Jones Lang LaSalle

February 3, 2006
Public Misled on Air Quality After 9/11 Attack, Judge Says

By JULIA PRESTON
Christie Whitman, when she led the Environmental Protection Agency, made "misleading statements of safety" about the air quality near the World Trade Center in the days after the Sept. 11 attack and may have put the public in danger, a federal judge found yesterday.
The pointed criticism of Mrs. Whitman came in a ruling by the judge, Deborah A. Batts of Federal District Court in Manhattan, in a 2004 class action lawsuit on behalf of residents and schoolchildren from downtown Manhattan and Brooklyn who say they were exposed to air contamination inside buildings near the trade center.

The suit, against Mrs. Whitman, other former and current E.P.A. officials and the agency itself, charges that they failed to warn people of dangerous materials in the air and then failed to carry out an adequate cleanup. The plaintiffs are seeking monetary damages and want the judge to order a thorough cleaning.

In her ruling, Judge Batts decided not to dismiss the case against Mrs. Whitman, who is being sued both as former administrator of the E.P.A. and as an individual.

As a legal matter, the ruling established that the suit's charges were well-documented and troubling enough to meet a legal standard to go forward. But Judge Batts also criticized Mrs. Whitman's performance in the days after the collapse of the towers unleashed, by the E.P.A.'s estimates, one million tons of dust on lower Manhattan and beyond.

"The allegations in this case of Whitman's reassuring and misleading statements of safety after the Sept. 11, 2001 attacks are without question conscience-shocking," Judge Batts said.
Calls to the Whitman Strategy Group, Mrs. Whitman's current business, and to Glenn S. Greene, the Justice Department lawyer who is representing her and the E.P.A. in the case, were not immediately returned. Mrs. Whitman, a former New Jersey governor, was administrator of the E.P.A. from 2001 to 2003.

Mrs. Whitman knew that the towers' destruction had released huge amounts of hazardous emissions, Judge Batts found. But as early as Sept. 13, Mrs. Whitman and the agency put out press releases saying that the air near ground zero was relatively safe and that there were "no significant levels" of asbestos dust in the air. They gave a green light for residents to return to their homes near the trade center site.

"By these actions," Judge Batts wrote, Mrs. Whitman "increased, and may have in fact created, the danger" to people living and working near the trade center. Judge Batts said that Mrs. Whitman was not entitled to immunity because she was a public official. Judge Batts allowed the suit to proceed on some counts against the E.P.A. She dismissed claims against Marianne L. Horinko, an assistant administrator of the E.P.A. at the time.

Lawyers for the plaintiffs were "very gratified that the court has recognized that the E.P.A. failed in its obligation to protect the residents of downtown Manhattan and Brooklyn," said Justin Blitz, a lead lawyer on the case.

In a statement yesterday, Senator Hillary Rodham Clinton called the E.P.A.'s conduct "outrageous."

"New Yorkers were depending on the federal government to provide them with accurate information about the air they were breathing," she said. "I continue to believe that the White House owes New Yorkers an explanation."

About 2,000 tons of asbestos and 424,000 tons of concrete were used to build the towers, and when they came crashing down they released dust laden with toxins. After an expert panel failed last year to settle on a method for organizing an E.P.A. cleanup, the agency said it would proceed anyway with limited testing and cleaning of apartments in downtown Manhattan below Canal Street.

Jones Lang LaSalle

February 3, 2006
Jobless Rate Falls to Lowest Level in More Than 4 Years
By VIKAS BAJAJ

The unemployment rate fell to its lowest level in four and a half years in January, the government reported today, as the economy added construction, education, health and other jobs.

Employment was up in virtually every sector of the economy and the country as a whole added 193,000 jobs, the Labor Department reported. The unemployment rate fell to 4.7 percent, the lowest it has been since July 2001.

The report also revised upward the employment gains for November and December, increasing the total number of new jobs created in those months to 81,000. Though total job growth remains at a slower pace than at this point in past recoveries, the 687,000 jobs added in the last three months was one of the strongest showings of the current economic expansion.

With those additions and other revisions to the 2005 data taken into account, the economy added an average of 174,000 per month in the last 12 months. Economists estimate that the nation needs to add roughly 150,000 jobs a month just to keep up with population growth.

Though January's report fell short of economists' expectation of about 250,000 new jobs, it showed broad-based strength. The construction industry added 46,000 jobs, perhaps reflecting the warmer than usual January, and the number of education and health services jobs increased by 39,000. Employment was up in all parts of the economy except for retail services, in which jobs decreased by 2,000, and the government, which was down 1,000.

"This is one of the very-easy-to-interpret reports," said Ethan Harris, chief United States economist for Lehman Brothers. "In this one, everything lined up like the planets."
The unemployment rate also fell across most major population groups, except teenagers, who saw a slight increase. It fell the most for blacks, to 8.9 percent from 9.3 percent, and for adult men, to 4 percent from 4.3 percent.

Average wages, which have lagged behind inflation for much of the last year, were up 0.4 percent, or 7 cents an hour, to $16.41, indicating that workers are gaining some ground in a tightening labor market after anemic gains of recent years.

If the increase in incomes keeps up at this pace in the coming months it could prompt the Federal Reserve's policymakers to raise its benchmark short-term interest rate, now at 4.5 percent, when they meet on March 28, economists said. Sharply rising wages are often seen as a harbinger of inflation because they allow people to bid up the price of goods and services.

"We have not seen any inflation yet, but what we have heard is an inordinate number of price increase announcements in the third or fourth quarter, but they were not supposed to take effect until Jan. 1," said Richard Yamarone, director of economic research at Argus Research in New York.

Stocks were trading moderately lower this morning, as investors took into account the probability of another interest rate increase, which the Fed last raised earlier this week. The Standard & Poor's 500-stock index was down 0.5 percent. Bond prices initially fell after the employment report came out, but they have since recovered.

Among people who evacuated their homes because of Hurricane Katrina in late August, the unemployment rate rose to 14.7 percent in January from 12.4 percent in December.

About half the 1.2 million people who left their homes because of the hurricane had returned by January, most of whom were employed; the unemployment rate for returnees was 2.9 percent in January, down from 5.6 percent in December. But the situation appears to be getting worse for those who have not returned; the unemployment rate for them rose to 26.3 percent from 20.7 percent in December.

Separately, the University of Michigan's index of consumer confidence dipped slightly to 91.2 this month from 91.5 in December. The latest reading was down from an earlier estimate of 93.4.

Jones Lang LaSalle

$250M Port Complex Wins Formal Approval
By Eric Peterson
Last updated: February 3, 2006 08:24am

(To read more on the industrial market, click here.)
PAULSBORO, NJ-The South Jersey Port Corp. has signed a formal agreement with officials of this Gloucester County community to redevelop a 190-acre industrial brownfield site as a new port facility. The complex will join two existing Delaware River ports operated by the state agency in Camden and Salem. The two locations combined to handle more than 3.5 million tons of international bulk, break-bulk and container cargo in 2005.

“This agreement sets out the details of an expansion of Delaware River port capacity in South Jersey,” says SJPC executive director Joseph Balzano. He adds that bringing this project on line will bring new jobs and businesses to the community. “We have so many customers who want to come to South Jersey, and we know if we build a facility, we’re going to get more customers.”
“The signing of this agreement is the culmination of more than two years of work to make sure that this area will keep pace as a major regional maritime center,” says Richard Alaimo, chairman of the SJPC. The cost of the project at build-out is being projected at $250 million, with the initial phase expected to cost between $100million and $135 million. Financing is going to come from a couple of bond issues, with an initial issue valued at $10 million going to pay for engineering studies and the permitting process. In terms of new jobs, officials are putting the long-term number in the 2,000 range.

The 190-acre site is made up of a former BP refinery and the adjacent Essex Chemical site of the Dow Corp., with the latter representing 60 acres of the total. BP is responsible for remediating the refinery portion of the overall site. “Gloucester County has placed great emphasis on restoring brownfield sites to productive economic use,” says county freeholder director and State Sen. Stephen Sweeney. “This agreement will take this onetime brownfield and crank it up as an engine of growth.”

Paulsboro controls the site by virtue of a long-term lease it had with BP, and will in turn lease it to the SJPC. The latter is responsible for the design and construction of the new port complex, as well as handling the permitting process. The county has agreed to build an overpass connecting the site with I-295, a project that carries an estimated cost of $16 million, according to Sweeney. That cost is expected to be reimbursed to the county by the New Jersey DOT.

Jones Lang LaSalle

GlobeSt.com UPDATE: Cedar Completes Mall Acquisition
By Eric Peterson
Last updated: February 2, 2006 10:05am

(For more retail coverage, click GlobeSt.com/RETAIL.)
EGG HARBOR TWP., NJ-Cedar Shopping Centers Inc. has completed its acquisition of Shore Mall, a one-level, 620,000-sf enclosed mall here, paying $33.65 million for the 75-acre property. As reported by GlobeSt.com, the Port Washington, NY-based REIT went under contract on the property in early January. Officials of the company say they expect to close, as well, on the acquisition of an adjacent 50-acre undeveloped site “during the next few days.” Sale price for the site is $2 million.

The sellers of both the mall and the adjacent site are partnerships in which Cedar CEO Leo Ullman is a limited partner. The partnerships had owned Shore Mall for nearly two decades and Cedar Shopping Centers managed the property during that period.

The purchase price is being funded by assumption of nearly $31 million in first mortgage financing at 7.01%, due August 2008, according to Tom O’Keeffe, Cedar’s CFO. The remainder of the purchase price is being funded by the company’s revolving credit facility. Cedar is also taking on certain installment payments totaling $3.1 million, payable through 2009 to the holder of preferred partnership interests.

Shore Mall is anchored by a 167,299-sf Boscov’s department store, which will be expanded by another 12,400 sf later this year. Other anchors include a 144,000-sf Value City store and an 85,000-sf Burlington Coat Factory; all three recently extended their leases. Cedar officials say the adjacent site, its sale pending, has a build-out capability of another 200,000 sf of retail.

Jones Lang LaSalle

Apartment Complex Trades for $21M
By Eric Peterson
Last updated: February 2, 2006 10:01am

(To read more on the multifamily market, click here.)
LINDENWOLD, NJ-An unidentified buyer acquired Stonington Court Apartments, a 456-unit complex in this metro Philadelphia community, for $20.8 million. The sale price factors out to about $45,614 per unit.

The sale was arranged by Robert Holland, senior vice president and co-managing director, and vice president Matthew Weilheimer of the Kislak Co., Woodbridge, NJ. The duo represented both the seller, Stonington Court Apartments Association LLC, and the buyer.

Built in the early 1970s, the garden-style complex’s 456 units are spread over 24 buildings and the site includes a clubhouse and a pool. The property is currently 90% occupied, according to Holland. “New Jersey continues to experience unprecedented demand for multifamily properties.”

Jones Lang LaSalle

200,000-SF Tech Park Set to Go Under Construction
By Eric Peterson
Last updated: February 2, 2006 08:13am

(To read more on the industrial market, click here.)
SOUTH AMBOY, NJ-Construction work is expected to be under way shortly on Raritan Landing, a 200,000-sf technology park and disaster recovery center on this city's Raritan River waterfront. The project is part of a larger redevelopment that will eventually include a 150-key Marriott Hotel and an attached convention center. Some 750 parking spaces are also part of the site plan, as is "substantial public access to the waterfront," according to a spokesman for the development team.

The city-owned tech park complex is being built by Joseph Jingoli & Son, a Lawrenceville-based construction firm that has been designated by this Middlesex County community as the site's lead redeveloper. Also involved in the project are CS Technology, a New York City-based strategic consulting firm, and Enterprise Infrastructure Holdings, a firm that assists tech companies with their real estate requirements. And Princeton University architectural professor Mario Gandelsonas has been hired as a design consultant.

Raritan Landing is slated to be ready for occupancy by the summer of 2008, according to Michael Caputo of Joseph Jingoli & Son. City officials say they are already talking to several large financial and technology firms "with a Wall Street presence" and possible interest in disaster recovery space, but declined to name possible tenants.

According to South Amboy Mayor John O'Leary, his community sits at the convergence of a network of unused fiber optic cables that tie in with Raritan Landing's use. The waterfront site also provides both water taxi and ferry access to Lower Manhattan, which is about 20 miles away across Raritan and New York bays, he points out.

The Raritan Landing site is also adjacent two new waterfront multifamily communities, Lighthouse Bay and Harbor Village at Lighthouse Bay, both projects of the Pleasantville, NY-based Baker residential. And this past November, the latter announced a third project nearby, Beacon Pointe.

Jones Lang LaSalle

GlobeSt.com UPDATE: Arena Project Gets New Overseer
By Eric Peterson
Last updated: February 1, 2006 10:17am

NEWARK-The Newark Housing Authority is out and the Newark Downtown Core Redevelopment Corp. is in as the controlling agency for the new $310-million arena now under construction for the New Jersey Devils hockey team here. According to a published report, city officials made the change at the recommendation of HUD, which has been reviewing the housing authority’s financial management practices for about 18 months.

While city officials would not comment further, some details of the new agency have been released. The NDCRC will be headed by city administrator Richard Monteilh, who has largely functioned as the city’s lead negotiator for the project. The new agency will also have a four-member board, consisting of Zinnerford Smith, head of the Newark Watershed and Development Corp. and a member of the housing authority’s board; John Jones, the assistant director of economic development for the city; Robert Altenkirch, president of the New Jersey Institute of Technology, which is located in Newark; and housing authority board member Karen Torian.

Also, according to city officials, the housing authority will stay on as the agency of record for the project, mostly to deal with eminent domain issues if they arise. The NDCRC will oversee the project as a housing authority contractor.

Jones Lang LaSalle


Kaplan Gets Site Plan Approval for Residences
By Eric Peterson
Last updated: February 1, 2006 10:19am

(To read more on the multifamily market, click here.)
CINNAMINSON, NJ-This Burlington County community’s planning board has given preliminary site plan approval for “Section 5,” totaling 69 units, within the Kaplan Cos.’ Villages at Cinnaminson Harbour residential community here. The phase will consist of 33 townhouses and 36 carriage homes, according to Jason Kaplan, president of the Highland Park-based company.

Designed by Minno & Wasko Architects of Lambertville, Section 5 is expected to be under construction by this summer, according to Kaplan. At full build-out, the Villages at Cinnaminson Harbor will have a total of more than 900 multifamily units.

The project will also include a public promenade along the Delaware River. A marina is also part of Kaplan’s long-term plan for the project.

Jones Lang LaSalle


Japan's Banks: A Better Bottom Line

The turnaround at Mitsubishi UFJ is a strong sign that the worst is over for the sector, which still has plenty of catching up to do globally.

He heads the world's biggest financial group, with 40 million personal accounts and more than $1.65 trillion in assets. Despite all that responsibility, Nobuo Kuroyanagi, 64, CEO of Mitsubishi UFJ Financial Group is remarkably relaxed. That's because his bank, the result of the recent merger of Mitsubishi Tokyo Financial Group and UFJ Holdings, is firmly on the road to recovery after a troublesome decade for Japan's financial sector.

Earnings through the six months to September, 2005, were $6.1 billion and are expected to reach $12.6 billion for the year through March, according to Nikko Citigroup, vs. a $1.8 billion loss last year. And while those first-half profits benefited from several one-time accounting measures, the bank's stock has risen 51% in the last 12 months.

NEXT STOP. That's a remarkable turnaround. Just three years ago, Japan's government ordered the nation's biggest banks, including the two that became Mitsubishi UFJ, to halve their bad loan portfolios within two years. The tough medicine was necessary. Having made trillions of yen in ill-judged loans during the bubble years, Japan's big banks had failed for a long time to get tough with ailing companies until the government stepped in and told them to sort out the mess.

Now, the test for Mitsubishi UFJ is to transform itself from a recuperating behemoth into a truly global bank that can compete alongside the likes of giants such as Citigroup (C ) and HSBC Group (HBC ). Following the merger of MFTG and UFJ, Mitsubishi UFJ is now among the world's biggest five banks in terms of market capitalization, but analysts say it must boost profits if it's to rank alongside the world's leading lenders.

"We'd like to become one of the global top five banks," Kuroyanagi told BusinessWeek in a recent interview at Mitsubishi Financial's Tokyo headquarters. "To do that, we'll build a first-class retail operation in Japan and then expand internationally."

BILLS STILL DUE. Mitsubishi UFJ faces its share of challenges. For one thing, catching up with the leaders won't be easy. Citigroup posted earnings of $24.6 billion for 2005. Mitsubishi UFJ has yet to announce results for the final quarter of 2005, but for the three months to last September, Citigroup's profits exceeded those of Japan's top six banks' combined. Similarly, the return on assets for Japan's six biggest banks runs about half of what the U.S. giant manages.

One reason for low profits is that years of bad loans limited investment at home and forced Japan's banks to scale back overseas operations. Plus, Japan's banks have historically focused on providing cheap loans to corporations, often at the expense of potentially more profitable retail banking.

Another concern is that Japan's banks still need to repay public funds they received during the worst days of the banking crisis. Mitsubishi UFJ, for example, owes the government $7 billion, even after paying back $2.7 billion in October and $2.6 billion in December. The bank is unlikely to finish repaying the government before 2007.

ASIAN FOCUS. Fellow megabanks such as Mizuho are in the same boat. "Their earning power is much improved, but since the banks still have to repay the public funds back to the government they're limited in how they can use their capital," says Junsuke Senoguchi, bank analyst at Lehman Brothers in Tokyo.

Still, some signs indicate that the banking comeback will continue. Deregulation of the Japanese financial sector, including measures to allow banks to sell securities at branches and, from 2007, offer a full range of insurance products, should help increase profitability at home. The prospect of higher interest rates in Japan later this year will also improve the picture.

And Mitsubishi UFJ is expanding overseas to build business among Japanese companies investing heavily in the rest of Asia. "We have business with most of those Japanese companies," Kuroyanagi notes. The bank has three branches in India, it opened a new office in Shenyang in June, and has launched an investment-banking operation in Singapore to help drum up new business across the region.

"ONLY REALISTIC OPTION." Mitsubishi UFJ is also searching for a banking partner in China, where Japanese companies are investing billions of dollars. The Japanese media recently reported that the bank is in talks with Bank of China (BOC), one of China's Big Four banks, about a $300 million investment. Kuroyanagi declines to confirm details, but he admits that his bank has a good relationship with BOC and that an alliance would help serve multinationals forming joint ventures in provincial Chinese cities where Mitsubishi UFJ doesn't have branches.

Such an investment would be a smart strategy. Analysts say rival banks are already making aggressive moves in China and that Japanese banks risk falling behind. In January, for instance, Britain's Royal Bank of Scotland completed a deal to take a 10% stake in BOC. "It's very natural for [Mitsubishi UFJ] to have an interest in taking a stake in a Chinese bank, and Bank of China is a very good bank," says Hironari Nozaki, bank analyst at Nikko Citigroup in Tokyo.

Stronger Asian operations are also the most likely source of longer-term profitability. Analysts question whether Mitsubishi UFJ, along with other Japanese banks, will be successful at persuading conservative Japanese account holders to increase their use of higher-margin financial products, such as high interest consumer-finance loans. Opportunities for growth in the competitive markets of Europe and the U.S. also look limited. "Asia is the only realistic option for good returns," says Lehman Brothers' Senoguchi.

In any case, Kuroyanagi reckons Asian expansion will bring a different kind of U.S. customer -- multinationals that are expanding in Asia. No matter what the client's nationality, "we want to be the No. 1 bank in Asia [for multinationals doing business in the region]," he says. Even if that takes a few years, the grim days of Japanese banking's lost decade are being left behind.

Jones Lang LaSalle


Xanadu or 'no can do'?
As Mills battles problems, state fears for its Meadowlands project
Friday, February 03, 2006

BY MATTHEW FUTTERMAN
Star-Ledger Staff
During a 30-plus-year career in finance and real estate, George Zoffinger says he has never been flat- out wrong on a major decision, and he has the bank account and several vacation homes to prove it.

But three years ago, Zoffinger, the chief executive of the New Jersey Sports and Exposition Authority, led the drive to award Mills Corp. the right to build Xanadu, a massive retail and entertainment center at the Meadowlands Sports Complex.

Now, Zoffinger is wondering whether tapping the Virginia-based real estate investment trust over two other deep-pocketed developers could turn out to be the biggest blunder of his career.
"I actually said that in a meeting with our lawyers the other night," Zoffinger said during a recent interview. "What if I turn out to be dead wrong about these guys?"

Mills, which has a multibillion- dollar portfolio of mega-malls and entertainment complexes around the world, stunned Wall Street last fall when it delayed its third-quarter earnings report. Since then, the news from the company has included an accounting scandal, lay- offs of top executives and second thoughts about major development projects.

All of this has rankled top state officials who promised the $1.3 billion Xanadu project would be an economic engine for northern New Jersey.

Today, Zoffinger and Carl Goldberg, the sports authority's chairman, will question the chief executives of Mills and its development partner, Cranford-based Mack-Cali Realty, during a meeting in the Meadowlands. The state officials will press Mills CEO Larry Siegel and Mack-Cali chief Mitchell Hersh to show they can raise enough money to build what they promised.

But with concern about Mills' finances rising, Zoffinger confirmed state officials have already begun gauging the interest of other developers about taking over the Xanadu project.

Last month, Mills announced for the second time in three months that it would have to restate earnings, this time going back to 2000. The move triggered a flurry of shareholder lawsuits.
Meanwhile, the company is abandoning 10 developments it says it no longer can afford, including a high-profile project on San Francisco's waterfront. The company has announced it will write off $77 million for the fourth quarter of 2005.

Mills' top financing agent, the German company KanAm, which has put $250 million into Xanadu, recently stopped allowing withdrawals on two of its funds after the bad news about Mills sparked a run on deposits.

FUTURE IN DOUBT

Add it all up, says Greg Andrews, an analyst with GreenStreet Advisors in Newport Beach, Calif., and it's anybody's guess whether Mills will be able to survive and complete Xanadu. The total square-footage of Mills' projects worldwide has tripled since 2000, leading some analysts to suggest the real estate investment trust, or REIT, may have grown too fast.

"You don't expect companies to come and go," Andrews said. "REITs are supposed to be stable, because most of their income comes from collecting rent. But this is a company that was always underwriting more risky investments and always had accounting that was more aggressive than its peers."

Here in New Jersey, leasing activity at Xanadu has been slower than expected. Plans for several of Xanadu's entertainment features that helped Mills' bid carry the day -- a rooftop roller-coaster, a House of Blues, a miniature auto racing course -- are either dead or dying.

Bob Sommer, a spokesman for Mills, declined to say how many tenants have signed leases for Xanadu, but said "86 percent of anchors had signed or are with letter proposals."

While Sommer acknowledged the developers have abandoned several proposed entertainment venues, he said attractions such as North America's first indoor ski mountain, the Wanna-Do children's center and a major movie complex remain in the works.

"We're going to have a good meeting tomorrow," Sommer said yesterday.

A minor league ballpark is still in the plan, too, though no deal has been reached on that either, and the original partner in the ballpark has sued the company.

BUILDING PROGRESSES

Construction on Xanadu, which is being built around the Continental Airlines Arena, has been underway since last spring. So far, a $70 million parking garage has risen and a steel frame for part of the retail complex is being erected. But nearly two years of work remains before the first phase of the complex opens.

Mills' supporters note the company's stock price is up about $3, or roughly 7 percent, in the past week following a meeting with the banking community. The company has said a forensic accounting investigation by the Securities and Exchange Commission will not turn up any more bad news that could do further damage to Mills' overall value.

But over the past six months, Mills shares have dropped by more than a third.

Mills' critics say state officials should have seen Mills' woes coming years ago. Executives at Secaucus-based Hartz Mountain Industries, which lost out in the bidding to develop the sports complex site and sued to stop the project, have maintained since 2002 Mills would find a way to wiggle out of its commitments.

"The time for sophistry and disguises is over," said Irwin Horowitz, general counsel for Hartz. "For Mills to continue, they ought to have to put up a letter of credit or a construction bond for the remainder of the project, but given the state of the company, I don't think they could get it."
Industry experts say Mills' ability to sign tenants to expensive leases at Xanadu will make or break the project. The company raised $500 million in cash to pay for the first half of construction, with Mack-Cali contributing $30 million. But banks will only lend Mills the rest of the money if they can see tenants signing leases that will provide enough money for Mills to pay off its debt. The Catch-22 is that tenants may be hesitant to sign leases with a company with so many internal problems.

Goldberg said the leases will be the major topic of discussion at today's meeting.

"We've got to examine the leases and determine the activity is where it should be at this stage of construction, and that it will supply a sufficient amount of cash flow to complete the project," he said.

But with at least $250 million already spent on the project and another $250 million committed for supplies and work that that has already been contracted out, Zoffinger said he remains certain Xanadu will be completed -- by someone.

"There is too much money in the ground already," Zoffinger said. "Either Mills gets its act together and finishes, or somebody else will take it over. But it will get done."

Jones Lang LaSalle


Pfizer to cut 270 jobs at Brooklyn factory
by Catherine Tymkiw February 01, 2006

Pfizer Inc. plans to cut 270 jobs at its Brooklyn manufacturing plant in anticipation of lower sales for several drugs that are made there.

Pfizer Inc. plans to cut 270 jobs at its Brooklyn manufacturing plant in anticipation of lower sales for several drugs that are made there. The Brooklyn plant employs 990. About 110 jobs will be eliminated later this month, with the remaining 160 to be phased out later this year. The reductions span a range of manufacturing jobs and are part of a global three-year initiative to bring capacity in line with actual output, said Pfizer spokesman Bryant Haskins. The drug maker has already divested about two dozen plants since the initiative started, he said.

Pfizer products face increasing competition from generic drug makers when their patents expire. "Even though we’ve experienced product growth across Pfizer, several products manufactured or packaged at Brooklyn are going off patent so we expect to see volumes decline," said Mr. Haskins. Diflucan, Zithromax, Zoloft, Norvasc and Zyrtec are among products that have lost or will lose patent exclusivity in the next couple of years, Mr. Haskins said. "In the end, it will end up with cost savings because the plant will be more efficient," he said.

Manufacturing accounts for about 33,000 of Pfizer’s 115,000-person workforce. Brooklyn Borough President Marty Markowitz said he was saddened by the layoffs but optimistic about the future. "The good news is that the Brooklyn facility continues to be open and it is my hope that in the days ahead new drugs will be discovered that will be appropriate for the Brooklyn plant to produce," he said in an emailed statement.

Jones Lang LaSalle


BlackRock shares tumble on breakdown in talks

by Catherine Tymkiw February 01, 2006
Shares of BlackRock Inc. tumbled more than 7% after CNBC said that talks with Morgan Stanley about a potential takeover broke down.

Shares of BlackRock Inc. tumbled more than 7% on Wednesday after financial news network CNBC said that talks with Morgan Stanley about a potential takeover by the investment firm broke down. BlackRock’s stock fell as much as 7.4%, to $123, during early trading and was off 3.5% intraday. Less than two weeks ago, the firm’s stock surged nearly 10% after CNBC initially reported the negotiations with Morgan Stanley. It all came down to price. According to CNBC, Morgan Stanley Chief Executive John Mack nixed the deal because it was too expensive -- estimates ranged from $8 billion to $10 billion.

BlackRock’s stock has skyrocketed from $14 in 1999, when it was taken public by Pittsburgh, Pa.-based PNC Financial Group Inc. BlackRock, which has a market capitalization of $8.3 billion, managed $452.7 billion of assets at the end of last year. Although takeover talks have cooled for now, a deal could still happen if valuations of asset-management firms reach "a more reasonable level," reported CNBC citing unnamed Morgan Stanley sources.

Jones Lang LaSalle

TD Banknorth Closes Hudson United Purchase

The acquisition of Mahwah's Hudson United Bancorp by TD Banknorth (NYSE: BNK) has been formally completed. Terms of the agreement call for Hudson United shareholders to receive cash payments of $42.42 per common share, or 1.4 shares of Portland, Maine-based TD Banknorth’s common stock.

Further, the companies report that former Hudson United directors David A. Rosow and Brian Flynn were elected to the TD Banknorth board.

Separately, Fitch Ratings said that the transaction will enhance TD Banknorth's operations from both geographic and business-line standpoints. The New York City-based ratings agency cautions, however, that TD Banknorth will need to make substantial investments in Hudson United's retail operations and will likely face some integration challenges. TD Banknorth shares climbed $1.06 to $30.04 in afternoon trading. - Martin C. Daks

Jones Lang LaSalle

MaXware Hires New CEO, Aims to Expand

MaXware AS, a global identity-management specialist in Norway, has tapped Stale Svenning as its new president and CEO to succeed founder Tore Wold, who has shifted his focus to the company’s Asia-Pacific business. The privately held company based in Trondheim, Norway, is also growing its global workforce, particularly its North American base in New Jersey, with plans to more than double its headcount to 100 by year-end.

Svenning, who has some 15 years of executive management and business-process reengineering experience including stints at McKinsey & Co. and Deloitte and Touche, most recently served as COO at Norway’s SpareBank 1 Midt-Norge. "His track record driving mid-stage companies to the next level of business success, complemented by his industry knowledge, makes him the ideal leader to take MaXware's helm," said David Chartier, chairman of MaXware's board.

Jeanette Morales, who was recently hired as vice president, global marketing, told NJBIZ that the company is moving its North American base from Freehold to Edison in a few weeks to accommodate expansion plans. She said most of the recruiting will take place in New Jersey, and is focused primarily on marketing and sales positions.

MaXware aims to help businesses handle digital identity management, helping them manage "who has access to what," said Morales. - Ki Kim

Jones Lang LaSalle

GlobeSt.com EXCLUSIVE: CBRE Picks Up Nearly 2M-SF Assignment
By Eric Peterson
Last updated: January 31, 2006 02:56pm

(To read more on the industrial market, click here.)
JERSEY CITY-Owner Rreef has handed out the exclusive assignment for its Port Jersey Industrial Park here, opting for CB Richard Ellis to handle the sprawling property, GlobeSt.com has learned. The firm has the leasing exclusive for the property, and will manage it for Rreef as well. Altogether, Port Jersey Industrial Park encompasses a total of 1.5 million sf in eight buildings.

Handling the assignment for CBRE on behalf of Rreef will be senior vice president William Waxman, first vice president Gary Capetta, vice presidents Nicholas Nitti and Matthew Corpuel and senior associate Carrie Brown. On the leasing side of the assignment, Port Jersey Industrial Park currently has a total of 602,000 sf available, according to David Nenner, vice president and district manager for Rreef, which has a local office in Hackensack.

“Port Jersey Industrial Park is located within the Port Newark market,” Waxman points out. “We believe that with the strength of the Port market, the property will yield positive results over the next several months.”

Positioned at the Jersey City end of the sprawling Port of Newark and Elizabeth, all of the park’s buildings have rail access, according to Nenner. The park’s tenant roster currently includes East Coast Logistics, Star Snax and Phoenix Warehouse Inc., all of which operate warehouse and distribution facilities. The available space “is divisible to varying sizes,” Waxman says.

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GlobeSt.com EXCLUSIVE: Apartment Complex Trades for $66M
By Eric Peterson
Last updated: January 31, 2006 10:59am

(To read more on the multifamily market, click here.)
SOMERVILLE, NJ-The 642-unit Brookside Gardens apartment complex here has been sold, GlobeSt.com has learned. The sale price of $66.25 million factors out to just over $103,000 per unit.

Brokers from the Woodbridge-based Kislak Co. represented both the buyer and the seller; both are local partnerships. The firm’s vice president Matthew Weilheimer represented the buyer, Brookside at Somerville LLC. Seller Brookside Investment Associates was spoken for by Barry Waisbrod, an associate with the firm.

“This sale transaction demonstrates the unprecedented demand for this product type, Weilheimer tells GlobeSt.com. At 642 units, Brookside Gardens is one of the largest multifamily complexes in Somerset County. Currently 95% occupied, its units are spread over 42 buildings. And the complex is also one of the oldest in the county--it was built back in 1948.

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Treasure Island Chain Is Shutting Down
By Eric Peterson
Last updated: January 31, 2006 10:49am

(For more retail coverage, click GlobeSt.com/RETAIL.)
MAHWAH, NJ-In mid-January, crafts and patio furniture retailer Treasure Island, based here, filed for Chapter 11 protection, and company officials recently announced formally that the entire 16-store chain is being shuttered. Company officials say all existing stores will be closed by the end of March. Declining further comment, a spokesman for the company blamed heightened competition, notably from AC Moore and Jo-Ann Stores, for the chain’s demise.
According to a published report, Treasure Island’s bankruptcy petition listed approximately $10.4 million in debts, $9.6 million of that to unsecured creditors, and $9.5 million in assets. Earlier this month, the company reported $49 million in total revenues for 2005.

Founded in 1970, the family-owned company has 11 stores in New Jersey: Ramsey, Paramus, North Plainfield, Wayne, East Brunswick, Florham Park, Shrewsbury, Lawrenceville, Toms River, Woodbridge and a clearance center in Mahwah. The other five are in New York: Scarsdale, Huntington, Carle Place, Wappingers Falls and Wainscott.

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Commerce Will Open 65-Plus Branches in 2006
By Eric Peterson
Last updated: January 30, 2006 02:10pm

(For more retail coverage, click GlobeSt.com/RETAIL.)
CHERRY HILL, NJ-Commerce Bank has grown from 97 branches, or “stores,” as company officials like to call them, in 1997 to nearly 373 today, and the fast-growing financial institution is looking to add at least 65 new branches in 2006. If all the pieces fall into place, that count could approach 80. The openings are expected to increase the company’s work force by some 1,800.
“We will continue to grow in both new and in our heritage markets,” says Vernon W. Hill, Commerce’s founder and chairman. “We will also grow in both suburban and urban communities based on the success of our retail model.”

Without naming specific locations, Commerce will add between 10 and 15 branches in New Jersey, another 20 to 25 in New York and Connecticut and 10 in Pennsylvania, according to Hill. The company is also planning on opening between 10 and 15 branches in the metro Baltimore area, a new market for Commerce. The Baltimore market will essentially be an extension of the bank’s existing presence in Washington, DC and Northern Virginia.

And Commerce is planning to open between 10 and 15 branches in Southeast Florida, Hill adds. Indeed, his company is off and running very early toward that goal: Commerce has already opened seven branches in the Sunshine State just since the first of the year. The openings have taken place in Boca Raton, Boynton Beach, Delray Beach, Lake Worth, Palm Beach, North Palm Beach and West Palm Beach. “We plan to ultimately create a network of more than 150 store locations in Southeast Florida,” Hill says.

Commerce Bank currently has more than $38 billion in assets, company officials report. According to figures released by the company, its core deposits increased by 27% in 2005, net loans increased by 34% and total assets grew by 26%.

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GlobeSt.com UPDATE: Wilshire Sells Two More Assets for $9M
By Eric Peterson
Last updated: January 30, 2006 10:24am

NEWARK-Wilshire Enterprises, based here, has sold off two more of its New Jersey holdings as part of its announced plan to focus on several Sun Belt states, specifically Arizona, Florida and Texas. The sales come at a time when the company is also bringing in an outside consulting firm to study its future.

The two properties just sold are part of a group of assets Wilshire officially put on the block this past summer. The larger of the two is its Galsworthy Arms residential community in Long Branch, NJ, which went for $6.9 million. The profit, net of taxes, was $2.8 million, according to company officials. The second is a Rutherford Bank branch in Rutherford, NJ, which sold for $1.6 million and recorded a profit, net of taxes, of approximately $600.000. The buyers of the two assets were not identified.

“These divestitures are part of our announced strategy to rationalize our asset base through geographic concentration and quality upgrades in our core markets,” says Sherry Wilzig Izak, Wilshire’s chairman. She reports that since 2002 the company has received $80.1 million in gross proceeds from asset sales, has pending sales of $12.8 million and has $29.7 million in assets listed for sale. The largest sale to date came in October when it sold the Wilshire Grand Hotel in West Orange, NJ for nearly $13 million.

Simultaneously, the company has announced it has hired consultants Freidman, Billings, Ramsey & Co. to “conduct a strategic review regarding alternatives to maximize shareholder value,” Wilzig says. “We believe that the actions we have initiated and completed, and actions anticipated for the coming months have done a great deal to enhance the company’s value. We will evaluate all strategies. That could possibly include a merger or the sale of the company. We have asked them to consider all alternatives.”

The actions come at a time when at least one major shareholder has called for liquidation. As reported by GlobeSt.com in November, top execs of the Greenwich, CT-based Mercury Real Estate Advisors, a 14.6% stakeholder in Wilshire, fired off a letter to the latter’s board criticizing its strategy and demanding that the company be “liquidated immediately to maximize shareholder value.”

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Hampshire Buys 90,000-SF Flex Building
By Eric Peterson
Last updated: January 30, 2006 10:19am

(To read more on the industrial market, click here.)
RAMSEY, NJ-The Hampshire Cos. has acquired the 89,900-sf flex building located at 663 E. Crescent Ave. here. The pick-up was made on behalf of the firm’s Hampshire Partners Fund IV.
As part of the transaction, the full building has been leased back to the seller, Coperian Corp., a compounding equipment and systems manufacturer. The building itself consists of a combination of office, R&D and warehouse space. The sale price was not released.
“This property was attractive because of its location and the ability to structure a long-term lease with the occupying tenant,” says Norman A. Feinstein, executive vice president of the Morristown-based Hampshire Cos., an investment fund management firm. “It fits well within our overall acquisition and investment strategy.” James F. Gunning, senior director, David Sherman, EVP and Nicholas Nemeth, SVP of CB Richard Ellis’ Saddle Brook office represented both the buyer and the seller.

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C&W Refines, Deepens Global Strategy
By Barbara Jarvie
Last updated: February 1, 2006 06:43am

NEW YORK CITY-To operate more efficiently worldwide, Cushman & Wakefield has expanded its global corporate structure. The new structure is organized geographically, as well as by business line and corporate department.

As part of that effort, the firm makes a number of executive moves. John C. Santora has been named chief operating officer. In his new position, Santora, who previously globalized the firm’s Asset Services Group, will work with Cushman management around the globe and continue to build and maintain a global platform. He has been with the firm since 1977. He directed International Asset Services in Brazil and Mexico and oversaw its expansion in Asia and Europe.
Christopher Lowery, was named CEO, Global Capital Markets and Principal Activities. In his new position he will direct and oversee capital markets. Previously executive vice president of Capital Markets, he has been with Cushman since 1988.

C&W named three regional CEOs: Tony Marano, CEO of the Americas; John Travers, CEO of Europe; and Michael Thompson, CEO of Asia. In addition to having responsibility for their global region, the three CEOs will work together. Marano was previously Cushman & Wakefield’s chief operating officer for US operations. Travers was previously chairman and senior partner of Cushman & Wakefield’s European operations. He has been with the firm since 1975. Thompson was previously group chief executive officer of Cushman & Wakefield Asia Pacific. All are members of Cushman’s board of directors.

Bruce Mosler, Cushman’s president and chief executive officer, says the alignment is necessary to meet the "present and future needs of our clients. In today’s global economy, it’s crucial for a firm like ours to continue to provide the highest integrated real estate services on a worldwide basis."

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Coupling Again

Last year, alliance activity grew 20 percent in the United States and 30 percent in Asia.Doug Bartholomew, CFO Magazine
February 01, 2006

Just a few short years ago, strategic alliances were decidedly out of favor as companies focused on consolidation and restructuring. No longer.

"Strategic alliances are coming back quicker now than M&A activity," says Kees Cools, co-author of "The Role of Alliances in Corporate Strategy," a November 2005 report by Boston Consulting Group. In fact, BCG says, strategic alliances in the United States were up 20 percent last year. Similarly, alliance activity grew 30 percent year-to-year in Asia.

This latest round, however, is benefiting from lessons learned in the 1990s, when companies viewed alliances strictly as "vehicles of growth," says Cools. Many couplings — particularly in the airline industry — failed partly due to a lack of clear governance policies and exit strategies, he adds. Others didn't take full advantage of complementary assets.

Still, the benefits of forming alliances to achieve growth while reducing new product development and marketing costs are as real as ever. For example, General Motors, DaimlerChrysler, and BMW, playing catch-up with Toyota and Honda, recently joined forces to bring a new hybrid engine to market faster than either could on its own. In addition to sharing design costs, says Eric Ridenour, Chrysler Group chief operating officer, "our goal is to find efficiencies in such areas as engineering, working with suppliers to develop and purchase components, and in purchasing manufacturing equipment."

Going forward, Cool expects strategy alliances to "continue to grow some 10 to 15 percent in the next few years before stabilizing."

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Servion Global Solutuions Expansion

Servion Global Solutions Inc.
29 Emmons Drive, Suite E-30
Princeton Commerce Center, Princeton 08540
609-987-0044; fax, 609-987-8797
Balakrishnan Kavikkal, president
Home page: www.servion.com

Servion Global Solutions has signed a lease to expand to a third-floor corner suite at 600 Alexander Road. The move represents an expansion from 2,200 feet at Princeton Commerce Center to 3,500 square feet. The firm offers business response solutions for the financial, banking, insurance, hospitality, and telecommunications

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Alexander Street

Alexander Street is the current focus of Princeton University's attention, as one of two possible locations for the proposed arts center provided by the largesse of alumnus Peter B. Lewis.
Now the university is buying property further down that road, the two 48,000-foot office buildings at the corner of Alexander Road and Canal Pointe Boulevard. Its offer on 600 and 619 Alexander has been accepted, says Cass Cliatt, university spokesperson. Tenants have received notification letters of the possible sale, and the university is in its "due diligence" period.

Peter Dodds of Garibaldi, Morford, and Dodds, which often represents Princeton University in these matters, had no comment.

"We made an offer to purchase them and the office has been accepted. We are in the process of due diligence," says Cliatt. "We would sustain commercial tenants there in some space and use the remaining space for administrative personnel and other purposes." The university's policy is to pay taxes on any building that it buys that has a commercial use.

To enhance the creative arts at the university, Lewis, a member of the Class of 1955 who made his fortune from Progressive Insurance, is donating $101 million, some of which will be used for bricks and mortar. One possible site is the area west of the current creative arts building, 185 Nassau Street, plus Green and Frick halls on Washington Road. Another is the area south of the McCarter and Berlind theaters near the Dinky station.

But there is no reason to link the arts project with the Alexander Road purchase, says Cliatt: "The use being viewed is administrative."

The Alexander Road purchase "was a quiet, under-the-radar transaction," says Bill Barish, whose firm, Commercial Property Network, leases the buildings for the Eagle Group, based on State Street in Trenton and owned by Sidney L. Hofing. The price was not disclosed, but Barish suggests it had a price point "that continues to prove the value of the Princeton real estate market."
The sole occupants of 619 Alexander are Sovereign Bank and Nassau Broadcasting, and Barish notes that those leases do not expire for at least 10 years. Tenants at 600 Alexander Road include the law firm of Maselli Warren, Re/Max Princeton, Snelling Personnel, and Orion Clinical Solutions. The newest, just-signed tenant is Servion Global Solutions.

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NYC economy grew for 4th month in row:
surveyby Catherine Tymkiw

New York City’s economy expanded for the fourth straight month in January, according to a survey of purchasing managers released today. The National Association of Purchasing Management’s New York Report on Business said the index of non-manufacturing activity, an indicator of the city’s economy, grew to 54.9 in January, up from 53.6 in December. While it is still well below the 65.5 in September, the figure contrasts with the usual slowdown of economic activity in January. Numbers above 50 reflect expansion.

“The upbeat implications for the job market that the survey has been suggesting are beginning to unfold,” wrote Peter Oppenheimer, the group’s executive director. “The city’s payroll count is accelerating and the number of jobs has increased almost 175,000 from the low point exactly two years ago.” NAPM’s report mirrors the sentiment from the New York Federal Reserve’s Empire State manufacturing report. That survey, released two weeks ago, showed a modest slowdown in the pace of manufacturing activity though manufacturers were upbeat about growth over the next six months. According to NAPM’s latest report, purchasing managers were less optimistic but they still expect business activity to remain strong. The outlook index, which reflects expectations of business conditions six months from now, stands at 50, below last month’s reading of 62.5 but better than November’s, which stood at 40.

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Tewksbury residents plan to fight proposed 175-unit age-restricted housing
Tuesday, January 31, 2006
BY CATHY BUGMAN

Star-Ledger Staff
Plans for what would be Tewksbury's first age-restricted adult community will be the focus of a public hearing tomorrow night -- and neighbors plan to show up en masse.

"I think a lot of neighbors have concerns," said David Vernieri, a Matheson Road resident who's lived in town for seven years.

Vernieri said he and others intend to show up at the first of the planning board's public hearings on the plan at 7:30 p.m. at the meeting hall at 60 Water St. in the Mountainville section of the township.

K. Hovnanian, the Edison- based home builder, is under contract with property owner Bellemead Development Corp. of Roseland to purchase a 121.75-acre parcel straddling Route 523 (Oldwick Road) just south of Route 78.

The plan is to put up a 175-unit development consisting of 101 townhomes, 48 duplexes and 26 homes for low- and moderate-income families on what is now mostly woodlands, fields and wetlands, bordered to the west by Rockaway Creek.

The site sits along a highway corridor that the state has targeted as a growth area, but Hunterdon County is trying to have it reclassified as environmentally sensitive to preserve the rural character of the land.

Neighboring residents, including Gerard Souza of New Bromley Road, are concerned that the size of the development could negatively affect the ecosystem.

"Around here, we have a lot of deer -- they'd have to be relocated, exterminated or move," he said. "It's likely they'll be forced on the street and there'll be more fatalities."

He said there was a recent sighting of an otter on the property as well as rare fish in the waterway.

Other concerns voiced by neighbors include the size of the development and its traffic impact.
Township Committeeman Thomas Kenyon said he anticipates the controversial development plan will generate considerable discussion.

"I would expect five or six board meetings on this," he said. "It's very complicated."

According to the developer and a report assessing the impact of the development on the community, the rental cost for the state- mandated affordable housing units are estimated to be $1,190 per month, including utilities, for the two-bedroom units and $1,375 per month, including utilities, for the three-bedrooms. The price of the townhouses would range from $730,000 to $770,000 while the duplexes would run from $818,000 to $895,000. The townhouses and duplexes are designed for three or four bedrooms and would be in 53 buildings.

All except the affordable housing units are for occupants who are age 55 and older, and all except the occupants of the affordable housing units can take advantage of the site's clubhouse for recreational activities.

The site was previously approved for 800,000 square feet of office space, but a glut in the office market contributed to the reason why those plans never reached fruition, officials said.

Had those offices been built, it would have meant considerably more traffic and significantly more affordable housing units under the formula used by the state Council on Affordable Housing to calculate the township's fair share of low- and moderate-income dwellings, Township Committeeman George Tauber said.

The zoning was changed last year to the Rockaway Village District, which permits residential development, Township Land Use Administrator Shana Crane said.

According to the community impact report, prepared by Art Bernard of THP Inc. of East Brunswick, the adult community is anticipated to bring in 267 adults. The affordable housing is conservatively projected to bring in an additional 76 residents, including 15 school- aged children.

As of 2000, nearly 26 percent of the township's population of 5,541 was over 55, according to U.S. Census statistics. And the state Department of Labor is projecting Hunterdon County's population will increase by 25,711 people by 2020 and of that increase, 93.6 percent will be people over 55.

Cathy Bugman works in the Somerset County bureau. She may be reached at cbugman@starledger.com or (908) 429-9929.

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

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Group to buy Fairmont for $3.3B
Tuesday, January 31, 2006

Associated Press
A group of investors including a Saudi prince and a company that owns two Atlantic City casinos has agreed to buy the luxury hotel chain Fairmont Hotels & Resorts for about $3.3 billion in cash, Fairmont said yesterday.

Under the deal, a Canadian company owned by Prince Alwaleed bin Talal's Kingdom Hotels International and Los Angeles-based real estate investment fund Colony Capital, which owns the Resorts and Hilton casinos in A.C., will acquire all of Fairmont's outstanding shares for $45 each in cash.

"Colony's mission is to make major investments with world-class partners and irreplaceable assets managed by proven management teams," Prince Alwaleed said in a statement.

The amount represents a 2.7 percent premium to Fairmont's closing stock price Friday. But Fairmont noted that it is a 28 percent premium over its closing price on Nov. 4, the last trading day prior to the first public expressions of interest in the company.

Last week, Fairmont urged shareholders to reject a $40-per-share offer from activist investor Carl Icahn to acquire a controlling stake in the company.

Once the Fairmont acquisition is completed, the investment group intends to combine the company with Singapore-based hotel chain Raffles Holdings, which would bring its combined portfolio to 120 hotels in 24 countries.

"Fairmont and Raffles are an excellent strategic fit with rich histories, global brand recognition and complementary destinations," Prince Alwaleed said. "Joining the two luxury companies creates an ideal platform for continued international expansion."

Including assumed debt, Fairmont said the value of the deal is about $3.9 billion.

The deal was unanimously approved by Fairmont's board of directors, who recommended shareholders vote in favor of it. Fairmont will remain an independent company headquartered in Canada, while Raffles will also retain its independent brand identity.

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

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In shrinking innovation sector, Picatinny center grows strong

BY MICHAEL DAIGLE DAILY RECORD
The Picatinny Technology Innovation Center has 15 tenants and is the proud "parent" of three companies that outgrew the Rockaway Township facility.

Patricia Milley, the center's director since 2000, also said four other companies are considered "virtual" tenants because they are working with the center's staff to develop business plans that would allow them to rent space there.

The innovation center opened in 1996 as a joint effort of the state, Picatinny Arsenal and Morris County. It was designed as a place where small companies could develop new products in line with Picatinny's overall goals of supporting innovation in technology and enhancing the county's economy.

Morris County Freeholder Frank Druetzler said he was glad to see that businesses at the center are creating manufacturing jobs because those types of jobs have been leaving the county -- and the country -- in recent years.

According to the state labor department, New Jersey lost 1,800 more manufacturing jobs in November as part of a long-term slide that leaves the state with 323,600 manufacturing jobs.
Milley said two companies that recently outgrew the innovation center were Form, Fit and Function and AIT Glass.

Form Fit and Function, which designs systems that reduce vibration, won a $10 million contract with the Department of Defense to design and produce specialized gear for Ohio-class nuclear submarines.

Milley said the company is trying to find space in Morris County because its legal and financial support system is here.

AIT Glass, which makes specialty glass products for use in the medical field among others, is generating $2 million a year in revenue and has 12 employees.

A third company that outgrew the center, Beacon Dynamics, is working with a current tenant, VDC, she said.

Another tenant, Frontier Polymers, placed first in a competition for seed funds, she said, and four others have received small business innovative research grants.

Milley provided a comparison of activity at the center in 2000 and this year.

• The center has 15 tenants, up from six, and occupies 19,780 square feet at Picatinny, up from 6,492.
• The center generated $339,000 in revenue this year, up from $188,000 in 2000. Most of the income, $239,000, was fees from tenants.
• The center paid $107,000 in fees to Picatinny, up from $32,000 in 2000.
• Tenants had $7.5 million in revenue this year, up from $4.8 million in 2000.
• They employ 120 people, up from 14 five years ago.
• Tenants generated $12.6 million in outside funding this year. In 2000, they produced none.
The center has $180,000 on hand for expansion, Milley added.

Michael Daigle can be reached at (973) 267-7947 or mdaigle@gannett.com.

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Vacancy rate stuck at 20% for four years
BY TIM O'REILEY DAILY RECORD

PARSIPPANY -- Medical-advertising agency CommonHealth provides a glimpse into why Morris County's office vacancy rate has been stuck at about 20 percent for four years in a row.
In October, CommonHealth announced that it had signed a lease for 166,000 square feet in Morris Corporate Center III, among the biggest commercial real-estate deals of the year.
But instead of adding hundreds of new people to the county work force, the agency will leave behind empty buildings elsewhere in Parsippany as it puts several of its divisions under one roof.

Although the amount of vacant space in the county will drop because CommonHealth's new location also will house some employees now working in Wayne, the flow of workers has moved out of Morris with other companies.

For example, Dendrite International moved a few miles south on Route 202 from Harding, in Morris County, to Bedminster, in Somerset County.

A year-end report by the brokerage GVA Williams characterized the state of the commercial real-estate market as a "statistical standstill"that slowed in the second half of 2005.

A notable hurdle is that "the market lacks the abundance of small to mid-size companies migrating from one building to another as they continue to grow."

"In 2005, particularly in the latter half, the market experienced more in-places renewals and fewer tenants expanded."

For example, Novartis, a Swiss drugmaker with its North American headquarters in East Hanover, is pushing ahead with a major expansion and renovation of its campus there, more to make room for operations now in leased space rather than to hire new people.

Vacancy rate rising

Cushman & Wakefield calculated the county's year-end vacancy rate at 23.4 percent, 1.2 points higher than a year ago, as the amount of vacant space increased by 704,000 square feet.

By contrast, the average for 11 counties in northern and central New Jersey stayed the same at 19 percent.

In contrast to previous years, when industry experts forecast that the numbers would start improving, expectations are much more modest.

"I'm not concerned nor overly optimistic," said Jeffrey Heller, an executive vice president at the Florham Park office of Trammell Crow Co.

"I would say the (leasing) tide is creeping in a little bit, but I don't see any dramatic change. The vacancy rate might drop by a point or two at the most."

Companies take their time deciding what to do when their leases come to their end, "and often wind up renewing or maybe downsizing" their space to fit tighter budgets, GVA Williams senior vice president John K. Cunningham said.

Perhaps the brightest spot in the past year was Verizon Communications' purchase of the former AT&T headquarters in the Basking Ridge of Bernards, which had sat empty since the end of 2001.

Verizon is gutting and renovating the entire 1.3 million-square-foot complex for its new operations center, which is expected to hold 3,000 people by mid-year.

In addition, Verizon has mapped out plans to build a pair of 175,000-square-foot buildings on the property, big enough for several hundred more employees.

Besides transferring in people from other parts of the company's territory, industry experts hope that Verizon's moves will spark activity in the depressed corridors along both sides of Route 287 from suppliers and subcontractors wanting to be close to the giant telecom.

BASF site still empty

Rather than focus on the overall vacancy rate, industry executives highlight several subcurrents:

• The former North American headquarters of BASF in Mount Olive sits empty, with no buyers even rumored.

The size of the complex, at 970,000 square feet, not only limits the number of companies that could use it but also adds about 4 percent to the county's vacancy rate.
Excluding that project, the vacancy rate would drop into the mid-teens, depending on the survey.

That's the rate at which tenants and landlords have about the same negotiating power, most experts say.

• Activity in different areas in the county has been uneven.

Almost all of the major office buildings in Florham Park have filled up, but empty floors are available in places, such as Parsippany and south of Morristown.

In Parsippany, for example, the 120,000-square-foot building at 11 Waterview has never had a tenant since it was completed four years ago.

Cunningham attributed that to an owner that will accept only a set price rather than negotiate.
Cutting deals on rent or improvements has become common in recent years in the face of a persistently high vacancy rate.

• Steel is coming out of the ground at 100 Kimball Ave. in Parsippany, a 175,000-square-foot office building that was the first to be launched in Morris County in four years without tenants signed ahead of time.

Florham Park-based developer Gale Co. believes that a shortage of new, top-of-the-line space in blocks of at least 100,000 square feet warranted the gamble of going ahead on a speculative basis.

Some in the industry, such as Heller, believe that Gale probably had strong indications of interest before starting construction, even if it has no leases in hand.

Among industrial properties, the vacancy rate edged down to 7 percent from 8.6 percent at the end of 2004, according to Cushman & Wakefield.

But while Morris County is the largest office market in New Jersey, it is the smallest among five northern counties in industrial space.

Morris' industrial capacity is less than one-fourth the size of Middlesex's, with its huge concentration of warehouses along the New Jersey Turnpike.

Tim O'Reiley can be reached at (973) 428-6651 or toreiley@gannett.com.

Jones Lang LaSalle

01/31/06
St. Clare's cancer units moving out

Sloan-Kettering to combine services in Somerset
BY MARIA ARMENTAL DAILY RECORD

DOVER -- The Memorial Sloan-Kettering Cancer Center plans to consolidate its two outpatient regional centers at St. Clare's hospitals into one free-standing facility now being built in Somerset County.
The two regional centers, in St. Clare's Denville and Dover hospitals, would be relocated to an 85,000-square-foot building in the Basking Ridge section of Bernards Township, with the potential for future expansion, Christine Hickey, spokesperson for Sloan-Kettering, said Monday.
It would remain a strictly outpatient center, Hickey said.
St. Clare's and Sloan-Kettering negotiated in the 1990s a 10-year agreement that will expire in December.
David Lundquist, St. Clare's Health Systems chief operating officer, said hospital officials and representatives from Sloan-Kettering are negotiating possible joint work between Sloan-Kettering and St. Clare's.
"We are in the midst of a transitional discussion," Lundquist said, adding that all the details have not been worked out yet.
"We just know that we will continue to grow our oncology services. As a system, we feel very good (about) our opportunities for the future," Lundquist said.
"Our full intent is to move into the future and create more opportunities in the area of oncology care," he added.
Lundquist declined to comment on the specifics of the discussions or what the hospital plans to do with the space in the two St. Clare's hospitals that the cancer center now occupies.
Memorial Sloan-Kettering at St. Clare's provides chemotherapy, radiation therapy and other oncology services, and has an onsite laboratory to provide pre-treatment blood test results.
Memorial Sloan-Kettering has regional cancer centers based in New Jersey, Long Island and Westchester, in an attempt to offer outpatient oncology services outside of New York City.
The centers are based at other hospitals but staffed by the center, Hickey said.
Lundquist said Sloan-Kettering officials informed St. Clare's at the end of 2005 about their intention to close their regional centers and open their new facility in Basking Ridge.
Since the centers were staffed by Sloan-Kettering, hospital officials don't anticipate the move could translate into job losses.
Hickey said the new facility is expected to open by the fall.
Travel troubles
"About 17 percent of our patients come from New Jersey, and we understand how difficult it can be to travel to Manhattan," Hickey said of the decision to open the outpatient center in New Jersey.
The number of patients using the St. Clare's facilities was unavailable.
The new site is located in the Mountain View Corporate Center, off Route 78, near Routes 287, 202 and 206. Memorial Sloan-Kettering purchased the 25.6-acre parcel in March 2004 and broke ground in the fall of 2004.
St. Clare's also offers its own oncology-related services.
The Denville hospital has an outpatient cancer care center and a 24-bed inpatient cancer care unit. Those provide treatment including chemotherapy, blood transfusions, bone marrow biopsies, and other procedures.
St. Clare's also has mammography programs at its Denville, Dover, and Sussex hospitals.
In addition, all three hospitals offer an extensive list of cancer support groups.

Maria Armental can be reached at (973) 989-0652 or marmental@gannett.com.