Jones Lang LaSalle

Seagis Buys Nearly 1M-SF Warehouse Building
By Eric Peterson
Last updated: March 23, 2006 02:19pm
(To read more on the industrial market, click here.)

EDISON, NJ-Seagis Property Group has acquired the 955,000-sf industrial building at 2170 Lincoln Highway here, paying $61.5 million for the asset. The sale price factors out to $64.40 per sf of building space, but the site also has land available for future development. Lincoln Highway is also known as Route 27.

The seller of the building was an affiliate of its major occupant, Victoria Classics. The New York-based home furnishings company will stay in the building, leasing it back on a long-term basis. Terms of the lease were not disclosed.

“This acquisition provided us with the opportunity to obtain a very large asset with tremendous trailer parking capacity,” says Dave Gibbons, senior vice president of the West Conshohocken, PA-based Seagis. “It also has ground for future development in one of the strongest submarkets in the New Jersey Turnpike corridor.” In terms of future development, the building’s 50-acre rail-served site has an adjoining 10-acre undeveloped tract. Total build-out capability is in the 600,000-sf range, according to Gibbons.

As reported by GlobeSt.com, the Victoria Classics affiliate bought the sprawling asset in late 2003 from the Electrolux Corp., and moved in during Q1 of 2004. The building had been used by Electrolux’s Frigidaire division, which had shut down operations in the summer of 2003 after more than 50 years at the site. Victoria Classics occupied about two-thirds of the building, leasing the remaining space to Kenco, a Chattanooga, TN-based third-party logistics provider.
The move-in by Victoria Classics consolidated four of its then-existing warehouse and distribution locations in Brooklyn, NY and Newark, Elizabeth and Woodbridge, NJ. The company sells imported home furnishings through such retail chains as JCPenney, Linen ’n Things, Bed Bath & Beyond, Burlington Coat Factory and Target.

The latest acquisition comes on the one-year anniversary of Seagis’ founding by former Keystone Realty Trust execs Charles C. Lee Jr. and John Begier. In its first year, the firm has picked up $215 million of industrial properties, amounting to 3.2 million sf. Virtually all of that activity involves logistically driven properties and has occurred in the New Jersey, New York and Miami markets.

Jones Lang LaSalle

Lightstone Completes $800M Refi of 10 Outlet Centers
By Eric Peterson
Last updated: March 23, 2006 09:42am
(For more retail coverage, click GlobeSt.com/RETAIL and to read more on the debt and equity markets, click here.)

LAKEWOOD, NJ-The Lightstone Group, based here, has completed an $800-million refinancing of 10 outlet centers within its Prime Retail portfolio. The proceeds of the refinancing, estimated at $631 million, will be used to upgrade and expand the properties, according to Angela Mirizzi-Olsen, Lightstone’s senior vice president and chief investment officer.

“We have been able to take advantage of competitive market conditions and close this transaction,” says Mirizzi-Olsen, who closed the deal on behalf of Lightstone. “This transaction will serve to enhance the targeted centers.”

The funding was provided by Wachovia; further details were not released. “This will enable Lightstone to continue its portfolio-wide reinvestment strategy,” says Wachovia managing director Chad Johnson, who represented the lender.

All of the centers being refinanced bear the Prime Outlets brand. Four of them are in Florida, located in Naples, Ellenton, Florida City and Grove City. Three of the properties are in the Midwest, in Pleasant Prairie, WI; Jeffersonville, OH; and Huntley, IL. The other three are in San Marcos, TX; Lebanon, TN and Gulfport, MS. The privately owned Lightstone’s portfolio now totals approximately 20 million sf of space in 28 states and Puerto Rico, as well as more than 20,000 residential units.

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Mills Pays Authority $31M to Complete Lease Deal
By Eric Peterson
Last updated: March 23, 2006 09:40am
(For more retail coverage, click GlobeSt.com/RETAIL.)

EAST RUTHERFORD, NJ-Mills Corp.’s financial woes have been well publicized, and the status of its participation in the massive Meadowlands Xanadu retail/entertainment complex here has been a major question mark. Indeed, a few weeks ago officials of the Arlington, VA-based developer were called before the New Jersey Sports & Exposition Authority, the state agency that runs the Meadowlands Sports Complex and owns the Xanadu site, to explain their financial status.

In the wake of those developments, Mills remains in good stead with the NJSEA, at least, having yesterday paid the final installment of $31 million toward the 15-year lease of the Xanadu site. Altogether, Mills has paid the state $160 million for the rights to the 104-acre site surrounding the Continental Airlines Arena, on which Xanadu is already rising. The payment by Mills beat the NJSEA-imposed deadline of March 31 by nine days.

“It is an indication of Mills Corp. being a good partner with us,” NJSEA president and CEO George Zoffinger says in a prepared statement. “We are proceeding along with the project. They continue to meet all their obligations.”

Mills is joint-venturing the $1.3-billion Meadowlands Xanadu with the Cranford, NJ-based Mack-Cali Realty Corp. At build-out the project will amount to 4.8 million sf of retail, entertainment and recreational uses, including an indoor ski resort. Negotiations are ongoing regarding a possible minor league baseball stadium.

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Kushner Takes Title to Three Parcels
By Eric Peterson
Last updated: March 23, 2006 08:09am
(To read more on the multifamily market, click here.)

ASBURY PARK, NJ-Kushner Cos. has closed title to three city blocks on which it will build the second phase of the Wesley Grove mixed-use community. The acquisition, on the southern end of this oceanfront city, paves the way for Kushner to move through the city’s technical review committee approval process on its proposal to build an additional 300 condos and duplexes.
The sale price was not disclosed; however, the financing was provided Valley National Bank. The seller was Asbury Partners, locally based master developer of the 56-acre Oceanfront Asbury redevelopment area along the city’s oceanfront.

Phase II of Wesley Grove follows the 146-unit initial phase, the first portion of which is currently under construction and slated for completion in early fall. About 50% of the initial 91 townhome and condo units have already sold, reports Jeffrey Freireich, managing director of the Florham Park-based Kushner. The rest of the initial 146 units are scheduled to be under construction shortly.

“The community has generated a lot of demand,” says Freireich, noting that it’s being built by Kushner’s development arm, Westminster Communities. “We’re planning on moving as quickly as possible to begin construction on Phase II.”

The land just purchased for the second phase is listed as Blocks 131, 142 and 143 on the city’s zoning map, with the blocks forming a triangle between Cookman, Asbury and Heck avenues. At build-out, Wesley Grove will total some 750 homes and 35,000 sf of retail space in a neighborhood configuration. The units will be in buildings ranging from three to eight stories, designed by the Liebman Melting Partnership of New York City.

The overall Oceanfront Asbury project is being built by multiple developers under the direction of master developer Asbury Partners. Its 10-year build-out will encompass 3,000 residential units and a 450,000-sf retail/entertainment component at an estimated cost of $1.25 billion.

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Hotel Sets Sights on Expansion
By Eric Peterson
Last updated: March 22, 2006 09:40am

LONG BRANCH, NJ-Tiburon Hospitality has floated plans to expand its Ocean Place Resort and Spa property on this city’s Atlantic oceanfront. That expansion could add a second tower and additional amenities to the 254-room property, which also includes a spa and 42,000 sf of meeting space.

The plans were made public during a meeting of the Long Branch city council, when that body voted to authorize assignment of development rights presently held by Tiburon Ocean Place LLC to a new partnership called Ocean Place Development LLC. The Carefree, AZ-based Tiburon is seeking to team up with the Washington, DC-based Orr Partners-Op LLC to form Ocean Place Development LLC to expand the facility. The city’s involvement in the property dates back to 1986 with it gave the redevelopment rights to Gem Holding Inc. for what was then known as the Ocean Place Hilton Hotel, and Gem subsequently sold its rights to Tiburon in 2000.

During the same meeting, the city council also voted to bond $1 million to buy four acres adjacent to the hotel complex. According to city council president Anthony Giordano, the site is suitable for retail or office space, a parking structure or a convention center. Formal plans for the Ocean Place Resort and Spa expansion are expected to be announced by the middle of April.

Jones Lang LaSalle

College Will Relocate Satellite Campus
By Eric Peterson
Last updated: March 22, 2006 09:43am

FREEHOLD, NJ-The Monmouth County Board of Freeholders has introduced an ordinance for a $12.4-million bond issue, the majority of which would be used to buy and renovate an office building for the relocation of the Bayshore Higher Education Center. The latter is satellite campus of Brookdale Community College, a county institution. The satellite campus currently operates out of a former elementary school in Hazlet.

The proposed new satellite location is also in Hazlet. Of the total bond issue, $7 million would be used for the new campus location, and the county is currently doing due diligence on One Crown Plaza, a vacant 25,500-sf office building on four acres on Laurel Ave. in that community, according to county finance director Mark Acker. The remaining $5.4 million of the bond issue would be used to renovate an existing arena on Brookdale’s main campus in the Lincroft section of Middletown.

The Bayshore Higher Education Center is one of four satellite campuses outside of Brookdale’s main campus. County officials say the acquisition of One Crown Plaza could be approved and completed within the next 90 days.

Jones Lang LaSalle

University Plans Massive MXD Expansion
By Eric Peterson
Last updated: March 22, 2006 07:38am

GLASSBORO, NJ-Officials of Rowan University have unveiled plans to expand the campus and add a mix of commercial and athletic uses. Called Rowan West, the project would rise on 280 acres owned by the state-supported school straddling this city’s border with Harrison Township in Gloucester County.

The expansion, which officials estimate will cost between $800 million and $1 billion, is being fueled by the university’s need to build some new academic buildings on the main campus here, to increase the capacity of the 12,500-student school, according to Rowan president Donald Farish. The plan is to move the university’s existing athletic facilities off the main campus to Rowan West and replace them with academic facilities.

“We have several new buildings planned, but we can’t construct them until we move the athletics complex,” Farish says. Joining the university’s proposed new athletics complex at Rowan West would be a student residential complex and other residences, a hotel, retail space and restaurants and a rail station. A campus shuttle would connect the two separate campus sites. The facilities would be designed, as well, to hold local high school athletic competitions, conventions and other events.

Plans also call for a Major League Soccer stadium, and the university has signed an agreement with the pro league to move things in that direction. Under the terms of the agreement, Rowan has 120 days, or until mid-July, to develop plans for a stadium that would bring an MLS franchise to South Jersey by 2009. The agreement also calls for the university to have a developer and a funding package in place during that period.

“We will issue an RFP for potential developers shortly,” Farish says. “This is a major step for South Jersey and Rowan University. We expect the Rowan West project to impact the region’s economy, bring in new ratables, create new jobs and significantly transform the university.”
Rowan West is the second major project for the university, which was once known as Glassboro State College. University officials are set to break ground early next month for the South Jersey Technology Park, located near the Rowan West site, to start work on a project first announced in mid-2001.

Jones Lang LaSalle

Legislature Approves Base Redevelopment Agency
By Eric Peterson
Last updated: March 21, 2006 12:27pm

TRENTON-The State Senate voted 39 to 0 yesterday to approve bill S-1472, which would establish a commission to oversee the redevelopment of Fort Monmouth once the base is closed. The bill is identical to one passed earlier by the Assembly, and now goes to Gov. Jon Corzine for his approval, which is expected.

Fort Monmouth is one of the bases slated for closure by BRAC last summer. Most of its mission, which consists of R&D in the fields of communications, surveillance and reconnaissance systems will be shifted to Aberdeen Proving Ground in Maryland, a move expected to be completed by 2011.

Under the terms of the legislation, the Fort Monmouth Economic Revitalization Authority would be a 10-member body. The group would include four at-large gubernatorial appointees, along with the head of the state Commerce, Economic Growth and Tourism Commission, one member appointed by Monmouth County and a nonvoting member appointed by the federal Department of Defense. The other three would be the mayor of Eatontown, where the main portion of the base lies, along with the mayors of Oceanport and Tinton Falls, where portions of it lie.

“We need a qualified agency steering the ship and leading Fort Monmouth and the surrounding region into safe waters,” said State Sen. Ellen Karcher (D-Monmouth), a co-sponsor of the bill, in a statement. Legislators hope to have the authority up and running by the end of the year, with a first step of creating subcommittees that will do most of the work.

According to Assemblyman Michael Panter (D-Monmouth), a co-sponsor of the Assembly’s version, the federal government will provide $350,000 in seed money to get the authority up and running. Additional funding is expected from the federal Department of Labor related to job retraining programs for civilian employees at the site, according to Panter.

Jones Lang LaSalle

Legislature Approves Base Redevelopment Agency
By Eric Peterson
Last updated: March 21, 2006 12:27pm

TRENTON-The State Senate voted 39 to 0 yesterday to approve bill S-1472, which would establish a commission to oversee the redevelopment of Fort Monmouth once the base is closed. The bill is identical to one passed earlier by the Assembly, and now goes to Gov. Jon Corzine for his approval, which is expected.

Fort Monmouth is one of the bases slated for closure by BRAC last summer. Most of its mission, which consists of R&D in the fields of communications, surveillance and reconnaissance systems will be shifted to Aberdeen Proving Ground in Maryland, a move expected to be completed by 2011.

Under the terms of the legislation, the Fort Monmouth Economic Revitalization Authority would be a 10-member body. The group would include four at-large gubernatorial appointees, along with the head of the state Commerce, Economic Growth and Tourism Commission, one member appointed by Monmouth County and a nonvoting member appointed by the federal Department of Defense. The other three would be the mayor of Eatontown, where the main portion of the base lies, along with the mayors of Oceanport and Tinton Falls, where portions of it lie.

“We need a qualified agency steering the ship and leading Fort Monmouth and the surrounding region into safe waters,” said State Sen. Ellen Karcher (D-Monmouth), a co-sponsor of the bill, in a statement. Legislators hope to have the authority up and running by the end of the year, with a first step of creating subcommittees that will do most of the work.

According to Assemblyman Michael Panter (D-Monmouth), a co-sponsor of the Assembly’s version, the federal government will provide $350,000 in seed money to get the authority up and running. Additional funding is expected from the federal Department of Labor related to job retraining programs for civilian employees at the site, according to Panter.

Jones Lang LaSalle

Burlington Coat Factory Signs Three Industrial Leases Totaling 779,000 SF
By Eric Peterson
Last updated: March 21, 2006 09:30am
(To read more on the industrial market, click here.)

BURLINGTON, NJ-Following a site selection process that began more than two years ago, Burlington Coat Factory has signed three industrial leases totaling 779,000 sf. The family-owned Burlington agreed earlier this year to be acquired by the Boston-based Bain Capital Partners for more than $2 billion.

The signings were arranged for the retailer by the Rutherford-headquartered Corporate America Realty & Advisors. “Burlington Coat is a value-driven company,” says Howard Applebaum, president of Corporate America Realty & Advisors. “But they’re sensitive to the logistics analysis that has to be done. Each requirement had its own unique specifications that were fulfilled.”

In the largest transaction, Burlington Coat took 439,000 sf for general merchandise warehousing at the 750,000-sf 570 East Mill St. in San Bernardino, CA. Building owner ProLogis was represented in-house by Mike Del Santo, and by Frank Geraci, Walt Chenoweth, Dan La Paz and Art Day of the Ontario, CA office of CB Richard Ellis. Applebaum was assisted on behalf of the tenant by Anthony J. Brent, SVP of Lee & Associates, City of Industry, CA.

Burlington Coat has also signed on for 300,000 sf for its Baby Depot inventory at 42 Runway Rd. in Levittown, PA. In a separate transaction, the company has also taken 40,000 sf for its Web-based orders at 32 Runway Rd. nearby. Both properties are owned by a partnership of Frank Greek & Son of East Brunswick, NJ and Principal Life Insurance of Des Moines, IA.

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CBS Signs 12-Year Expansion Lease, Adds 65,000 SF
March 21, 2006
By Gail Kalinoski, Contributing Editor

CBS Broadcasting Inc. has added nearly 65,000 square feet of space to its offices and studios at 555 West 57th St. in Manhattan, giving it a total of 253,316 square feet under a 12-year lease expansion signed with building owner SL Green Realty Corp.The additional space makes CBS the largest tenant at the 20-story building that has 975,983 square feet, a parking garage and Hudson River views.

Other tenants in the 33-year-old building located at the corner of 11th Avenue include BMW, Ticketmaster, St. Luke's Roosevelt and The City University of New York.SL Green and CBS officials did not return calls for comment by deadline. The details of the lease were not disclosed, but rents in midtown Manhattan average about $53.69 per square feet, according to CB Richard Ellis Inc. research.In March 2004, when it signed a 10-year-lease extension, CBS was using four floors in the building mostly for studio, technical and office space for "60 Minutes" as well as other programs like the syndicated newsmagazine "Inside Edition."

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Financial problems mount for troubled Mills Corp.
Potential takeover unlikely as analysts cut stock
Wednesday, March 22, 2006
BY MATTHEW FUTTERMAN
Star-Ledger Staff

Last month, officials at the New Jersey Sports and Exposition Authority insisted the troubled lead developer of the Xanadu retail and entertainment center in the Meadowlands had made it through the worst of its financial difficulties.

This week, however, the problems for the Mills Corp. of Virginia have gone from worse to dreadful.

During the past four days, analysts downgraded the company's stock, shares dropped to a 52-week low and industry experts warned anyone hoping for a quick exit strategy through a takeover is going to be disappointed, since Mills executives now won't say when they will be able to deliver accurate financial results for the past five years.

State officials had cited a potential takeover of Mills by a solid real estate company as a way to ensure that the $1.3 billion project would get built.

"You don't have to be a genius to know what is going on," said Raymond Bateman, one of two sports authority commissioners, who voted against the controversial Xanadu project two years ago. "They're hustlers, and that goes way back to when they were buying every lobbyist in the state to get what they were after."

Mills executives, who partnered with Mack-Cali Realty of Cranford on the Xanadu project, did not return phone calls seeking comment, continuing its practice of doing nearly all their talking through occasional filings with U.S. Securities and Exchange Commission.

In its latest filing Friday, the company announced it would miss both its March 16 target date to re-state its earnings from 2000 to 2004 as well as the March 31 deadline to release its results from last year.

In response, Citigroup analyst Jonathan Litt downgraded the stock to "sell," from "hold," and Banc of America analyst Ross Nussbaum followed suit Monday, dropping his target price on the stock to $30, from $40, and warning it could go as low as $25.

"We continue to believe that a near-term sale of Mills is unlikely, given the absence of audited 2005 financials, the SEC inquiry, lawsuits, and uncertain outlook for Meadowlands Xanadu," Nussbaum wrote in a report to investors.

Mills shares have lost 20 percent of their value this week alone, and are down 50 percent from a year ago.

Carl Goldberg, the sports authority's chairman and one of the biggest boosters of the Xanadu project, said yesterday the company's dwindling share price was not directly related to the future of Xanadu. He said he remains optimistic, though vigilant, about Mills' prospects.

Goldberg said if the company has any hope of completing Xanadu it must begin signing leases for the project, which can then be used as collateral to gain the necessary construction financing to complete the job.

The problem for Mills, however, is retailers may resist signing long-term leases with an unstable company. And without the leases, Mills won't have enough money to complete a project that is supposed to include North America's first indoor ski mountain, a minor league ballpark, a hotel and dozens of high-end stores and restaurants.

"If they don't, we all recognize the increasingly more difficult prospect of securing construction financing," Goldberg said. "The single-most important thing is leasing activity. Everything we talk about becomes increasingly problematic if they are not successful in getting leases."

So far, Mills has signed just four leases and has made little progress on the entertainment venues that helped Xanadu beat out competitors for the sports authority property.

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

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Cowen Group plans IPO to raise $100 million
by Catherine Tymkiw

Cowen Group Inc., a Manhattan investment bank, filed to raise up to $100 million through an initial public offering.

The firm, which was acquired by Société Générale in 1998, said becoming a public company "will allow us to focus on the growth of our own platform," according to a Securities and Exchange Commission filing.

Cowen, founded in 1918, provides research, sales and trading and investment banking services to firms investing in healthcare, technology, media, telecommunications and consumer industries. The net proceeds from the IPO will go to the firm’s selling stockholder, SG Americas Securities Holdings Inc.

Cowen had a profit of $11.9 million on revenue of $297 million in 2005, compared with net income of $52 million on revenue of $295 million in 2004. Last year’s bottom line was impacted by higher non-compensation expenses, which rose 68%.

The company, which plans to trade on the Nasdaq under the ticker symbol "COWN," didn’t disclose the number of shares or estimated price range of the offering.

Cowen & Co, Credit Suisse, Merrill Lynch & Co., Keefe, Bruyette & Woods and Sandler O’Neill + Partners are the joint book runners for the IPO.

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WNYC plans move into new downtown offices
by Julie Satow

After more than eight decades in the same downtown offices, New York Public Radio is finally moving.

WNYC has signed a 20-year lease for 75,600 square feet at 10 Hudson Square, located on Varick Street in Soho. The building’s asking rent is around $33 per square foot.

WNYC, which was city-owned until nine years ago, is moving from the Municipal Building at Centre and Chambers streets. It has been at the location -- where it occupies only 51,400 square feet -- since its first broadcast 81 years ago. The station hopes to move over the next 12 to 18 months, following construction of the new offices.

"Our long history here solidified our resolve to remain in lower Manhattan, where events in recent years have cemented our relationship with this neighborhood," said Laura Walker, the chief executive of WNYC.

The new digs are comprised of 71,900 square feet, or two-and-a-half floors, in the 12-story building. It will also have a 3,700-square-foot performance space on the building’s ground floor. The Lower Manhattan Development Council awarded WNYC a $1.5 million grant last week to build the performance space.

Cushman & Wakefield Inc. represented WNYC and the landlord of 10 Hudson Square, Trinity Real Estate, represented itself.

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Accounting Firm Expands to Jersey

SolomonEdwardsGroup (SEG), an accounting services firm based in Philadelphia, has opened a new office in Roseland and hired a former Deloitte Consulting partner to head the operation. Marcella LoCastro, CPA, will officially start in the role of managing director on April 1, reporting to CEO Edward Baumstein.

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Mixed messages from economy

New Jersey’s economy is sending out mixed signals.Employers added 4,700 jobs last month, according to the latest report from the state Department of Labor and Workforce Development released today.

But the state’s unemployment rate rose to 4.7 percent from 4.5 percent. This is the highest level since August 2004, though it is still below the national unemployment rate of 4.8 percent.Some experts say the unemployment rate can rise even as companies are hiring because people who may have dropped out of the work force are encouraged to resume looking for a job.

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Federal Reserve Bank Beige Book Report

Second District--New York Skip to content

The Second District's economy continued to expand at a good pace, on average, across sectors in the first two months of 2006, though housing and consumer lending have softened. Input price pressures persist and there are scattered signs of increased wage pressures, but there is little evidence of any broad-based acceleration in consumer prices. The labor market has shown further signs of strengthening, particularly in New York City's financial sector, and there are signs of a pickup in hiring in the manufacturing sector. Retailers report that sales were somewhat below plan, largely due to the mid-February snowstorm and unseasonably cold weather in the second half of the month. Housing markets have generally been softer, though Manhattan's apartment rental market has remained strong. The New York City area's office market has tightened further. Conditions in the financial sector remained strong in early 2006, and bonus payments are estimated to be up 17 percent from last year. Finally, bankers report widespread weakening in demand for consumer loans and residential mortgages but little change in credit standards or delinquency rates.

Consumer SpendingRetailers report that sales were slightly above plan in January, but slightly below plan in February. The more recent weakness was largely attributed to the February 12th snowstorm and, to a lesser extent, unseasonably cold weather in the second half of the month. Virtually all retail contacts note that higher-end merchandise has generally sold better than lower-priced categories. Inventories are reported to be at satisfactory levels, while selling prices for comparable items are said to be little changed on balance.

Tourism has remained strong since the last report, despite some slowing in late February. Manhattan hotels report that business was strong during January and the first half of February, with occupancy rates up from a year earlier and room rates up more than 10 percent, though there are scattered reports of softening in recent weeks. Similarly, Broadway theaters report strong conditions in January and February, with attendance up roughly 5 percent from a year earlier and revenues up 15 percent, though theaters also report some weakening in the last week of February.

Consumer confidence in the region was steady to stronger in February. Based on the Conference Board survey of Middle Atlantic residents, consumer confidence rose for the fourth time in five months, reaching its highest level since last July. At the same time, Siena College's survey of New York State residents shows confidence rising only marginally, following a decline in January.

Construction and Real EstateThe region's housing market was mixed but, on balance, softer in early 2006. New Jersey homebuilders report a growing inventory of homes at the higher end of the market. The number of transactions has been well below comparable 2005 levels, selling prices have been basically flat since last autumn, and builders are offering more concessions. However, an industry contact notes one exception: redevelopment in older urban areas, a growing segment of the market, has met with persistently strong demand. Albany area Realtors report that sales fell 13 percent from a year earlier in January, while selling prices were up 10 percent. Similarly, sales of Manhattan co-ops and condos are reported to be down 10 to 15 percent from a year earlier in January and February, despite strong demand for high-end apartments and townhouses reportedly driven by strong bonus payouts on Wall Street. Overall, real estate contacts report that the inventory of unsold apartments has grown and that prices have leveled off, though they remain more than 10 percent ahead of a year ago. In contrast, Manhattan's rental market has shown persistent strength, with rents rising steadily but moderately.

Commercial real estate markets across the New York City metropolitan area were generally stronger in early 2006. Manhattan's market continued to strengthen in February, according to a major brokerage firm, largely buoyed by strong leasing activity from financial, legal and media firms, with a large number of small leasing deals noted in Lower Manhattan. Suburban office markets were mixed, however, with vacancy rates edging down in northern New Jersey, but rising in Long Island, Westchester and southwestern Connecticut. Industrial markets were stronger across the metropolitan area, as vacancy rates were steady to lower and asking rents continued to climb. Long Island's market has been particularly tight, with an industrial vacancy rate below 5 percent.

Other Business ActivityA leading New York City employment agency reports a sustained pickup in the labor market, led by strong hiring from the financial and legal sectors. This contact reports a lack of available office workers and notes that a majority of hires are people switching jobs; average salary offers are up about 10 percent from a year ago for mid-level jobs and up 20 percent for high-paying openings. Scattered labor shortages are also reported from the manufacturing sector.

A contact in the securities industry characterizes January and February as strong months, largely driven by strong growth in derivatives trading and a more general shift in asset allocation away from money markets to equities and bonds. Annual bonuses, mainly paid out in January and February, were estimated to be up 17 percent, in aggregate, from last year.
Manufacturing contacts in New York and New Jersey report continued improvement in business conditions, a pickup in hiring activity, and ongoing widespread increases in input prices. Purchasing managers in the region report mixed to stronger results for February--those in the Buffalo and New York City areas indicate acceleration in activity, while those in the Rochester area note some slowing following an exceptionally strong January. Purchasers in all three areas report continued input price pressures.

Financial DevelopmentsSmall to medium-sized banks in the district report ongoing declines in demand for residential mortgages and a sharp decrease in demand for consumer loans; however, demand for commercial loans and mortgages was little changed. Over 45 percent of bankers report declines in demand for consumer loans, while just 3 percent indicate increases; responses on residential mortgages were similarly lopsided. Credit standards are reported to be virtually unchanged across all loan categories. Bankers report increased loan rates for all loan categories, most notably on commercial mortgages. There were also widespread increases in deposit rates. Delinquency rates remained unchanged across all loan categories.

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Paying for Palms

It's pricey to rent both an office and an apartment in West Palm Beach.

A study of 61 major markets by San Francisco-based real-estate services firm Global Real Analytics shows office-building prices in that south Florida market skyrocketed nearly 35% last year -- the biggest increase in the country. West Palm Beach also led the survey in apartment price appreciation, with a 32% increase. Behind the gains is one of the nation's hottest job markets.

West Palm Beach and Oakland, Calif., are projected to be the best office markets in the country in terms of occupancy gains and rent growth over the next two years, says Maria Sicola, research director for Cushman & Wakefield, the New York-based commercial real-estate services firm.

For contrarian investors not looking to buy on the upswing, Detroit offers cheap office buildings. Capitalization rates -- the return on investment in the first year -- for buildings in the Motor City are the second highest in the country at 9.5%. Detroit also was the only office market in the U.S. where prices fell last year, by 2.2%. But with U.S. auto makers on the skids, white-collar job prospects aren't good, and Cushman & Wakefield projects Detroit will lag behind most U.S. markets over the next two years.

Battle Experience

National real-estate brokerage firm Grubb & Ellis is trying to expand its presence in the fierce world of New York City real estate by hiring a veteran of the tumult of post-9/11 lower Manhattan.

David Arena, who starts as president of Grubb & Ellis's New York region today, ran Morgan Stanley's real-estate group when it searched for a new home for the brokerage firm's 3,500 workers following the loss of its offices in the terrorist attack. After employees were relocated to Westchester County, New York; midtown Manhattan and New Jersey, in 2002 he joined real-estate advisory firm Jones Lang LaSalle Inc., where he helped Morgan Stanley eventually move some of its workers back to lower Manhattan. More recently Mr. Arena has helped to advise the Port Authority of New York and New Jersey in its contentious negotiations with developer Larry Silverstein over plans to redevelop the World Trade Center site.

Northbrook, Ill.-based Grubb & Ellis hopes Mr. Arena will help expand the firm's leasing and brokerage business.

He says the past five years have prepared him for his new job. "You have to be able to move quickly, opportunistically, think ahead and manage risk," says Mr. Arena. "Those are the kinds of experiences that I took away from 9/11 and working downtown."

Jones Lang LaSalle


112 acres, many ideas; Somerville seeks advice
Sunday, March 19, 2006
BY CATHY BUGMAN
Star-Ledger Staff

Somerville is gearing up for a meeting next month to solicit the best ideas from residents, business people, community leaders and other stakeholders interested in the future of the borough's last large developable tract off Route 206.

Consultants are sifting through preliminary ideas offered at a meeting earlier this month and are preparing to present three working options to the public on April 29.

Those concepts will be drawn from proposals -- including an inn and conference center; cafes; a library; a performing arts theater; a community center; parks; ballfields and walking trails -- for what is now a vacant 112-acre tract bounded by the highway, NJ Transit's Raritan Valley rail line and South Bridge Street.

But more ideas are needed, borough officials say, and they are encouraging people to contribute their thoughts to what they see as a pivotal meeting for the future of the entire community.
"This meeting is a meeting 20 years in the making," Mayor Brian Gallagher said.

The meeting time has not been set, but Gallagher sees it as an all-day session offering shuttle bus rides and tours of the landfill site in the morning and then workshop sessions for people to brainstorm ideas through the afternoon in the jurors' waiting room on the Somerville Green.
Based on the enthusiasm seen at a March 11 meeting involving community leaders mulling ideas for the site, Gallagher anticipates the next meeting will be as productive or moreso.

Key to any plan for the site will be that it complements what the downtown already offers, borough officials and consultants say.

"Somerville already has a sense of place," said Meg Walker, a vice president for Project Public Spaces, a New York City-based nonprofit planning and urban design firm. "We have to build on it, not compete with it. That's the challenge."

A dump for household trash for nearly 30 years, the site closed in 1984. It was shrouded in litigation for nearly 20 years, pitting the borough against a developer, Rosenshein Associates of New Rochelle, N.Y., who had planned to build a shopping mall on the site but never carried through with it.

Now, aided by government money, including a $185,000 grant from Somerset County's economic development incentive program and $50,000 from the state Department of Community Affairs, the borough is moving forward ambitiously to transform the property.

It has hired Colin Driver as economic development director and is moving forward in its investigation of what contaminants are located at the site. Driver said the borough is working closely with the state Department of Environmental Protection as well as with other entities, including NJ Transit, Haddonfield-based engineers Remington & Vernick and the nonprofit Regional Plan Association, based in New York City, which is offering recommendations and undertaking advanced land use planning strategies to promote economic development.

NJ Transit is in the early stages of what is expected to be a $20 million revitalization of the Somerville train station, with plans for handicapped-accessible platforms, upgraded elevators, new stairs and ramps and a rehabilitated pedestrian tunnel with new lighting, according to spokesman Dan Stessel.

Another element under consideration is partnering with the Doris Duke estate across Route 206 via a possible pedestrian link.

With all its various facets, the project is capturing widespread attention near and far, borough officials say.

"There's nothing like this going on anywhere in the region," said Driver. "Somerville is downtown Somerset County. Everyone is looking at this."

Cathy Bugman works in the Somerset County bureau. She may be reached at cbugman@starledger.com or (908) 429-9925.

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

Jones Lang LaSalle


Pharma sales hit $602B

Global pharmaceutical sales grew 7 percent last year, to $602 billion, according to IMS Health, a market-research firm that tracks prescription-drug data.

The increase was attributed, in part, to double-digit gains in such emerging markets as China, Mexico, Russia and Turkey. However, growth was slightly slower -- 5.7 percent -- in 10 major markets, including the U.S. In fact, North America accounted for 47 percent of global sales.
The firm noted that 40 percent of total market growth was fueled by the introduction of new products launched in key markets. The number of blockbusters (those with sales exceeding the billion-dol lar level) reached 94 in 2005, compared with 36 in 2000, and included 17 new members of the billion-dol lar club.

Jones Lang LaSalle


Ciena Consolidates Facilities

LINTHICUM, Md.--(BUSINESS WIRE)--March 21, 2006--Ciena(R) Corporation (NASDAQ:CIEN), the network specialist, today announced plans to close its Shrewsbury, New Jersey facility not later than April 29, 2006, the last day of Ciena's second fiscal quarter. The facility currently houses 114 employees.

The closure is expected to result in a headcount reduction of 62 employees. Ciena expects to offer relocation to 27 employees, the majority whom are engineering employees. The planned action is expected to have no effect on current product development efforts. Ongoing development work previously conducted at the facility will be consolidated on a functional basis with related efforts already in progress at other Ciena locations. Sales and support activities currently conducted out of the facility will be moved to alternate remote locations. Operational responsibilities based out of New Jersey will transition to the Company's headquarters in Maryland.

"For more than a year now, we have been moving away from product-based or location-specific R&D to a model of 'core competency-based' R&D that enables us to leverage our engineering resources across a wider range of product and solutions sets, independent of geographic location," said Gary Smith, Ciena's president and CEO. "Closing a facility is a difficult decision that affects employees, their families and the surrounding community, but the cost savings that will result make it a necessary step in Ciena's process toward profitability and earnings growth."
Ciena estimates that the actions announced today will generate between $7 to $8 million in annualized cost savings, including approximately $6 to $7 million at the ongoing operating expense level, prior to restructuring-related or other non-operating charges. The Company expects that the majority of the cost savings will be in place by the end of its second fiscal quarter, 2006.

Ciena expects to record restructuring charges ranging from approximately $3.8 million to $8.1 million associated with this action. All of these restructuring charges are expected to result in future cash expenditures by Ciena. Restructuring charges include severance, relocation and other employee costs ranging from approximately $2.9 million to $7.2 million, depending upon the number of employees that accept relocation offers. Restructuring charges associated with severance are expected to be paid and incurred primarily during the second fiscal quarter, and to a lesser extent in the third and fourth fiscal quarters of 2006. Any restructuring charges attributable to relocation are expected to be incurred over the remainder of fiscal 2006, depending upon, among other things, the number of employees accepting relocation offers and the timing and amount of any relocation payments to employees. Restructuring charges also include approximately $0.9 million in facilities costs, primarily associated with remaining lease payments for the facility. This charge is expected to be incurred during Ciena's second fiscal quarter and the resulting cash expenditures will be incurred as the remaining lease obligations are paid during Ciena's second and third fiscal quarters.

In addition to development activities based at its headquarters in Linthicum, Maryland, Ciena has development facilities in Acton, Massachusetts; Alpharetta, Georgia; Kanata, Ontario and has recently launched a development center in Gurgaon, India. At the end of its first fiscal quarter ending January 31, 2006, Ciena employed 1,442 worldwide.

Jones Lang LaSalle


Jones Apparel considering buyout
By Jennifer Waters, MarketWatch
Last Update: 12:04 PM ET Mar 21, 2006

CHICAGO (MarketWatch) -- Jones Apparel Group Inc., the parent of such ubiquitous designer brands ranging from Gloria Vanderbilt to Barneys New York, said Tuesday that it is considering putting itself on the block.

The Bristol, Pa.-based retail group said, however, that it has no plans to get rid of any of its various businesses or divisions.

Jones Apparel shares surged more than 15% to a 52-week high of $35.50.

In a brief statement, Jones Apparel said there can be no assurance that a sale will occur. Also, the company said it has no intention of disclosing any other information until the board either approves a sale or decides it won't sell the group.

Jones Apparel has had a string of disappointing earnings performances in recent quarters, prompting it to reorganize its operations. The company -- which was formed over more than three decades of acquiring individual brands and licenses of apparel, footwear and accessories -- has seen profits shrink the last two years, and analysts expect this year's results to fall as well, according to Thomson First Call. However, they are forecasting an increase in income in fiscal 2007.

Last year, the company reported earnings of $274.3 million on sales of $5.07 billion.
Last week, Women's Wear Daily, the retail trade magazine, reported that Jones Apparel was considering a sale of its Nine West shoe division.

Jones Lang LaSalle

JLL Picks Up 518,000 SF of Assignments
By Eric Peterson
Last updated: March 20, 2006 02:37pm

PARSIPPANY, NJ-Jones Lang LaSalle’s New Jersey office here has picked up two leasing exclusives totaling 518,000 sf. For one, Ivy Realy picked JLL as the agent for the 280,000-sf Ivy Corporate Park here. Formerly known as Lanidex Executive Center the complex was acquired by Ivy from the Transwestern portfolio earlier this year for an undisclosed price.

“This is the only corporate campus setting in Parsippany located directly at the intersection of two major interstate highways,” says Susan Mason JLL senior vice president, who is handling the assignment with Thomas Reilly, the firm’s executive vice president. “Each building has floor plates available for tenants of all sizes.”

Ivy Corporate Park consists of a total of six buildings. The acquisition of the property by Ivy boosted the firm’s holdings in the Parsippany market to nearly 500,000 sf.

In the second assignment, JLL has been picked by JER Partners of McLean, VA, the private equity investment arm of JE Robert Cos., and the New Jersey-based Herring Management to lease their recently acquired 238,000-sf class A office building at 23 Orchard Rd. in Skillman. The assignment will be handled by Mason, along with JLL executive vice president Jon Meisel.
“This is an unusual facility that lies on 70 acres and includes a tennis court, a ball field and a sand volleyball court,” Meisel says. “JER Partners and Herring Management specialize in multi-tenant buildings and plan to reposition the property.”

JER and Herring bought the property, which is located in the Princeton market, late last year from Computer Associates. The firm occupies most of the building and will continue to do so through 2007. For the longer term, the new owners plan to spend upwards of $2 million to renovate and upgrade the building to prep it for multi-tenant use. The renovation effort will focus on the building’s entry points, lobby and common areas and elevators.

Jones Lang LaSalle

Kaplan Wins $37M Financing for Federal Hill
By Eric Peterson
Last updated: March 20, 2006 10:13am
(To read more on the debt and equity markets and the multifamily market, click here.)

PERTH AMBOY, NJ-Kaplan Cos. has obtained financing amounting to $37 million for its Federal Hill redevelopment project here. The Highland Park-based company’s project consists of 153 units, including 33 townhomes and 120 condos in three- and four-story buildings.

The funding was arranged for Kaplan by Shimon Weiner and Abe Katz of Meridian Capital Group of New York City. The pair negotiated a floating rate with a spread of 200 to 160 over Libor over a three-year term.

In a separate transaction, Meridian’s Marc Kassai secured financing for two properties in Newark on behalf of an undisclosed owner. The two elevator buildings were purchased for $4.2 million, or 80% loan-to-value. The loan carries a rate of 5.64% over a 15-year term. The buildings at 691 Elizabeth Ave. and 15 Goldsmith Ave. contain a total of 92 units.

Jones Lang LaSalle


Accounting for cheaper rents

A small accounting firm in midtown has been drawn to lower Manhattan by cheaper rent. Padell Nadell Fine & Weinberger has relocated to 59 Maiden Lane, at the corner of William Street, from 156 W. 56th St.

It has signed a four-and-a-half- year sublease for 17,600 square feet at the 44-story building, where the asking rent is $35. The firm was facing a steep rent hike at the 56th Street building, where asking rents are $42 for lower floors.

"The financial district offers great value, with escalating rents in midtown," says Harry Krausman, a managing director at Colliers ABR, which represented the tenant.

The city Department of Finance is an anchor tenant in the downtown building. The space "works perfectly with their needs," Mr. Krausman says.

Lincoln Properties represented the sublessor, Broadview Networks.
--Julie Satow

Jones Lang LaSalle


Audit overseers triple office space

The agency that oversees the auditing practices of public companies is expanding its offices. The Public Company Accounting Oversight Board, a nonprofit created as part of the Sarbanes-Oxley Act of 2002, has tripled the size of its space at 1251 Sixth Ave., between West 49th and 50th streets.

The board signed an eight-and-a-half-year sublease for 33,000 square feet, or the entire 16th floor. The asking rents in the 54-story building, whose largest tenant is Deutsche Bank, range from the mid-$40s to $75 a square foot for top floors.

"We looked at other buildings, but this was the best and most viable option," says Michael Liss, a senior associate at the Trammell Crow Co., which represented the tenant.

Studley represented the sublessor, CDC Ixis, a subsidiary of the French banking concern Groupe Caisse d'Epargne.

--Julie Satow

Jones Lang LaSalle


CBS gets distance from Viacom

Some staff moving out of headquarters; audit board counts 3 times the space Published on March 20, 2006

CBS Corp., after splitting off from Viacom late last year, is moving some employees out of Viacom's headquarters. It has signed a 12-year lease for an additional 65,000 square feet at 555 W. 57th St., at the corner of 11th Avenue.

The transaction brings the company's total space in the 20-story building to more than 253,000 square feet and makes CBS the largest tenant there. The asking rent in the building, which also houses the BMW of Manhattan dealership, is $40 a square foot.

The CBS workers who are relocating from Viacom's headquarters at 1515 Broadway, between West 44th and 45th streets, will be joined by colleagues from some other CBS offices. The 57th Street building and 524 W. 57th St., across the street, make up what is referred to as the CBS broadcasting center.

"They have been there for at least 15 years, and the expansion is a combination of the split from Viacom and internal growth," says Steven Durels, executive vice president at SL Green, the landlord of 555 W. 57th St.

Under the split, CBS owns Simon & Schuster publishers, Showtime and Paramount Parks; Viacom owns MTV and Paramount Pictures.

CB Richard Ellis represented CBS.

--Julie Satow

Jones Lang LaSalle

Liberty Gets OK for 156,000 SF of Offices
By Eric Peterson
Last updated: March 20, 2006 08:08am

MT. LAUREL, NJ-Liberty Property Trust has received final approval from township officials to develop and, in one case redevelop, 156,000 sf of office space in two buildings on 20 acres here. Township officials have also okayed a plan to fold two existing buildings totaling 75,000 sf nearby into the new to create Liberty Walk at East Gate, a class A office campus.

The two buildings totaling 156,000 sf will also be designed to achieve LEED certification, according to Rob Jones, vice president of the Malvern, PA-based Liberty Property Trust’s South Jersey region. The larger of the two will be 100,000 sf of new construction, and the other is a 56,000-sf renovation. The park will also include a mile-long green beltway of interconnected walkways, patios, ponds and other amenities.

“We have expertise in ‘green’ development,” Jones says. “This park is being designed with many features that will enhance sustainable development.”

The groundwork for Liberty Walk was laid last year when Liberty completed a 50,000-sf office building for Marlin

Leasing Corp. at 300 Fellowship Rd., according to Jones. The process continued that year when Liberty developed a 25,000-sf spec building at 302 Fellowship Rd. that is now 90% leased. Atlantic & Pacific Mortgage (11,720 sf) and Kay Construction (10,786 sf) are the building’s two new tenants.

Liberty has since acquired the buildings at 306, 330 and 350 Fellowship Rd. According to Jones, the 306 and 330 buildings will be demolished to make way for the new LEED-certified, four-story, 100,000-sf building. The 56,000-sf 350 building will be gutted and renovated to LEED and class A office standards. “The renovation should be completed by October of this year, and the new building will be ready for occupancy in early 2007,” Jones says.

“The market for large blocks of class A office space in this region is very strong,” says Fred Berlinsky of Markeim-Chalmers of Cherry Hill, who has the marketing assignment. “This corner of the township is an excellent location because of its proximity to major highways and the labor pool.”

Jones Lang LaSalle

UPDATE: Cendant Hotel Spin-Off Will Bear Wyndham Name
By Eric Peterson
Last updated: March 17, 2006 10:10am

PARSIPPANY, NJ-Wyndham Worldwide will be the name of the new hospitality company being created by Cendant Corp.’s spin-off of its lodging, vacation exchange and rental and timeshare resorts businesses, slated to occur later this year. When the spin-off is completed, Wyndham Worldwide will be an independent, publicly traded company that will operate nine hotel lodging chains including the Wyndham, Ramada, Super 8, Wingate Inn and Days Inn brands. Its vacation exchange and rental businesses include RCI, Novasol and Landal GreenParks, and its timeshare resorts businesses include Fairfield Resorts and Trendwest Resorts. For previous coverage, click here .

“The name represents the elevation of a signature brand to serve as our new corporate identity,” says Stephen P. Holmes, Cendant vice chairman, who’s slated to become chairman and CEO of the new company. “As a provider of accommodations, we will leverage a name that provides us with a familiar corporate identity and conveys who we are.”
As part of the spin-off and name change, the company’s Cendant Timeshare Resort Group Inc. will become known as Wyndham Vacation Ownership Inc. The Cendant Hotel Group, meanwhile will change its name to Wyndham Hotels & Resorts. The Cendant name is being retired.

Jones Lang LaSalle

UPDATE: Dealer Takes Another 30,000 SF
By Eric Peterson
Last updated: March 17, 2006 10:01am
(To read more on the industrial market, click here.)

MAHWAH, NJ-Prestige of Bergen Inc. has leased 30,000 sf at Ivy Realty’s 16 McKee Dr. here. The space is in additional to the 60,000 sf the company signed for this past October, expanding Prestige’s Toyota Service Center operations at the site. A portion of the former warehouse space will also be converted into administrative offices.

Both Prestige of Bergen and Ivy Realty were represented by Marion M. Geddes, Ivy’s executive vice president of leasing. Terms were not released. The signing leaves just 5,000 sf still available at the 110,000-sf facility.

The property is part of the Mahwah Business Center, where Ivy owns and manages a total of some 510,000 sf of industrial and flex space. As reported by GlobeSt.com, Ivy recently did a $20 million refi of its holdings within the business center, converting a floating-rate loan to fixed.

Jones Lang LaSalle

NJPAC Issues RFEI for $100M MXD Tower
By Eric Peterson
Last updated: March 17, 2006 08:01am
(To read more on the multifamily market, click here and for more retail coverage, click GlobeSt.com/RETAIL.)

NEWARK-The New Jersey Performing Arts Center has issued a Request for Expressions of Interest for a proposed mixed-use tower that would be built on a 1.2-acre site opposite the arts and entertainment complex’s main entrance Downtown. The building site is part of NJPAC’s original site plan and NJPAC officials are looking to find a private developer to build it.

“Our mission, since the earliest days of planning, has been for the Arts Center to help create an around-the-clock environment in the Newark Arts District,” says Lawrence P. Goldman, NJPAC’s president and CEO. “The missing ingredient is market-rate residential and higher-end retail opportunities. After eight years of successfully operating this cultural facility, we are ready to build upon that by bringing living and commerce into this city. This is a complicated project, but it’s time.”

Completed in 1997 at a cost of $185 million, NJPAC features a 2,750-seat main auditorium and a 514-seat theater, as well meeting and conference space. The performance venues have attracted more than four million people in their first eight seasons. What NJPAC has in mind for Two Center Street, as the project is dubbed, is a total of at least 250 residences in low-, mid- and high-rise settings, one-fifth of which would be set aside for artists. The plan also calls for 30,000 sf of street-level retail and cultural uses and structured parking for more than 700 cars. NJPAC officials have put an estimated price tag of $100 million on the project.

The effort is part of an original plan for 16 Downtown acres, dating back to 1988, calling for construction of NJPAC and ancillary uses on three sites around it, including Two Center Street. The latter site currently contains a two-story building that would be demolished and a surface parking lot. Both NJPAC and the Two Center site are adjacent to a new light rail station slated to open this summer.

Besides the proposed site, two others remain for eventual development, situated between NJPAC and McCarter Highway. For Two Center Street, NJPAC officials say the hope to have a developer named by the end of this year, and to have the building completed by early 2010. According to a statement issued by NJPAC, “developers must have a demonstrable commitment to excellence in planning and design, an established record of financial stability and success, a record of integrity and trustworthiness and a basic sensibility in harmony with NJPAC’s multi-layered mission.”

Jones Lang LaSalle

Pair Fills 70,000-SF Warehouse
By Sean Ryan
Last updated: March 16, 2006 10:46am
Sean Ryan is associate editor of Real Estate New Jersey.
(To read more on the industrial market, click here.)

PARSIPPANY, NJ-Two industrial users have leased the previously vacant building at 181 East Halsey Rd. here bringing the 69,300-sf property to 100% occupancy. The AvalineGila Group LLC, a warehousing/logistics firm headquartered in Whippany, signed up for 48,500 sf. Filmtech, a self-adhesive tape manufacturer headquartered in Morristown, took the remaining 20,800 sf.

The new tenants fill space vacated by Mountain Gear and Titanium Industries, both locally based. Terms of the deals were not disclosed. Hackensack-based NAI James E. Hanson senior vice president Kenneth D. Lundberg and managing director of corporate services Scott K. Perkins represented the owner, Jofra Realty Corp., in both transactions.

In the Filmtech deal, the tenant was represented by Scott Peck of Resource Realty of Northern New Jersey. The 181 East Halsey Rd. property, which was built in 1980, features 23-foot ceiling and access to I-287 and other major highways.

Jones Lang LaSalle


A Monkey Could Do Your Job (A True Story)
Craig Thomas, SVP, Director of Research & Research Systems
cthomas@tortowheatonresearch.com

"A monkey could do your job" is one of those phrases that we all hope we will never hear. Fears of monkey offshoring have produced many a sleepless night for me, as you might imagine. I've always tried to put that inevitability out of my mind, live in the now and count my blessings, but I would be lying to you if I said that my level of anxiety doesn't rise anytime I see a monkey using sign language or riding a tricycle, perhaps in a smart little cowboy outfit, or even when I come across Planet of the Apes while flipping through the channels. Clearly, Dr. Zaius could do a better job of this than I could. Heck, who am I kidding?! Even General Ursus could give me a run for my money!

Well, wouldn't you know, the day I've dreaded all my life came just last week. I was giving a presentation, and despite all of my efforts to appear somewhat intelligent, an astute member of the audience in the back of the room put two and two together and finally blurted out what I had been thinking all these years, "You add no value! A monkey could do your job!"
There it was; the jig was up!

Now, to set the scene, this was a very classy industry affair (whose good name I wouldn't dream of besmirching here, in association with this sordid tale). I would not hesitate to present at another one of its events--assuming the monkey is busy and can't do it (with all sincerity, it is a great organization, a great conference and it was an honor to be there as a presenter). Nor would I choose reveal the identity of the industry heavyweight who made the astute comment, for fear that he would accelerate the process of finding a suitable simian replacement for me. I would like to protect this man's fine name and reputation, so for the purposes of this tale let's just call him Monkeyman.

Now, I knew something was going to happen. I've known of Monkeyman for a decade or so now, and I could see him pacing around the back of the room as he has always done at these events prior to his inevitable outbursts. You can always tell when he's worked up, showing his dominance by snorting, marking his territory at the back of the room, beating his chest and gesticulating wildly. Yes, the silverback has very distinctive behaviors out in the wild, as do the rest of us in reaction to his rituals. I, for one, try not to make eye contact or enter the territory that Monkeyman has marked for himself. Engaging in any conversation can also prove painful and is to be avoided at all cost. The key is to not stand near him at the buffet and to always sit toward the front of the room.

But enough about Monkeyman's odd behavior; let's get to the root of his comments. The presentation I was giving was planned to shed some light on which industries will drive the economy in the near-term outlook. The thrust of my take was that no one has such perfect insight into the future, but if one looks back at the detailed regional and industry data, one might glean some insight. The idea is essentially that if we can identify the strongest industries over the last few cycles and also identify what has driven their expansion, then we can make a fair judgment as to their prospects going forward, and where among the various commercial real estate markets these industries may prosper.

The easiest examples of distinguishing structurally expanding industries versus those whose cycles may be winding down are these two recent stars: housing and healthcare. Both are currently major drivers of commercial real estate absorption. The latter is driven by technological advances and an aging population; this is structural and is likely to have staying power through the near-term outlook. The former is driven by low financing costs and expectations for future appreciation, and is thus likely to wind down through the near-term outlook. One might therefore bet on markets and properties supported by growing healthcare-related industries, while worrying about markets and properties that are linked closely with the housing boom. If you have a very good, detailed database system like ours here at TWR, you can crunch all the numbers and identify opportunities and risks in each and every market.

So that's it; that's all I've got. I am, by nature of my simple take on the world, very reluctant to say that we should all target markets and investments that are big in nanotechnology, I-pod accessories and liquefied coal production, but I am comfortable enough using the available data to reveal where the safe bets are likely to be. I think that's what Monkeyman's issue was all about.

You see, from Monkeyman's perspective, any primate can sift through data. Algorithms can be written, databases can be built, regular outputs can be created and out will pop the data and the answer. So, with a little programming up front, and maybe a behavior-reinforcing system of treats and electrical shocks, one can produce a monkey-driven forecasting process. Okay, fine!--you've got me, Monkeyman. Bring on General Ursus; he can have my office.

I'm just not smart enough to pick up the paper, read the news, circle the next big thing and then turn around and project real estate investment returns based on that. While Monkeyman can apparently rely on news, experience, personal observation, taste and instincts, I'm afraid that I'm a slave to the data. I'll tell you straight out, I wish I had Monkeyman's guts. Purchasing commercial real estate is a serious and long-term investment. If a client's money and welfare are on the line, I just don't feel comfortable going with my gut. I just don't trust my instincts with that kind of responsibility. Let's face it; unless you're smart like Monkeyman, you need that data!

I need it! I need 55,460! I need 150! I need 6.4%! I need 37.1%! I need 80,160! I need 81.2%! I need 31.4%! I would be lost without data. How could I understand Tampa without knowing that over 55 thousand net migrants showed up there in 2004? If we didn't know that, we couldn't grasp what is driving its quick expansion and absorption of real estate. If I didn't know that Chicago's industrial availability rate had dropped by a full 150 basis points since its recent peak, I might conclude that only coastal ports has a chance when it comes warehouse absorption. If I didn't know that a full 6.4% of Minneapolis' employment base was in finance, I might assume that it would behave more like St. Louis or even Toledo. Did you know that the average annual value of existing single-family housing transactions in Riverside over the last few years amounts to 37.1% of the income earned there? That's the highest of any market we cover! Yikes! My gosh, if I didn't know that over 80,000 people in Detroit worked in auto manufacturing, I wouldn't have a clue about what lies ahead for its real estate assets. In addition, if I didn't know that the industrial capacity utilization in the U.S. is 81.2%, I wouldn't know a thing about potential inflationary pressure. And what is the difference between 25.6% and 31.4%? That's the share of population 25 years and older with at least a bachelors degree, in Rhode Island and Connecticut, respectively. That says something about why one is wealthier than the other, and I wouldn't know about that at all unless I had my dirty little secret--I use data to form my thoughts about where the world is going.

So, I really have no defense. The secret is out. Bring on my monkey replacement Monkeyman; I will shift my activities to dancing for nickels in front of taverns--probably a lucrative position here in Boston on St. Patrick's Day--and you've got to strike while the iron is hot when your talents are as limited as mine. Or maybe I'll stick around a while longer and all of us here at TWR will continue trying to coax insights out of our databases; after all, there just might be a few others out there that feel as strongly about careful data analysis as we do. I'm willing to bet that there are more than a few that are just not as gifted as Monkeyman--who are in the same boat as we.

Go to www.tortowheatonresearch.com to register for a free subscription to About Real Estate.
© 2006 Torto Wheaton Research

Jones Lang LaSalle


Cendant Hotel Spin-Off Will Bear Wyndham Name
By Eric Peterson
Last updated: March 17, 2006 10:10am

PARSIPPANY, NJ-Wyndham Worldwide will be the name of the new hospitality company being created by Cendant Corp.’s spin-off of its lodging, vacation exchange and rental and timeshare resorts businesses, slated to occur later this year. When the spin-off is completed, Wyndham Worldwide will be an independent, publicly traded company that will operate nine hotel lodging chains including the Wyndham, Ramada, Super 8, Wingate Inn and Days Inn brands. Its vacation exchange and rental businesses include RCI, Novasol and Landal GreenParks, and its timeshare resorts businesses include Fairfield Resorts and Trendwest Resorts. For previous coverage, click here .

"The name represents the elevation of a signature brand to serve as our new corporate identity," says Stephen P. Holmes, Cendant vice chairman, who’s slated to become chairman and CEO of the new company. "As a provider of accommodations, we will leverage a name that provides us with a familiar corporate identity and conveys who we are."

As part of the spin-off and name change, the company’s Cendant Timeshare Resort Group Inc. will become known as Wyndham Vacation Ownership Inc. The Cendant Hotel Group, meanwhile will change its name to Wyndham Hotels & Resorts. The Cendant name is being retired.

Jones Lang LaSalle


SL Green Takes Leasehold, Enters JV
By Barbara Jarvie
Last updated: March 17, 2006 12:08pm

NEW YORK CITY-SL Green Realty Corp. has acquired a long-term operating net leasehold interest in 521 Fifth Ave. The deal includes an option to acquire fee ownership in five years and--assuming SL Green exercises that option--the total cost would be $225 million.

The 40-story, 460,000-sf office currently has an ownership group led by RFR Holding LLC, which retained fee ownership. On the tenant roster at the 98%-occupied tower are Abberley Kooiman, Rosner, Bresler, Goodman and Bucholz as well as Moroze Sherman Gordon and Gordon. SL Green also completed a joint venture for its One Madison Ave. residential condominium project with a partnership comprised of RFR, Credit Suisse and Ian Schrager.

Andrew Mathias, chief investment officer of SL Green, says the addition builds on the firm’s position in the Fifth Avenue office corridor and provides them with "another venue to execute a retail strategy and create additional value." Floor plates range from 22,000 sf at its base to 6,000 sf in its tower. With an upcoming vacancy scheduled, SL Green plans to redevelop and reposition the building. Darcy Stacom of CB Richard Ellis acted as exclusive agent for RFR Holding.

In the other deal, the arrangement calls for the venture to convert the 43-story landmark building--known as the Clocktower--into residential condominiums. A project timetable will be released at a later date. SL Green will retain a 30% interest in the Clocktower. The arrangement provides Ian Schrager and RFR with the ability to increase its ownership interest if certain incentive return thresholds are achieved. In this deal, CBRE’s Stacom acted as exclusive agent for SL Green.