced the terms of its two-part $600 million bond offering, which was boosted in size by $25 million. The bond transaction consists of $350 million of 6-5/8% 10-year senior notes and $250 million of 7-5/8% senior subordinated notes due 2018.

The deal is expected to close at the end of this month, and is contingent upon the closing of the previously announced Engineered Support Systems acquisition. Bear Stearns was the sole book-running manager, while Wachovia Capital Markets served as joint lead manager.

DRS plans to use proceeds from the offering, plus part of its available cash and borrowings under an amended credit facility, to finance its purchase of Engineered Support Systems; pay down some of that company’s outstanding debt; and to pay related fees and expenses.

DRS, a defense technology company, makes a range of mission-critical systems. The company’s shares climbed $1.00 to $49.75 in afternoon trading. - Ki Kim

Jones Lang LaSalle


ImClone may sell itself or merge
January 24, 2006

ImClone Systems Inc. said it may sale itself or merge with another company, and appointed a board member as interim chief executive.

(AP) — ImClone Systems Inc. on Tuesday said it may sale itself or merge with another company, and appointed board member Joseph L. Fischer as interim chief executive. The maker of colorectal cancer treatment Erbitux, which became ensnared in an insider trading scandal in 2001, said it hired Lazard to help it review its alternatives. The Manhattan company may also consider a strategic alliance, and will consult with its partners during the process.

ImClone said Mr. Fischer, a member of its board since 2003, will replace Philip Frost, who was named interim CEO in November. Former CEO Daniel S. Lynch resigned in November for unspecified reasons. ImClone said it doesn't plan to disclose further information about the strategic review until the process is completed or it reaches an agreement. The company's stock scandal also caused lifestyle retailer and media mogul Martha Stewart to serve jail time in 2004 for lying about her sale of ImClone stock.

Jones Lang LaSalle

Phasing Out & Phasing In

Looking at our Winter 2006 forecast, many are noticing that some of the markets that produced banner results in 2004 and 2005 are set to slow in 2006. Never fear! We are not projecting that the hotel industry in these markets will crash, nor are we saying that the hotel recovery is over. Rather, some markets have had the benefit of a rapid recovery and are now at the end of their expansion phase, meaning that they will now shift down to a stabilized pace of growth. The good news is that there are several other hotel markets that have not yet come to the end of their expansion phase and as a result, they are going to see above-average growth in RevPAR and above-average room rate increases in the year ahead.

The graph below illustrates RevPAR growth over the past year and compares it to projected growth over the coming year. We can see that such markets as Fort Worth, Austin, the Florida markets (Fort Lauderdale, Miami, and West Palm Beach), Orange County, New York, and Washington D.C. had substantial growth in RevPAR over the past year; we will refer to this group as Group 1. While such markets as Boston, Newark, San Francisco, Albany, and Houston had below average RevPAR growth during 2005; we will refer to this group as Group 2. It's just the case that Group 1 is ahead of Group 2 in their cycles.

RevPAR Growth: Good Times Can't Necessarily Last

When a market begins its expansion phase, occupancy has increased to its long-term average, rents (i.e. room rates in the case of hotels) are beginning to rise and no new supply is being added. Once a market has completed the expansion phase, rents have seen a rapid increase and the market is poised to take on some new construction. Following the expansion phase is the hypersupply phase, in which new supply has started to enter the market and rent growth is positive, but declining. We believe group 1 is at the end of its expansion phase and beginning the hypersupply phase. Group 2, however, is just getting to its expansion phase.

Looking specifically at demand, it is necessary to exclude two of the strongest markets, Austin and Fort Worth, as exceptions to our phase analysis, because Austin and Fort Worth were both witness to the "hurricane effect" during the 3rd quarter of 2005. The Katrina and Rita evacuees brought a wave of temporary demand to these markets that inflated their results. The effect was exogenous and thus outside of any discussion with regard to its real estate cycle.

How do we know that Group 1 is at the end of its expansion phase? One bit of evidence is that these markets are above their long-term occupancy level. All of the markets in Group 1 have surpassed their long-term average for occupancy by over 200 basis points--West Palm Beach leads the pack with an 800+ basis-point difference. Now we look at room rates, specifically real room rates. Each of these markets has passed its previous real ADR peak in either the full- or the limited-service sector. Thus, it's no wonder that our models are predicting a slowdown in RevPAR. They are at the end of their expansion phase; it's not a bad thing, just the culmination of good results.

As to Group 2, if we first look at occupancy, we can see that Albany and Richmond are at or getting close to long-term average levels in occupancy. The other markets in the group are still trailing behind their long-term average, but occupancy continues to increase. Likewise for room rates--none of the markets in Group 2 have surpassed their previous peak levels for real room rates. Therefore, these signs point to these markets either entering or being already in expansion, thus poised to produce much improved results this year.

Using market cycles, we can see that some of the hotel markets that have had a rapid recovery during 2005 will have positive but slowing growth in 2006, while those markets that are poised to have a greater recovery in 2006 will soon see accelerating performance. The hotel recovery in 2005 was spotty with some markets clearly leading the pack. This year is the year that the rest of the pack starts to catch up.

Jones Lang LaSalle


Two Jersey data companies teaming up
Tacit Networks adds Mobiliti

Tuesday, January 24, 2006
BY TOM JOHNSONStar-Ledger Staff

Tacit Networks, a privately held storage networking company in South Plainfield, is expected to announce today it acquired Edison- based Mobiliti, a vendor specializing in securing data on laptop computers.

The terms of the deal couldn't be learned, but the transaction is expected to give Tacit a better toehold in the fast-growing market for data consolidation among small office, home office and mobile workers.

Mobiliti was founded in 1997 and has about a dozen employees. It makes software that protects data on laptops and its list of 450 customers includes Shell Oil, Lucent Technologies and Motorola, and more than 100,000 users.

With the acquisition, Tacit becomes one of the first companies to offer consolidation of information technology from the home office to branch offices to individual workers using remote laptop commuters.

Chuck Foley, president of Tacit, said the company began talks with Mobiliti in the first quarter of 2005 and closed the deal in December. Mobiliti's employees already have moved into Tacit's offices in South Plainfield.

Founded in 2000, Tacit employs more than 100 people and hopes to turn profitable sometime this year, according to Foley. The company's revenue is growing 40 percent quarter over quarter, he said.

Tacit's technology allows its clients, including more than a dozen Fortune 500 companies, the ability to speedily exchange content data between data centers and remote offices via secure high-speed networks. Mobiliti has developed a technology that extends that ability to laptop computers, a market which also is rapidly growing.

"We think this is a very significant extension to our market," Foley said. The technology affords businesses huge savings in software, massive savings in maintenance, and enhanced security throughout its network, he said.

The market for data consolidation is growing as more workers are based away from corporate data centers. The need to control data from branch offices and remote workers is emerging as a top priority for many businesses.

"Data protection is typically only dealt with in earnest at the data center level, but Tacit Networks enables true manageability from the core, though the remote sites, all the way to the road warrior," said Heidi Biggar, an analyst with Enterprise Strategy Group.

Tom Johnsonmay bereachedat tjohnson@starledger.com or (973) 392-5972.
© 2006 The Star Ledger
© 2006 NJ.com All Rights Reserved.

Jones Lang LaSalle


Bank of America profit falls short
Tuesday, January 24, 2006

BY PAUL NOWELLAssociated Press
Bank of America posted its first profit decline in years yesterday, missing Wall Street's expectations as consumer bankruptcies and weaker trading results cut into its fourth-quarter earnings.

Shares of the nation's second-largest bank slipped after the results were announced.
The Charlotte, N.C.-based bank, which operates the largest branch network in New Jersey, said net income for the quarter totaled $3.77 billion, or 93 cents per share, down from $3.85 billion, or 94 cents per share, a year earlier.

Excluding merger and restructuring charges of $59 million before taxes from its acquisition of credit card company MBNA, Bank of America would have earned 94 cents a share in the latest quarter.

Analysts polled by Thomson Financial had forecast earnings of $1.02 a share.
"The fourth quarter was the first one in a long time when we failed to meet our own expectations," Chief Financial Officer Alvaro de Molina told industry analysts in a conference call. "It's fair to say we fell short of yours as well."

Revenue during the fourth quarter grew to $14.12 billion, from $13.71 billion last year -- also below Wall Street projections of $14.52 billion.

By missing its earnings target, Bank of America joined Citigroup, the nation's largest financial institution, which reported last week its earnings were 2 cents below analysts' expectations on weakness in its retail bank operations. Investors sent its shares down sharply.

The nation's third-largest bank, JPMorgan Chase, beat estimates but acknowledged weakness in its trading operations.

Ken Lewis, Bank of America's chairman and chief executive, blamed the fourth quarter's lackluster performance on the need to set aside more assets for bad loans and lower trading results -- factors that also influenced earnings at other banks during the final quarter of 2005.
"The impact of the change in bankruptcy laws and changes in our practices for overdraft charge- offs and over-limit credit card fees reduced pretax results by about $320 million," Lewis said in a statement. "In addition, we had a weak trading quarter that was well under our performance in recent quarters."

During the quarter, thousands of Americans rushed to file for bankruptcy ahead of the Oct. 17 change in the nation's bankruptcy law, which made it harder for them to discharge their debts.
Lewis noted his wa a one-ime event, saying: "The bankruptcy issue will not recur and should actually benefit us going forward as we expect a reduced level of bankruptcy filings under the new law."

For the year, Bank of America said it earned profits of $16.89 billion, or $4.15 a share, up from $14.14 billion, or $3.69 a share in 2004. Revenue for the year totaled $56.77 billion, up from $48.88 billion in 2004.

© 2006 The Star Ledger
© 2006 NJ.com All Rights Reserved.

Jones Lang LaSalle

Few sites for new retailers in Morris

Some small parcels remain, but big-box stores are out of luck as land is vanishing

BY TIM O'REILEY DAILY RECORD

Hard-core shoppers who plan their calendars around new store openings had better make the most of the coming year.

Once a handful of projects mapped out or under construction are finished, industry leaders say it will be time to hang a "no vacancy" sign at the county line.

Although a few parcels remain that could support small strip malls, larger projects with big-box anchors have become virtually out of the question.

"With the Highlands Act, that takes a good chunk of real estate right off the table, and it's going to make new development almost impossible," said Michael Halibej of Halibej Realty & Associates in Morris Plains.

Even before that, town councils heeding voters' complaints about increased traffic often took a hard line against new projects, said Art Weiss, a broker with the Parsippany office of CB Richard Ellis.

"I don't see any new development of raw land of any significance for a long time," he said.
Escalating house prices have given developers more leeway than just a couple of years ago to win bidding battles with commercial builders for raw land.

"It used to be that if a residential guy offered $1 million, I could offer $1.5 million to $2 million," said Howard Wein, who represents retail clients as a vice president at Jeffery Realty in North Plainfield. "But within the last 12 months, residential has been able to pay the commercial prices or more."

As open land disappeared from the market, it has become more common to redevelop obsolete factories and other commercial buildings -- or even dumps -- the types of properties that would be ignored in many other parts of the country.

In fact, almost everything that opened in 2005 or is scheduled for completion this year -- with the exception of additions along the periphery of Rockaway Townsquare mall -- fits in this category.

"Municipalities are not terribly eager for new, ground-up projects but are thrilled to see old, dying industrial property put back to use," said Scott T. Loventhal, director of development at Garden Commercial Properties in Millburn. "Developers are going to have to be creative in rehabbing and redeveloping."

Garden Commercial expects to finish construction in October of the 260,000-square-foot Riverdale Crossing, located on an abandoned rock quarry at the juncture of Routes 23 and 287.
Just a mile to the west, Lowe's opened a store in the summer on the site of an old scrap rubber dump that many developers had shunned for years.

On the congested Route 10 corridor in East Hanover, side-by-side Babies 'R' Us and Thomasville Furniture stores replaced an industrial building that had sat empty for more than a decade, partly because of environmental concerns.

In Morristown, Woodmont Properties expects to go ahead with demolition of the old Epstein's department store and some neighboring buildings to make way for a new mixed-use project that will include a total of 90,000 square feet for shops.

Perhaps the biggest potential prize, according to Weiss, is the former Hercules Gunpowder plant in Roxbury, covering 1,200 acres between Routes 46 and 80.

Still, proposals dressed up as redevelopment encounter the same objections as their greenfield counterparts.

In the Flanders section of Mount Olive, Armstrong Capital of Valley Stream, N.Y., ran into a storm of complaints a year ago when it sought to build a 128,000-square-foot Target at the Sutton Plaza shopping center it owns, replacing an old Ames store about half that size that has been vacant for four years.

Company executives did not return calls regarding Target's status, but town officials said Armstrong had quietly withdrawn the building application and had not submitted anything new.
In late 2004, an attempt to build a Wegmans supermarket and senior-citizen housing on the 37-acre site of an industrial building that has sat empty for more than a decade ran into a similar fate after neighbors raised hackles about increased traffic.

While cars often dominate the debate, Halibej said that may change eventually.

"With the tax pressures on every municipality, people are going to have to be more flexible to build up commercial ratables," he said.

In addition to redevelopment, industry experts hold out hope that lifestyle centers will receive a warmer reception from town officials and residents.

The latest fad in shopping centers, now that such previous hot items as outlet centers and power centers have reached maturity, lifestyle centers are loosely defined as covering 100,000 to 500,000 square feet. The stores are laid out on a line like neighborhood strip malls but are populated by many of the same national specialty chains that go into regional malls.

Big-box anchors, favorite targets of controlled-growth advocates, are never invited in.
So far, the 88,000-square-foot Shoppes at Union Hill in Denville is the only lifestyle center in Morris County. Almost full when it opened in mid-2003, owner Stanbery Development recently signed the clothing shop J. Jill to a lease that filled the last of the 23 spaces.

By autumn, The Streets of Chester, just off the town's Main Street, will become the second lifestyle center in the county.

Chuck Lanyard, director of brokerage at the Goldstein Group in Glen Rock, said he was working on securing two sites in the county for lifestyle centers, but he declined to give specifics.
"The great demographics and economy in Morris County make it a great place for lifestyle centers," he said.

And the smaller traffic counts make it easier to secure permits than with larger shopping centers.

Still, Union Hill ran into many of the same complaints as its larger counterparts when it went through the hearing process in 2001, including objections about traffic and overdeveloping the neighborhood.

Even after construction started, some argued that Stanbery had cut down too many trees.
With the debate long over, Stanbery gets calls every week from retailers wanting in, only to be told that the center is full for the foreseeable future.

Despite the strong performance, Stanbery has no projects even in the planning stage.
"The barriers to entry in Morris County are very high," said Ray Brunt, head of the company's New Jersey office in Manasquan. "We have looked for other locations, but at this point, we haven't been able to find anything."

In this environment, the tiny vacancy rates that have prevailed for several years are expected to continue through 2006 and beyond.

The Old Bridge brokerage R.J. Brunelli & Co., in its most recent survey one year ago, found a 2.7 percent vacancy on the Route 46 corridor and just 1.5 percent on Route 10.

Most of the retail openings along Route 46 were east of the county line.

On Route 10, only 70,000 square feet -- or the size of one newest-generation supermarket -- is vacant in the entire 21-mile stretch from Roxbury to Livingston.

For the most part, the lack of space forces retailers seeking new storefronts in Morris County to take a number and get in line.

"I recently had a national electronics retailer tell us they were ready to take 25,000 to 35,000 square feet, but all I could tell them was that we appreciated their interest," said Scott McGee, who directs the leasing effort at the ITC Crossing in Mount Olive.

Developer AIG Baker, based in Birmingham, Ala., is finishing a PetSmart store and has signed Applebee's to a lease for another pad there.

After that, the 743,000-square-foot center, expected by many in the industry to be the last of its size built in Morris County, will be finished, except for a couple of small parcels that are difficult to market because of their configuration or limited parking, McGee said.

The 149,000-square-foot addition to Rockaway Town Plaza, where some tenants have moved in, was entirely leased two years ago, said Michael Hauser, general manager of Rockaway Townsquare mall. Both are owned by Simon Property Group.

The mall is full, and plans are being drawn up for an interior makeover, although no schedule has been laid out.

Likewise, a new wing to the mall that has been talked about for several years has not received a go-ahead, although the ring road around the mall was realigned last year partly to make room for it.

Included in the Town Plaza will be the second Morris County location of Dick's Sporting Goods store.

Industry experts said Dick's scouted locations for several years, finally succeeding by taking over and rebuilding a store that Pathmark vacated in East Hanover last year.

In addition to individual changes, retailers wait for competitors to close in bankruptcy, as happened last year with Seaman's Furniture, to find expansion space.

Many other retail openings are relatively small, including:

• Marketplace at Rockaway, which opened in 2004 with Wal-Mart and DSW Shoes as anchors, is down to the last 5,800 square feet available of 258,000 square feet.
• Boonton Plaza, with a 23,000-square-foot addition under construction across the parking lot from Wal-Mart.
• Shops at Rockaway Plaza, with five spaces totaling 15,500 square feet.
• The Streets of Chester, a 105,000-square-foot lifestyle center that will open in September, 15 years after receiving its first permits.