This is a company blog used by the New Jersey Jones Lang LaSalle Team to keep track of current events within the real estate sector. All items posted on this website are originally written by other authors from various sources. This is simply used as a searchable tracking system for news we found relevant to our business.
Pharma Company Opens US Research Center By Eric Peterson Last updated: March 29, 2006 03:21pm
NORTH BRUNSWICK, NJ-Danish pharmaceutical company Novo Nordisk has opened Novo Nordisk Research US, which company officials describe as the first hemostasis research facility in the US. The Copenhagen-based firm has its US headquarters just down the road in Princeton. The 30,000-sf operation is in Building Tech Four, within the Technology Center of New Jersey, a project of the New Jersey Economic Development Authority. Located on Route 1, the facility is also within the Greater New Brunswick Innovation Zone, one of three zones created by the state to encourage technology growth. Building Four totals 86,000 sf, including an existing 26,000-sf wing and 60,000 sf of new construction on two floors. The Novo Nordisk operation occupies a full floor in the new section. Arranged in what is termed a Scandanavian design with a central research square surrounded by offices and labs, the facility will be used to research causes and cures for life-threatening bleeding, according to Dr. Marcus Carr, head of Novo Nordisk Research US.
“There are a number of research organizations here that are recognized for their excellence, and they are an important reason for choosing to expand our presence here,” says Mads Krogsgaard Thomsen, Novo Nordisk’s chief science officer. “The new center represents a major expansion of our research in the area of hemostasis, and is part of the ongoing internationalization of the company’s R&D.”
The company got the facility up and running with the help of a $3.3-million business incentive grant from the New Jersey EDA, according to Caren S. Franzini, the authority’s chief executive officer. “Novo Nordisk Research US is an important and welcomed addition to the Greater New Brunswick Innovation Zones.” The operation is starting off with 21 full-time researchers, “a staff size that we intend to double by the end of the year,” Carr says.
posted by Jones Lang LaSalle NJ News Blog at 10:29 AM
Mack-Cali Declares Quarterly Dividend By Eric Peterson Last updated: March 29, 2006 10:34am (To read more on the debt and equity markets, click here.)
CRANFORD, NJ-The board of directors of Mack-Cali Realty Corp. has approved a cash dividend of $0.63 per common share, indicating an annual rate of $2.52 per common share, for the period of January 1 through March 31, 2006. The dividend will be paid on April 17, 2006 to shareholders of record as of April 5.
The REIT’s board has also declared a cash dividend on its 8% Series C cumulative redeemable perpetual preferred stock ($25 liquidation value per depositary share, each representing 1/100th of a share of preferred stock) equal to $0.50 per depositary share for the period of January 15, 2006 through April 14, 2006. The dividend will be paid on April 17 to shareholders of record as of April 5.
Mack-Cali Realty has an agreement to buy Gale Real Estate Services Co. and full or half interests in 2.8 million sf of that company’s office properties in New Jersey in a deal valued at $545 million. That deal is expected to close as early as next month.
posted by Jones Lang LaSalle NJ News Blog at 10:28 AM
$8M Takes 78,000-SF Self-Storage Facility By Eric Peterson Last updated: March 29, 2006 10:37am (To read more on the industrial market, click here.)
PISCATAWAY, NJ-A West Coast institutional investor, which was not identified, has acquired the 78,025-sf self-storage facility at 4100 New Brunswick Rd. here for just over $8.3 million, a sale price that factors out to $107 per sf (net rentable). The seller was a New Jersey-based partnership, which was similarly not identified.
Both sides were represented by Nick Malagisi of Sperry Van Ness/Storage Realty of Williamsville, NY. The three-story facility is new construction, recently completed by the seller. It contains a total of 898 rental units and is 100% climate controlled, according too Malagisi. The seller began construction in 2005 and the facility opened for business earlier this month.
“The owners of the property have maximized their return on investment by selling the property now, upon completion, rather than wait two to three years,” Malagisi says. “They sold rather than absorb the rent-up risk.”
posted by Jones Lang LaSalle NJ News Blog at 10:28 AM
Onyx Buys 60,000-SF Office By Eric Peterson Last updated: March 28, 2006 03:16pm
GLEN ROCK, NJ-Onyx Equities LLC has added the office building at 266 Harristown Rd. to its portfolio, buying it from the Englewood-based Burt Ross Realty. The Woodbridge-based Onyx paid $6.7 million for the three-story, 60,000-sf building, a number that factors out to just under $112 per sf.
“This is a great value-added investment for Onyx,” says Robert Donnelly, Jr., associate director with Cushman & Wakefield’s Metropolitan Area Capital Markets Group in East Rutherford.
Donnelly co-brokered the sale with the MACMG’s executive director Gary Gabriel.
“The third floor is available for the first time since the building’s completion" in 1982, Donnelly says. “That presents an attractive lease-up opportunity for the new owner. Within this submarket, the building can cater to tenants from 1,000 to 20,000 sf. The building’s location and flexibility have contributed to the property’s historically high occupancy rate.”
The building’s current tenant roster includes National Risk Services, an insurance and workmen’s comp firm; the Korzik Group, another insurance company; the Goldstein Group, a retail brokerage and development firm; Atochem Inc.; and several law firms. Available space in the building is currently listed online with an asking price of $23 per sf. The building itself is located at a four-way interchange of Route 208 in Bergen County, near several other major highways.
“Middle-market investment sales transactions under $15 million, like this one, represent a growing area of business for us,” Donnelly says, noting that his group has expanded its focus in that direction. “Strong bidding interest in properties like 266 Harristown Rd. illustrates the potential of this niche.”
posted by Jones Lang LaSalle NJ News Blog at 10:27 AM
Mack-Cali, PRC JV on 111,000-SF Office Complex By Eric Peterson Last updated: March 28, 2006 09:31am
RED BANK, NJ-Homebuilder Hovnanian Enterprises is adding to its Downtown presence here in a big way, preleasing most of the planned Red Bank Corporate Plaza on a triple net basis for 10 years. The project is directly across the street from its new 65,200-sf headquarters building on Riverside Street, where it will be relocating shortly from its current home in nearby Middletown.
Red Bank Corporate's original developer, the PRC Group of West Long Branch, has a new, high-profile joint venture partner, namely the Cranford-based Mack-Cali Realty Corp. At build-out, Red Bank Corporate Center will total approximately 111,000 sf, with the initial four-story building that Hovnanian will occupy totaling 93,000 sf, including 88,000 sf of office space and 5,000 sf of retail.
A second office building of 18,560 sf will be developed at a later date, and a four-story parking garage is also part of the plan for the 3.4-acre site. The cost of Red Bank Corporate Center hasn’t been released. Hovnanian officials would not comment on the project.
“We acquired the site four-plus years ago,” Joel S. Brudner, PRC’s EVP/CFO, tells GlobeSt.com. “There were traffic concerns, and there were environmental issues,” he says of the site, which was occupied for many years by an auto dealership. “So we didn’t get final approval from all the agencies until about a year and a half ago, and we’ve formed a joint venture with Mack-Cali to develop the project jointly. This may lead to other ventures between our firms.”
The arrangement between the two companies calls for PRC to contribute the site and the two companies to develop it. The latter will serve as the leasing agent, and the two companies will co-manage it.
“We had been in touch with Hovnanian since their headquarters project started across the street,” Brudner says. “They will occupy both buildings, consolidating and expanding from other locations. Both buildings have the same architect and a similar design, and the object was to try and create some synergy and make a statement at that intersection.”
“We look forward to partnering with PRC and to enhancing our relationship with Hovnanian, which is both a Mack-Cali tenant and a potential co-developer with us on a transit village project,” says Mitchell E. Hersh, Mack-Cali’s president/CEO.
“Besides its excellent location, Red Bank Corporate Plaza will be one of just a handful of Downtown properties with suburban-type parking ratios,” Brudner says. “We’re looking forward to breaking ground within the next few weeks and expect to have it completed by the third quarter of 2007.”
posted by Jones Lang LaSalle NJ News Blog at 10:27 AM
Law Firm Takes 31,000 SF at Carnegie Center By Eric Peterson Last updated: March 28, 2006 12:53pm
PRINCETON, NJ-The law firm of Pepper Hamilton LLP has signed a lease for 31,000 sf at 301 Carnegie Dr., a four-story, 127,500-sf class A building here. The initial lease is for a five-year term. The firm will relocate from its existing 25,000-sf location in Alexander Park, also in Princeton.
The asset, located at one of the two main entrances to Carnegie Center, is owned by Carnegie Investors LLC, an affiliate of the Philadelphia-based BPG Properties Ltd., formerly Berwind Property Group. BPG was represented in-house while the tenant was represented by Jerry Fennelly and C.J. McCourt of NAI Fennelly, Hamilton.
Pepper Hamilton is a multi-practice law firm with 400 lawyers in a half-dozen states and Washington, DC. The firm’s Princeton office, currently with 50 staffers including 25 lawyers, was formed in 2001 when lawyers from the firm of Jamieson, Moore, Peskin & Spicer combined their practices with Pepper.
Acquired by the BPG affiliate in late 2004, 301 Carnegie has since undergone a capital-improvement program. The Pepper Hamilton signing leaves approximately 55,000 sf still available, with managing principal James Scanlon, associate Todd Elfand and managing director Kevin Carton of Newmark Knight Frank handling the marketing.
posted by Jones Lang LaSalle NJ News Blog at 10:26 AM
Exec-Suites Firm Leases 18,000 SF By Eric Peterson Last updated: March 28, 2006 11:13am
EATONTOWN, NJ-Main Office Executive Suites is set to move into two-thirds of the second floor, or about 18,000 sf, of the three-story, 80,000-sf 12 Christopher Way here. The lease caps more than 60,000 sf of recent leasing activity at the site, leaving less than 10,000 sf still on the market at an asset that was once nearly vacant.
At one time, defense contractor Mitre Corp. was the building's major tenant, occupying more than 60,000 sf. “Mitre informed the owners that they were going to vacate the building upon expiration of the term,” says Doug Richter of the locally based Richter Organization, the asset’s exclusive leasing agent. “We saw it as an opportunity to repurpose the building and build a recession-proof tenant roster.”
In the past two years, according to Richter, the building has “undergone a major capital improvement and marketing transformation.” Besides Main Office, new tenants include Delta Financial Associates; Technol Fuel Conditioners; DSCI; and an eatery, Café Christopher. The remaining space, a unit of 2,875 sf and a 7,000-sf block that includes a research lab, is currently listed on Richter’s website with an asking price of $26 per sf plus tenant electric.
posted by Jones Lang LaSalle NJ News Blog at 10:25 AM
Town Trustees OK Redevelopment Plans By Eric Peterson Last updated: March 27, 2006 11:22am
OCEAN GROVE, NJ-This oceanfront community doesn’t have the complex redevelopment issues of its neighbor to the immediate north, Asbury Park, but it does have a prime 3.2-acre site that has sat vacant ever since the 250-room North End Hotel was torn down in 1980. Now, the site is apparently ready for redevelopment.
The trustees of the Ocean Grove Camp Meeting Association have approved a plan by Wesley Atlantic Village Enterprises LLC, or WAVE, to redevelop the site with a combination of a hotel, condos, retail and other commercial space, a parking structure and a pool. The approval culminates a several-year process during which some 50 developers showed interest in the project, according to Scott Rasmussen, president of Ogcma.
The project still has a way to go before ground can be broken, according to William Gannon, a local attorney who heads the WAVE partnership. The New Jersey DEP has to sign off on it under the Coastal Area Facility Review Act, and additional approvals have to come from the Monmouth County planning board and the Neptune Township zoning board and historic preservation committee.
Ocean Grove was founded by a Methodist group in the 1860s as a Christian meeting camp, and was governed by that group until the 1970s when the community was folded into Neptune Twp. One of the largest collections of Victorian structures in the world, the whole community was put on the National Register of Historic Places more than 30 years ago. While it is no longer self-governing as a municipal body, the association still owns all the land in the community and residents lease the land on which their homes sit. In the case of the WAVE project, the association has agreed to a 99-year renewable lease, the terms of which were not disclosed. Specifics of the project’s size and scope haven’t been released yet because “plans are still in the early stages,” according to Gannon. The developer and local officials both say its design will be consistent with the community’s Victorian flavor.
posted by Jones Lang LaSalle NJ News Blog at 10:24 AM
C&W Gets Metropolitan Center Assignment By Eric Peterson Last updated: March 27, 2006 10:21am
EAST RUTHERFORD, NJ-New owner ING Clarion has given the leasing exclusive for Metropolitan Center to Cushman & Wakefield of NJ. As reported by GlobeSt.com, the New York City-based ING Clarion bought the 15-story, 423,000-sf class A office building in late 2005 from a CBRE-managed investor group for $119.5 million, or about $282.50 per sf.
“This building is a landmark, and over the course of the past decade it has experienced several improvements,” says Curtis Foster, senior director at C&W. “In the past three years, upgrades to the property have included a new security system, redesigned lobby and concierge station, and the new owners will further add to the building’s amenities. We have a chance to re-introduce this property to the marketplace.”
C&W of NJ negotiated the sale to ING Clarion, and the firm itself has its main Garden State office in the building, which was once known as One Meadowlands Plaza. The building is currently 88% leased with about 83,000 sf available, and a total of 135,000 sf is expected to become available within the next 12 to 18 months, according to Foster. Other major tenants include Aegis Insurance, Maersk Lines and Hudson News. Metropolitan Center is located on Route 3 here, directly across from Giants Stadium and the rest of the Meadowlands Sports Complex, including the under-construction Xanadu project.
posted by Jones Lang LaSalle NJ News Blog at 10:23 AM
Developer sues for refusal to rezone site Builder wants to add housing in 'economic development' district Thursday, March 30, 2006 BY MATTHEW REILLY Star-Ledger Staff
The developer K. Hovnanian is suing Hillsborough Township for refusing to rezone a large part of the former General Services Administration site in Belle Meade to allow it to build housing.
The property, purchased by K. Hovnanian to be developed by Hillsborough Properties, comprises 335 acres just off Route 206.
The township has zoned the property as part of its "economic development" district, which allows offices, corporate conference centers, restaurants, theaters, gym nasiums, tennis and pool facilities, financial institutions, libraries, museums, medical centers, hotels/ motels, retail stores and services, schools, and light manufacturing. It does not allow housing.
Last August, Hillsborough Properties asked the township planning board to rezone for residential construction. The township planning board instead recommended it be changed to "research and development," which also does not allow housing and is, in fact, more restrictive than the economic development zoning.
"A township master plan was approved last year that does a significant amount of rezoning, including that area," said Kevin Davis, township administrator and clerk. "The proposed new zone is parks and recreation, and research and development."
The new master plan was approved by the township, but the individual zoning changes are still being reviewed.
In its suit, Hillsborough Properties claims there is "no legitimate or rational land use basis to justify the continued zoning of the property in the (economic development) zone or to rezone the property to a more restrictive (research and development) zone." They said the township's actions are "arbitrary, unreasonable and capri cious."
The company is asking a judge to declare the economic development zone, as it applies to its property, null and void and direct the township to change the zoning to residential.
"A lawsuit is probably premature," said Davis, who said he hasn't seen a copy of the complaint. "We haven't adopted the new zone."
The site was a U.S. Army supply depot until 1958, when it was transferred to the GSA. It contains storage warehouses and sheds, railroad sidings, a pistol range, an incinerator and a gasoline decanting facility.
The site includes 19 miles of roads, 44 miles of railroad tracks, 2.1 million square feet of enclosed storage space and 8 million square feet of open storage space, according to the suit. There are significant environmental contamination problems on the site.
Davis said Hovnanian had a proposal to put 700 homes on the site, which the township strongly opposed. He said the developer presented its plans at a community gathering "and it was poorly received."
posted by Jones Lang LaSalle NJ News Blog at 10:22 AM
The scandals linked to the University of Medicine and Dentistry of New Jersey have prompted area legislators and Rutgers University officials to explore a merger between the university and the UMDNJ schools in the Piscataway and New Brunswick area.
A merger would link Rutgers with the Robert Wood Johnson Medical School in Piscataway and the Robert Wood Johnson University Hospital in New Brunswick.
Attaching a medical school to Rutgers "would be another piece in making Rutgers a great state university," said Assemblyman Patrick Diegnan, D-Middlesex.
"Putting Rutgers and UMDNJ together would raise New Jersey's standard of excellence in research, education and health care," said Sen. Joseph Vitale, D-Middlesex, who has discussed a possible merger with Rutgers officials, and members of Gov. Jon S. Corzine's administration. Talks of a merger are taking place against a backdrop of scandal at UMDNJ, which is under investigation by the U.S. Attorney's Office, which is looking into charges of influence peddling and the awarding of no-bid contracts.
UMDNJ, which has its main office in Newark, has already been charged with Medicaid fraud, and its operation is overseen by a federal monitor.
The scandals "are a strong catalyst to make this happen," said state Sen. Ray Lesniak, D-Union. "What I believe does not make sense is the status quo."
Several medical students interviewed at the Piscataway campus embraced the idea. "On a very basic level it would make life a lot easier — parking, access to the labs, the library, the copier machines," said Jaclyn McKinstry, a first-year medical school student from Cherry Hill.
She was skeptical that a merger would, in fact, take place. "We will love it, but the administration (at UMDNJ) has too much to lose," said McKinstry.
Nicholas Mapoli, a first-year medical student from Highland Park, who graduated from Rutgers College with a degree in Spanish, said a merger would make it easier to tell people where he attends school. "Rutgers is easier to explain than an acronym."
Mapoli said the scandals linked to UMDNJ have minimal effect on his perception of the medical school. "A few administrators did things they should not have done. That does not take away from the education offered here," he said.
A merger would undo the effect of the Medical and Dental Education Act of 1970, which joined the New Jersey College of Medicine and Dentistry in Newark with the Rutgers Medical School — ending the medical school's formal link to the university.
UMDNJ has grown to include eight schools at five campuses, with Piscataway and New Brunswick considered to be one campus.
The signature building of the Robert Wood Johnson Medical School is located on Rutgers' Busch Campus. "You don't even have to cross the street," said a Rutgers official, referring to side-by-side proximity of Rutgers and UMDNJ facilities.
Robert Wood Johnson University Hospital in New Brunswick is the medical school's teaching hospital.
Some elements of UMDNJ and Rutgers have already been combined. The Cancer Institute in New Brunswick operates under the UMDNJ umbrella, but about 40 percent of its faculty are from the Rutgers faculty. Diplomas earned by graduates of the UMDNJ School of Public Health include the signature of Rutgers University President Richard L. McCormick.
Despite side-by-side facilities, UMDNJ and Rutgers have separate telephone systems. "It's a toll call to call UMDNJ," said a Rutgers official.
According to area lawmakers, the Rutgers administration supports a merger, though no member of the administration would comment for publication, according to university spokesman Greg Trevor.
UMDNJ officials would not comment, according to spokeswoman Anna Farneski. Vitale calls McCormick a "tremendous advocate," but more important than McCormick's opinion is the governor's.
At a March 2 video conference with students and staff at UMDNJ's five locations, Corzine described himself as an "agnostic" when the question of the merger was raised.
Lesniak allowed that the governor has had to concentrate on mending the state's fiscal woes, before tackling an issue such as the proposed merger.
"The governor is committed to making sure UMDNJ has a fresh start," spokesman Anthony Coley said yesterday.
One of the most publicized failures of the administration of Gov. James E. McGreevey was an ambitious plan to merge UMDNJ with Rutgers and the New Jersey Institute of Technology. The "University of New Jersey" was to have been patterned after the University of California system.
"Those of us who lived during the . . . experience know that it was too much to bite off," said Vitale. "It was so broad — it was like Bill and Hillary (Clinton) trying to sell a health plan the first five minutes of their administration."
While a merger would benefit Central Jersey, it cannot work with without statewide support in the Legislature.
"This is tremendous for our area, but there has to be a North Jersey solution and a South Jersey solution," said Vitale.
Vitale said the merger of Rutgers and the UMDNJ campuses in New Brunswick and Piscataway could also have a component for Newark, merging NJIT with the New Jersey Medical School in Newark, allowing the medical school to "combine with NJIT's technical component," he said.
Lesniak said he has spoken with officials at NJIT, and they support the concept.
Vitale suggested South Jersey could benefit with a merger of UMDNJ's facilities in the Camden area and the Camden campus of Rutgers.
Some area lawmakers fear the scandals might cause a personnel drain.
"The publicity has been so terrible — we run the risk of losing key people," said state Sen. Barbara Buono, (D-Middlesex. "We already lost Dean (Harold) Paz."
Earlier this month, Paz stepped down as dean of the medical school to accept the position of chief executive officer of the Milton S. Hershey Medical Center at Penn State University and as dean of its College of Medicine.
The Penn State model — having a medical school connected to the state university — is common throughout the United States.
"Every high-end state university has a medical school," said Buono.
"It is not a matter of us just competing with other states. We could have something better," said Vitale.
Rick Malwitz: (732) 565-7291
posted by Jones Lang LaSalle NJ News Blog at 10:21 AM
Particularly on the winding exit from northbound Route 287 to Route 80 West, the site of numerous truck rollovers, the 287/80 interchange in Parsippany has long been a trouble spot in Morris County. There is a plan to improve the interchange, with ramps being realigned and relocated to improve traffic flow. If all goes well -- always a big "if" on big-ticket transportation projects in New Jersey -- work will begin in the fall of 2008.
On Thursday, the state Department of Transportation will hold a four-hour public information meeting on the project at the Parsippany municipal building. The project manager, George Worth, will run the meeting.
One question he might not be able to answer is this: Will lawmakers find a way to shore up the state's dwindling Transportation Trust Fund in order to pay for the $67 million, two-stage project?
"This is good news for us who use the roadways, but is it a done deal?"AAA New Jersey spokeswoman Pam Fischer asked of the project.
Thursday's meeting will begin at 3:30 p.m. There's one other highway nuisance, though not part of the project, that planners might want to consider in the future. Upon exiting Route 80 to Route 287 South, it is way too difficult to get over to the right lane to exit onto Route 10.
posted by Jones Lang LaSalle NJ News Blog at 10:20 AM
Corporate Office Properties Trust Sells 57,000 Square Foot Building Within Its New Jersey Portfolio
COLUMBIA, Md.--(BUSINESS WIRE)--March 29, 2006--Corporate Office Properties Trust (NYSE:OFC) announced the sale of a 57,000 square foot office building for $9.7 million, located at 68 Culver Road in Cranbury, New Jersey, in the Exit 8A submarket. The property is located within the Princeton Technology Center, a four building complex.
"This sale represents the continuation of our Company's strategy to dispose of assets located outside of core markets and provides the opportunity to recycle capital into acquisitions and development in our higher growth markets," stated Randall M. Griffin, President and Chief Executive Officer of Corporate Office Properties Trust. "We have sold $27 million in properties year to date versus our stated annual goal of $100 million," he added.
Company Information
Corporate Office Properties Trust (COPT) is a fully integrated, self-managed real estate investment trust (REIT) that focuses on the ownership, management, leasing, acquisition and development of suburban office properties located primarily in submarkets within the Greater Washington, DC region. As of March 29, 2006, the Company owns 182 office properties totaling 14.6 million rentable square feet, which includes 19 properties totaling 963,000 square feet held through joint ventures. The Company has implemented a core customer expansion strategy that is built around meeting, through acquisitions and development, the multi-location requirements of the Company's existing strategic tenants. The Company's property management services team provides comprehensive property and asset management to company owned properties and select third party clients. The Company's development and construction services team provides a wide range of development and construction management services for company owned a wide range of development and construction management services for company owned properties, as well as land planning, design/build services, consulting, and merchant development to select third party clients. The Company's shares are traded on the New York Stock Exchange under the symbol OFC. More information on Corporate Office Properties Trust can be found on the Internet at www.copt.com.
posted by Jones Lang LaSalle NJ News Blog at 10:20 AM
Exec-Suites Firm Leases 18,000 SF By Eric Peterson Last updated: March 28, 2006 11:13am
EATONTOWN, NJ-Main Office Executive Suites is set to move into two-thirds of the second floor, or about 18,000 sf, of the three-story, 80,000-sf 12 Christopher Way here. The lease caps more than 60,000 sf of recent leasing activity at the site, leaving less than 10,000 sf still on the market at an asset that was once nearly vacant.
At one time, defense contractor Mitre Corp. was the building's major tenant, occupying more than 60,000 sf. "Mitre informed the owners that they were going to vacate the building upon expiration of the term," says Doug Richter of the locally based Richter Organization, the asset’s exclusive leasing agent. "We saw it as an opportunity to repurpose the building and build a recession-proof tenant roster."
In the past two years, according to Richter, the building has "undergone a major capital improvement and marketing transformation." Besides Main Office, new tenants include Delta Financial Associates; Technol Fuel Conditioners; DSCI; and an eatery, Café Christopher. The remaining space, a unit of 2,875 sf and a 7,000-sf block that includes a research lab, is currently listed on Richter’s website with an asking price of $26 per sf plus tenant electric.
posted by Jones Lang LaSalle NJ News Blog at 10:19 AM
Law Firm Takes 31,000 SF at Carnegie Center By Eric Peterson Last updated: March 28, 2006 12:53pm
PRINCETON, NJ-The law firm of Pepper Hamilton LLP has signed a lease for 31,000 sf at 301 Carnegie Dr., a four-story, 127,500-sf class A building here. The initial lease is for a five-year term. The firm will relocate from its existing 25,000-sf location in Alexander Park, also in Princeton.
The asset, located at one of the two main entrances to Carnegie Center, is owned by Carnegie Investors LLC, an affiliate of the Philadelphia-based BPG Properties Ltd., formerly Berwind Property Group. BPG was represented in-house while the tenant was represented by Jerry Fennelly and C.J. McCourt of NAI Fennelly, Hamilton.
Pepper Hamilton is a multi-practice law firm with 400 lawyers in a half-dozen states and Washington, DC. The firm’s Princeton office, currently with 50 staffers including 25 lawyers, was formed in 2001 when lawyers from the firm of Jamieson, Moore, Peskin & Spicer combined their practices with Pepper.
Acquired by the BPG affiliate in late 2004, 301 Carnegie has since undergone a capital-improvement program. The Pepper Hamilton signing leaves approximately 55,000 sf still available, with managing principal James Scanlon, associate Todd Elfand and managing director Kevin Carton of Newmark Knight Frank handling the marketing.
posted by Jones Lang LaSalle NJ News Blog at 10:19 AM
Onyx Buys 60,000-SF Office By Eric Peterson Last updated: March 28, 2006 03:16pm
GLEN ROCK, NJ-Onyx Equities LLC has added the office building at 266 Harristown Rd. to its portfolio, buying it from the Englewood-based Burt Ross Realty. The Woodbridge-based Onyx paid $6.7 million for the three-story, 60,000-sf building, a number that factors out to just under $112 per sf.
"This is a great value-added investment for Onyx," says Robert Donnelly, Jr., associate director with Cushman & Wakefield’s Metropolitan Area Capital Markets Group in East Rutherford. Donnelly co-brokered the sale with the MACMG’s executive director Gary Gabriel.
"The third floor is available for the first time since the building’s completion" in 1982, Donnelly says. "That presents an attractive lease-up opportunity for the new owner. Within this submarket, the building can cater to tenants from 1,000 to 20,000 sf. The building’s location and flexibility have contributed to the property’s historically high occupancy rate."
The building’s current tenant roster includes National Risk Services, an insurance and workmen’s comp firm; the Korzik Group, another insurance company; the Goldstein Group, a retail brokerage and development firm; Atochem Inc.; and several law firms. Available space in the building is currently listed online with an asking price of $23 per sf. The building itself is located at a four-way interchange of Route 208 in Bergen County, near several other major highways.
"Middle-market investment sales transactions under $15 million, like this one, represent a growing area of business for us," Donnelly says, noting that his group has expanded its focus in that direction. "Strong bidding interest in properties like 266 Harristown Rd. illustrates the potential of this niche."
posted by Jones Lang LaSalle NJ News Blog at 10:18 AM
LaSalle Investment Buys Vancouver Office Building March 28, 2006 By Russ Colchamiro, Executive Editor
Doing what few U.S.-based companies have done before, LaSalle Investment Management has acquired an office property in Vancouver. Chicago-based LaSalle Investment Management purchased 777 West Broadway (pictured), a 75,000-square-foot, 12-story office building with retail on the ground, from an institutional investor for almost $22.8 million, or about $304 per square foot. The deal closed March 1, but wasn’t announced until yesterday.
"We’re a relatively small landlord here, although we intend to get larger," LaSalle Investment Management senior vice president Peter Martin told CPN today. He noted that there are strong fundamentals on the demand side in regard to Vancouver office properties, but limited supply.
But with Vancouver as host of the 2010 Winter Olympics, "we are seeing increasing demand for all property types. (The games) provide a lot of international exposure to our market," he explained.
"There’s certainly potential for outside investment," noted Greg McPhie, managing partner for the British Columbia practice with NAI Commercial, the Canadian affiliate of NAI Global. While U.S. acquisitions are uncommon in Vancouver, he pointed to a transaction that closed in September, wherein Seattle-based Goodman Real Estate Inc. purchased the Hotel Georgia and the 3750,000 square feet of developable land adjacent to it, for about $55.6 million U.S.
"Just like all of the U.S. West Coast, our market is characterized by lack of supply and few AAA office transactions each year, with smaller tenancies," McPhie said. "Foreign investors are a relatively small part of the investment equation here. They are competing against Canadian investors and a lot of high net worth investors from Asia. Which is what makes this deal notable."
posted by Jones Lang LaSalle NJ News Blog at 10:18 AM
Warehouse where there was landfill San Francisco company seeking to build on old PJP site Ricardo Kaulessar Reporter staff writer
WAREHOUSE REPRESENTATIVE - Robert Cavanaugh, former Jersey City councilman and attorney for San Francisco company AMB, at last Tuesday’s Planning Board meeting. Standing to his left is city planner Robert Cotter.
The site of an underground chemical fire that burned for years is being considered as the location of a massive warehouse.
The old PJP landfill, a 46-acre property between Sip and Duncan Avenues off Route 1/9, stretches to the Hackensack River on Jersey City's west side. It is slated to be the future home of an 883,000 square-foot high cube warehouse to be built by San-Francisco based AMB Property Corporation, an owner and operator of industrial real estate.
The proposed Pulaski Distribution Center would also have 36-foot ceilings, an "early suppression fast response" sprinkler system, 158 loading docks, 344 parking spaces, and 192 trailer storage spaces.
The center is projected to employ 300 to 400 permanent jobs and is expected to operate on 24-hour/7 day a week schedule.
An AMB representative recently that if the warehouse receives approvals from the city, construction will start in spring 2008 and completed by 2009. First, there has to remediation of the site.
AMB is currently under contract to purchase the land from its current owners, the Roman Catholic Archdiocese of Newark.
But there are concerns by neighbors over the warehouse being built in that particular location, which led to the City Council at last week's meeting tabling an ordinance to allow its construction until residents met with the developers.
City changing zoning
So far, the City Council has helped forward the development of the warehouse by introducing an ordinance at a March 8 meeting to change the city's land development law to allow for such a structure to be built in an area zoned as the city's Waterfront Planned Development district. Also, the Planning Board, at its meeting on March 14, approved the changes to the land development law so that the City Council could consider approving the ordinance at last week's council meeting.
Several residents living near the proposed warehouse site appeared at the Planning Board meeting. They told the board that they should ensure that representatives of AMB conduct a meeting with the residents on the project.
One of them was Marty Budnick, who lives a few blocks from the site. One of Budnick's concerns was that he remembered the site burning for years.
The underground fire was finally put out in 1985 by the NJ Department of Environmental Protection.
"I have my concerns about the project, but I want to hear what the developers have to say before I make any judgments," said Budnick after he spoke to the Planning Board. City planner Robert Cotter told the Planning Board that there is remediation plans already approved that would include a 30-feet pile of soil that would be a "cap" to prevent leaching of any chemicals, but those plans would need to be changed because of the construction being considered.
Bill Connelly, a nearby resident and brother-in-law of Mayor Jerramiah Healy, said it was a "perfect project at a perfect time."
Jeannette Biondo, who lives with her husband four blocks from the site, said she suffers from industrial asthma and is worried about the construction and the trucks.
The Planning Board requested that AMB representatives meet with the community and that an independent traffic study be paid for by the developers, who had already commissioned their own traffic study.
The attorney for AMB, Robert Cavanaugh, said his clients would agree to the board's requests. That was confirmed by Ward B Councilwoman Mary Spinello at last week's council meeting, who asked the ordinance allowing for future construction of the warehouse (which would be built in her ward) to be tabled for a future council meeting that would take place after the developers met with residents. The council went ahead and complied with her request. Ricardo Kaulessar can be reached at rkaulessar@hudsonreporter.com.
posted by Jones Lang LaSalle NJ News Blog at 10:16 AM
Mixed-Use Project Aims to Revitalize March 29, 2006; Page B6
Long Island's Nassau County, facing sluggish job and population growth, is planning a mixed-use project aimed at developing a central core in one of the country's oldest and wealthiest suburban regions.
The $1.6 billion project is slated to include a $200 million renovation of the aging Nassau Veterans Memorial Coliseum, home of the New York Islanders hockey team. Also on tap: a minor-league baseball stadium, a hotel, as much as one million square feet of office space, retail space and about 1,700 residential units -- with 340 of those slated to be affordable.
A joint venture has proposed renovating the existing Nassau Veterans Memorial Coliseum as part of a larger $1.6 billion project.
The pedestrian-friendly project will be a boost to "this great suburb that has not had the ability to develop a center," says Scott Rechler, chief executive of Reckson Associates Realty Corp. The Melville, N.Y., company is financing the project with Islanders owner Charles Wang. Earlier this month, the joint venture was tapped by County Executive Thomas Suozzi to develop the 77-acre county-owned parcel that is covered mostly by parking lots.
Mr. Suozzi, a Democratic candidate for New York governor, says the project is part of a broader vision for a "new suburbia" that will help prevent Nassau's younger people from fleeing the congestion and higher taxes that he says are part of being a middle-aged suburb. Mr. Suozzi, who has said the project will broaden the county's tax base, expects construction to begin in about two years.
Nassau County, which stretches just east of John F. Kennedy International Airport to the less densely populated Suffolk County, is home to about 1.3 million residents. In 2005 an estimated 17.5% of Nassau County households -- or 78,816, the seventh-highest county total in the U.S -- had net worths of $1 million or more, excluding the value of their primary residences, according to a division of TNS, a London-based research firm.
Nassau's median home price rose in December to $482,000, well above the national median of $213,000, according to Moody's Corp.'s Economy.com. Nassau's employment level fell in June by 0.1% from a year earlier compared with the national gain of 1.5%, according to the Bureau of Labor Statistics' most recent data.
Partly owing to its proximity to the economic engine of Manhattan, Nassau boasts a robust commercial real-estate market despite the region's above-average housing costs. While fourth-quarter office vacancy rates ticked up from a year earlier due in part to bank consolidations, Nassau remained the healthiest suburban office market in the tristate New York region with a vacancy rate of 10.8%, according to CB Richard Ellis Inc.
Office properties fetched average prices of $188 a square foot last year, in line with the national average of $190, according to Real Capital Analytics Inc. Philip M. Heilpern, senior vice president with CB Richard Ellis in Woodbury, N.Y., says prices are held down by comparatively high property taxes. Strong demand has prompted some companies to convert warehouses into offices, pushing some industrial users seeking newer space and lower taxes into Suffolk County, says Mr. Heilpern. He says property taxes on office properties in Nassau County range from $6 to $10 a square foot, compared with $3 to $5 in Suffolk County.
The retail market in Nassau and Suffolk counties, fueled by high incomes, also remains strong. But some experts say brisker job growth is needed to sustain retail growth. Asks Pearl M. Kamer, chief economist for the area's largest business organization, the Long Island Association Inc., "At what point does an excess of retail space clash with limitations on purchasing power?"
posted by Jones Lang LaSalle NJ News Blog at 10:16 AM
After two decades in the same location — a town house on 57th Street just west of Fifth Avenue — Ascot Chang, a retailer of custom-made shirts that cost as much as $650, found itself facing an uncertain future. The building had a new owner and the store's $40,000-a-month lease was set to expire in 2007.
So, like an apartment dweller eager to break free from the risks of renting, Ascot Chang decided to buy its own storefront. Recently the company, which is based in Hong Kong, agreed to pay $4 million for 4,700 square feet of ground-floor space at the former Intercontinental Hotel on Central Park South. The hotel is being converted into residential units.
"It's the Chinese mentality," said Thomas Yu, the general manager of United States operations for Ascot Chang, which also owns its store in Beverly Hills. "We'd rather own our own store so that we don't have to move all the time." The purchase is expected to be completed in May.
It is still relatively rare in this country for retailers other than big-box chains like Wal-Mart and Home Depot to own their real estate. But with the wave of conversions, especially in New York, developers who specialize in residential or office construction are increasingly carving out a separate condo for their ground-floor space and putting it on the market. Prices for these retail spaces — usually sold as condos, but occasionally as co-ops — are rising rapidly.
According to Real Capital Analytics, a New York real estate company that tracks transactions of $5 million or more, $1.2 billion worth of retail condos across the country were sold in 2004 and 2005 combined, compared with $120.8 million in 2002 and 2003. From 2001 to 2005, the average sales price rose from $441 a square foot to $995 a square foot, said Robert M. White Jr., the company president.
"I think the high pricing that's been achieved by some of these retail condos is going to cause more investors to look real hard at their retail space," Mr. White said. "More of them will create retail condos and sell it off separately."
Hessam Nadji, the managing director of research services for Marcus & Millichap, an investment brokerage company based in Encino, Calif., has identified about 250 retail condos on the market across the country. Of those aimed at retailers, rather than investors, the average asking price is about $285 a square foot, he said.
Brokers say that more of these properties are coming on the market. "It used to be that developers would hold onto the retail when they converted the building," said James P. Nelson, a managing partner at Massey Knakal, an investment brokerage company that specializes in smaller New York properties, "but now they see that when space is vacant, they can get a premium."
Stephen L. Glascock, the president of Anbau Enterprises, the developer of 110 Central Park South where the Intercontinental once operated, said his investors had always planned to sell the retail space. "We're not in the retail business," he said. "We're in the business of residential development."
Some sellers are seizing the moment. After holding onto 18,000 square feet of retail space with small neighborhood stores at 275 and 295 Greenwich Street in TriBeCa for nearly two decades, the Shaw Company of Chicago decided last year that it was time to sell, said Bruce Sinder, the president of Sinvin Realty, which represented Shaw.
A new project is rising across the street that will have a Whole Foods store, and several of the existing leases are about to expire, Mr. Sinder said. A company owned by the developer Donald Zucker bought the retail condo in December for $13.75 million. "He was buying for the future," Mr. Sinder said.
Retail condos attract several types of buyers. Some seek to defer payment of capital gains by exchanging property of similar value under Section 1031 of the federal tax code, as the Shorenstein family of San Francisco did last year when it bought the Borders Books space on 57th Street and Park Avenue for an undisclosed price.
Others are foreign retailers, accustomed to owning real estate in their home countries. Parasuco Jeans, a Montreal company that sells jeans for $150 to $800, is about to open its first United States store in 6,000 square feet of ground-floor space in a former bank building at Spring and Lafayette Streets in SoHo.
"Why throw money away on rent if you can own the place?" said Salvatore Parasuco, the chief executive of the company, which bought the store for $8.5 million from Leviev Boymelgreen, the developer that converted the rest of the building into residential condos. Some foreign retailers are so eager to acquire real estate that they are willing to become residential landlords or move to less-than-ideal locations. Custo Barcelona, an apparel chain based in Spain, recently bought a four-story building on Columbus Avenue and 71st Street with apartments on the three upper floors, said Joshua Strauss, a managing director at Robert K. Futterman & Associates, a retail brokerage company.
Custo Barcelona also owns a retail condo on Broome Street. "Broome Street is not the best location," he said. "You'd rather be on Broadway. But they still want to buy, and only buy."
Most of the costliest retail condos, however, are being sold to real estate investors. One of the most active buyers is the publicly traded Vornado Realty Trust, which set a record — $6,647 a square foot) — last May when it paid $113 million for retail space in the former Westbury Hotel, a residential conversion on Madison Avenue at 69th Street, that is leased until 2018 by the luxury retailers Cartier and Gucci.
Even condos with less glamorous tenants are commanding high prices. Storefronts on Lexington Avenue and 59th Street that are leased to the Gap and Banana Republic recently sold for $2,800 a square foot.
Chain stores based in this country are not in the habit of owning their real estate, brokers say. "Americans don't do it because it takes away capital they need to expand their business," said Alan Victor, an executive vice president of the Lansco Corporation, which represents tenants. "Most would rather open another store and generate more revenue."
One United States company that prefers owning to renting is Valley National Bank of Wayne, N.J., which has nine branches in Manhattan and four more set to open this year. Banks have been rapidly expanding in Manhattan, paying annual rents of $200 a square foot or more.
Gerald H. Lipkin, the chief executive of Valley National for the last 17 years, said he liked the predictability that goes along with ownership. "If you own, you've locked in your fixed costs for eternity," he said. And what if the branch fails at that location? "So I sell it," he said.
For the most part though, retailers who own their space tend to be local entrepreneurs, Mr. Nadji said.
Several years ago, Howard A. Ellins and his wife, Jocelyn Serfaty, decided to turn a longtime interest in Asian antiques into a retail business. It took two years for them to find a retail condo in the right location for their store, Abhaya Home Furnishings, but eventually they bought a 5,000-square-foot space at 145 Hudson Street in TriBeCa for $1.8 million.
Had they rented space, the lease would have expired in a few years, forcing them to confront the higher rents that have accompanied the neighborhood's escalating residential prices, said Mr. Ellins, who retired this year as a litigator at Davis Polk & Wardwell. "This was the more sensible way for us to go at it," he said.
Copyright 2006The New York Times
posted by Jones Lang LaSalle NJ News Blog at 10:16 AM
Fed Panel Raises Rate to 4.75% By EDUARDO PORTER WASHINGTON, March 28 — At Ben S. Bernanke's first meeting as head of the Federal Reserve's policy-making committee, the watchword was no surprises.
As expected, the Federal Open Market Committee raised the benchmark federal funds rate on Tuesday by a quarter of a percentage point, to 4.75 percent, and suggested that at least one more increase was in the cards. It was the 15th such increase in consecutive meetings of the committee.
In its statement describing the decision, the central bank veered little from the Fed's prior assessments of the economy and the expected path of monetary policy, underscoring Mr. Bernanke's stated intention to maintain the course set by his predecessor as Fed chairman, Alan Greenspan.
Despite its predictability, the Fed's statement still modestly unsettled financial markets, bolstering the dollar in foreign exchange markets and sending the prices of stocks and government bonds lower. The broad Standard & Poor's 500-stock index fell 0.64 percent, to 1,293.23. [Page C9.]
Though virtually all investors expected the rate increase, a substantial minority of operators on Wall Street had held hopes that the Fed would indicate that it would be the last one in the cycle that began in June 2004, when the benchmark rate stood at 1 percent. They were disappointed by the clear suggestion that the Fed still saw the need for further tightening.
"He was paving the way for another rate hike," said Mickey D. Levy, chief economist at Bank of America. "He knew full well that with this type of language the market would price in a hike to a 5 percent funds rate."
The Fed's statement relied on words nearly identical to those used after the committee's previous meeting in January, Mr. Greenspan's last after 18 years as head of the central bank. It said that "some further policy firming may be needed" to keep inflation under wraps.
It pointed out that the economy was growing robustly after a slowdown in the fourth quarter of last year. It noted that core inflation, beyond food and energy, had ticked up only modestly, but it warned that the rising prices of energy and other commodities could add to inflation pressures in the future.
Though the committee's statement was pored over by financial analysts for any hint of the new chairman's intentions, the market tremors appeared to have little to do with the new management at the Fed.
Mr. Bernanke is expected to put his own stamp on the central bank eventually. He has long said that he supports more transparency, letting the markets know more clearly how the Fed reaches its decisions and what is the expected path of policy. He has argued in favor of setting a specific inflation target — within a range — to make explicit the Fed's goals.
He apparently judged Tuesday not to be the day for bold moves, however. Untested as Fed chairman, Mr. Bernanke had a clear interest in projecting continuity with the Greenspan Fed.
At most, the new statement provided a mere hint of Mr. Bernanke's desired transparency. "It was the same policy message but with a little innovation in communication," said Laurence H. Meyer, a former Fed governor who is now an economic forecaster at Macroeconomic Advisers in Washington.
The whiff of change came in the second paragraph of the Fed's five-paragraph statement, the passage often referred to as the "snapshot paragraph," in which the committee assesses current economic conditions. It offered a somewhat more detailed analysis of current conditions than the one issued in January.
Significantly, it calmed fears that wage increases might spur inflation by pointing out that productivity gains were holding down the growth in labor costs.
At the same time, the Fed went beyond the expected description of the economy's current status to elucidate what it saw as its likely future path. "Economic growth has rebounded strongly in the current quarter," it said, adding that growth appeared "likely to moderate to a more sustainable pace."
Mr. Bernanke comes to the helm of the nation's central bank at a delicate moment for monetary policy. Since the Fed started increasing interest rates, financial markets have come to expect a quarter-point rise in interest rates at pretty much every committee meeting.
But after 15 consecutive rate increases, the cycle of monetary tightening is reaching its peak as interest rates approach what is seen as a "neutral" rate that is not so high that it slows economic growth but not so low that it allows inflationary fears to come back to life.
With underlying inflation at 1.8 percent, excluding food and energy, the Fed's preferred measure is still within the range of 1 percent to 2 percent considered comfortable by most officials. That leaves the Fed debating how far to raise rates merely to counter the risk of higher inflation as opposed to the reality of prices rising too fast.
In a note to investors, a Goldman Sachs economist, Andrew Tilton, said that "the potential for disagreement on policy decisions increases now that the Fed is roughly at 'neutral' and the data become more important."
With the economy growing at a healthy clip but facing the potential headwind of a weakening housing market, the decision on when to end the cycle of rising interest rates will not be trivial.
The outlook for inflation is slightly worse than in January, with increases in producer prices and consumer price inflation. Payrolls have expanded by some 200,000 a month and retail sales have grown sharply.
Fed economists have argued that a slowing housing market is likely to dampen overall economic growth. Housing, however, is not sinking yet. Sales of existing homes rose in February, housing starts remain strong and by some measures home prices are still rising.
In testimony to Congress last month, Mr. Bernanke argued that in coming quarters the Fed's policy-setting committee "will have to make ongoing, provisional judgments about the risks to both inflation and growth, and monetary policy action will be increasingly dependent on incoming data."
Given such uncertainties, mused Ethan S. Harris, chief economist of Lehman Brothers, "Bernanke moved into the job right at the time it got interesting."
Copyright 2006The New York Times
posted by Jones Lang LaSalle NJ News Blog at 10:15 AM
The very near future, that is, for six areas where technology is transforming business in dramatic fashion. CFO Asia examines what finance executives can do to manage the change. Cesar Bacani, CFO Asia
March 27, 2006
Inside Hewlett Packard's CoolTown IT-prototypes showcase in Singapore, Des Yee is in full steam. "This has a biometrically sealed chip," he says, holding up an ordinary looking ID card. "During the personalization process, we scan your thumbprint, capture your signature, take a three-point biometric picture of your face, put in a PIN number or even do a DNA swab for encoding on this chip. Then, depending on the level of security required by your company, this machine will read your thumbprint and compare it with what is embedded on the chip, or your signature, or your face or your DNA swab. Pretty scary, huh?"
Yee, who is director technologist for Asia Pacific and Japan of Hewlett-Packard (HP), the U.S. IT-solutions company, moves on to a new radio frequency ID (RFID) application. "You can now tag brochures, medical records, or whatever paper-based applications you have and put an RFID tag on a tag on a tag on a tag," he says, pointing to a document tray filled with a pile of brochures. "Previous to this, you could not do that, for the reason that if you put an RFID tag on top of itself, it will conflict. This in-tray, developed by Magellan Technology in Australia, can read all the tags inside it. A middleware allows your computer to communicate with the tray and tell you which documents are in there."
Is this Asia's future office? Better believe it. Perhaps DNA-capable ID systems are not for everyone, but RFID-tagged top-secret contracts and several years' worth of tax documents are certainly useful in any firm. And what about an executive PDA that is not only e-mail-capable, but also shows the latest financial statements, sales, inventory levels, and other real-time data while you are on the move? "Our MC50 enterprise digital assistant has a faster processor and more memory than a PDA and can go 10 to 12 hours without a recharge," says Mike Muller, president of Symbol Technologies Asia. The gadget connects to ERP, CRM, and other business applications via a wireless local-area network that allows high-speed access to data within a few hundred feet from the base station.
More important than the James Bond gadgetry are ever more sophisticated software suites that predict future trends, allowing companies to try and forestall profit-sapping developments. "We have a Fortune 100 customer called Ingram Micro, which markets computer systems to interim sellers," says Richard Hale, analytics leader of IBM's worldwide team for business intelligence. "When salespeople turn on their computer in the morning, a dashboard comes up. If there's a red light, the system is predicting that a customer is showing characteristics that it is starting to buy computers from another company. So the salesman is alerted into paying special attention to that customer."
The Future Is Now
Ingram's sales dashboard is an example of a technology that's becoming widely available, developed by global vendors such as Cognos, Hyperion, IBM, and SAS. Indeed, some of the gadgets on show at HP CoolTown are already in limited adoption. The Hong Kong government, for example, is replacing citizen ID cards with embedded-chip ones containing thumbprints and photographs, though not DNA swabs. RFID is now in airports (that strip of plastic on your luggage has an RFID transmitter telling conveyor belts which carousel it should go to) and in Asian factories serving America's Wal-Mart, which requires its suppliers to use RFID tags. What this tells Asia's CFOs is that the future is just around the corner, and they should start preparing for it now. Some might think that their current systems are adequate, thank you very much. But it would be difficult to maintain that kind of thinking when competitors start making strategic decisions faster, come up with new products sooner, treat their clients better, and, most disturbingly, raid your own customer base more efficiently and effectively. Once one company crosses over, the playing field becomes uneven, and everyone else has to follow or perish.
It's not just an issue of operational edge. "I don't think young people today, when they start looking for work, would want to join a company that is less adequate (in terms of technology) than what they are used to at home and in school," says Singapore-based Michel Gambier, general manager of Microsoft's information worker business in Asia Pacific. The technologically challenged Asian office may end up with a second-rate workforce — and a third-rate bottom line.
So what is the CFO to do? The first thing, of course, is to know what's coming up the pike and see which ones are likely to be what their enterprise will need. CFO Asia spoke with analysts, developers, vendors, CIOs, and CFOs for clues on what may become standard technology in the enterprise environment over the next 5 to 10 years. We think the following areas of business operations are most likely to see technological changes, and therefore should be looked at seriously by CFOs.
1: Smart Cards
At Sun Microsystems in Hong Kong, employees use chip-embedded ID badges to open office doors. "I can visit a Sun office anywhere in the world and enter the premises with this card," says Audrey Lam, a marketing specialist at Sun in Hong Kong. What's more, she can use the same badge to access her own files wherever she is in the Sun world. The company uses a thin-client computer system whose processing power and storage lie with central servers, not the usual desktop PCs with their own central processing unit and hard disks. So a staffer can slip his ID card into a slot in any Sun office computer and access his desktop, enabling him to work in whichever city he happens to be.
That same smart card is on track for many more uses. "We are introducing cards that have 500 megabits of memory on them," says Martin McCourt, president for Asia of Luxembourg-based smart card technology provider Gemplus International. "So essentially you've got a hard drive in the card, and one that is secure. You can put a thumbprint in there, photographs, your entire phone book." And even DNA information. The HP system that Des Yee was putting through its paces, which Bulgaria is adopting for its national ID system, has the option of a DNA reader. You swab saliva from inside a person's cheek, put the cotton tip in the reader along with the smart card, and the system will tell you in minutes whether the person is who he says he is.
Only the most security-conscious company will go the DNA route. Of more general interest is the use of the smart card to access employee desktops at home or wherever else they are (not just in any office location, as is the case with Sun Microsystems). Currently, some companies allow employees to access company resources outside the office through the internet and the use of a password system. A smart card, slipped into a reader connected to the PC, makes for added security, since the user will need to physically possess the card and use his password. A third safeguard is a thumbprint reader, making sure the person accessing the company portal is indeed the employee.
You can load the smart card badge with other features, such as an RFID tag. (This tag is a tiny radio transmitter that comes in a variety of forms, including one that can withstand 275 degrees centigrade heat in an oven, used in automotive parts, and another that utilizes conductive ink instead of copper for the antenna.) It will then be possible for the office system to know where an employee is at any given moment, assuming he is wearing his ID badge. This was put in practice in Singapore during the SARS scare in 2003. Through RFID tags, suspected victims of the disease were continuously tracked during their hospital stay, allowing doctors to quarantine everyone who had contact with patients later confirmed to be SARS-positive.
Privacy concerns and cost will probably limit the use of RFID on ID badges to hospitals and high-security environments, but the capacious smart cards may be used widely as laptops, tablets, PDAs, and other mobile devices are allowed access to business applications and confidential company data outside the office. "One of the things I see going forward is that people are going to be more and more mobile," says McCourt. "The challenge for the company is to make certain that whoever is trying to access company resources through the mobile-phone networks, say, is really authorized to do so. So there you can use smart cards to authenticate the user."
2: Enterprise Portals
The move to mobility is supported by the migration of company applications and data to the internet. "We're seeing a lot of companies in Asia investing in an enterprise portal," says Lai Kim Fatt, chief knowledge officer at NCS, the IT services subsidiary of Singapore Telecom. (It was Lai, then CIO of the Singapore government's Defense Science & Technology Agency, who developed the RFID-based monitoring of SARS cases.) A portal typically interfaces with customers, suppliers, and the public, but also stakes out a private intranet area for company executives and employees to access from inside and outside the office.
One building block is broadband, which allows speedy uploading by the company's enterprise portal server of applications and data and equally fast downloading and processing by staff. An indication of how ready Asian businesses are to embrace broadband — and thus migrate to the web — comes from a study by Dutch research firm Telecompaper. As of third quarter 2005, Hong Kong led the rest of Asia in broadband subscribers with 73 percent of all households, followed by South Korea with 67 percent. Penetration rates in Taiwan, Singapore, Japan, and Australia were in the 31 percent to 55 percent range. Chinese broadband subscriptions (6.6 percent of households) grew 90 percent from third quarter 2004.
Another driver of enterprise portal adoption is the rise of VPN — virtual private network — technologies. Banks and other high-security organizations use dedicated lines for their portals, but many other companies now have the cheaper option of utilizing the public internet. Security is provided by a VPN that either encrypts or encapsulates information before passing it on to the non-secure web, and does other things such as authenticate passwords.
More options are opening up as telecom companies join the fray. BT Group, the U.K. telecom giant, is introducing in Asia a menu of IT services that bypass the public internet altogether for mission-critical applications such as CRM software and data beamed wirelessly to a laptop. Instead, clients use BT's internet protocol (IP) global backbone and those of its partners, minimizing the danger, says the company, of the business getting hit by congestion or disruption on the public internet. And because BT and its partners have fixed-line, mobile, and wireless broadband infrastructure, clients can tap its services using any computing and phone device anywhere and anytime.
BT's solution anticipates the convergence of fixed-line broadband, wireless local area networks, and mobile roaming in the enterprise space, a trend that is gaining strength in cell phone-savvy Asia as current voice-and-text-only networks are replaced by 3G, which can handle streaming videos and high-volume data. "You talk to companies here about mobile wireless, and nine of ten, no, ten of ten, would be keenly interested," says Horace Chow, vice president for Asia Pacific of U.S. software giant Sybase. He expects worldwide spending on wireless infrastructure and application services to reach nearly US$60 billion in 2009, twice the total in 2004. This includes spending on WiMAX, which connects wireless local area networks with each other to allow high-speed access to data across an entire country.
3: Death of the PC? If office devices can access the enterprise portal anywhere via wireless broadband, does this mean the demise of the office workstation as we know it? After all, why should the company provide staff with both a desktop PC in a cubicle and a portable PC for mobile computing? One mobile PC for use inside and outside the office should be enough. Moving forward, what about a portable device combining computing, telephony, and ID authentication? A mobile phone activated by an authorized thumbprint is slipped into a "notebook PC" that is virtually just a screen, keyboard, and battery. Like the current thin-client system at Sun, processing and storage are done by the company's servers, accessed by the phone through a wide-area wireless connection such as WiMAX. The phone is slid out if the user wishes to make or answer a call.
Martin Gilliland, research director, client platforms, at Gartner in Singapore, sees cost savings driving the development of such a thin-client mobile device (though not necessarily one with a telephony component). "It's not a notebook because it doesn't have the motherboard CPU, a hard drive, and heat sink," he says. "You take a lot of cost out by reducing all that hardware expense. I'm guessing about 50 percent." But Gilliland doesn't expect thin clients to kill thick clients, that is, the present-day PCs with their own CPU and storage, at least in the next ten years. "The cost of the PC is coming down rapidly, while security and manageability are going up equally rapidly," he explains. "Developments from both hardware and software vendors are making its features and functions considerably more useful to the enterprise, such as 64-bit hardware and virtualization software."
Microsoft is leading the charge here. Gambier, the Asia Pacific general manager, says the software giant will launch this year a vastly improved Microsoft Office suite boasting new features such as business intelligence, and the new operating system Vista. "For the foreseeable future, we see the majority of organizations still using the thick client model," Gilliland concludes. "However, we expect the thin client model to grow faster."
But in the thick-client space, desktop PCs are expected to be eventually replaced by notebooks, laptops, and tablet PCs. "Enterprises will be going more and more mobile as the cost gap between desktops and laptops continue to narrow, and their capabilities converge," says Francis Kam, marketing director for Dell China. "The faster the costs go down, the faster will be the acceleration from desktop to notebook replacement." The total cost of ownership of a notebook versus a desktop is currently 30 percent to 40 percent higher, he adds, because of expensive mobility chipsets, batteries, cooling systems, extra-strong monitors, and robust chassis. Even so, says Kam, "we're seeing more and more of our customers replacing desktops with notebooks." Enterprise digital assistants (EDAs), such as those made by Symbol, are complements to notebooks, not replacements, chiefly because of screen size.
The cramped buttons are another inconvenience, but wireless full-size keyboards can help. At HP CoolTown, Yee demonstrated yet another alternative, a prototype attachment that beams a holographic keyboard onto any flat surface. Symbol's EDAs currently download enterprise applications and data only within the office, using the wireless local area network, but it is developing a model that links with mobile-phone networks. Users of this EDA will be able to access company applications anywhere and anytime, with the speed accelerated if downloading via a 3G network.
4: Internet Telephony
After putting in a broadband infrastructure, a company will have the option of voice-over-internet protocol (VoIP). This involves carving out a portion of the bandwidth for telephone calls. "You don't need to set aside too much, actually, because voice is only 3 to 4 KB," says David Tantana, business development consultant at software company Corebridge (Hong Kong). The firm, whose headquarters are in the U.K. and R&D center in France, reaps substantial savings because VoIP routes IDD calls through the internet, bypassing the networks — and fees — of traditional telcos.
Corebridge has also brought down its mobile roaming expenses, a by-product of the proprietary Corebridge Application Suite integrating telephony with data that it sells to other companies. "I spent virtually the whole day in Jakarta on my mobile phone calling overseas, and the bill came to just HK$45," says Neil Orvay, Corebridge's managing director and CFO. Through his phone's instant-messaging client, he accessed the company's Application Suite server in Hong Kong and instructed it to call his mobile phone and then patch him on to an overseas number. As a result, the phone company treated Orvay's call as originating from Hong Kong, not as pricey mobile roaming.
The Application Suite's main function is to put together the PBX phone system of a company and its databases, including CRM and email systems. The result is that whenever an office phone rings, the application server automatically brings up on the phone's associated computer all the information the company has about the caller, thus improving customer service and productivity. The system also captures information about all outgoing calls, email, SMS, and instant messaging, data that managers can mine to assess employee productivity. If a particular salesperson devotes 60 percent of his calls to customers that account for only 10 percent of revenues, for example, managers are alerted about the mismatch.
5: Business Intelligence
Business applications like Corebridge's are expected to become mainstream in the near future as Asian companies lay down basic broadband and wireless infrastructure, build enterprise portals, and implement ERP, CRM, and other enterprise software applications. All these transactional processes throw up huge volumes of information that can tell the company valuable things about future trends, deepen its understanding of itself, and generally sharpen its competitive edge — if the data can be mined, cleaned up, and analyzed. This is the business of business intelligence, or BI.
"Usage of BI in Asia Pacific is growing significantly," reports Matthew Mok, senior manager in Hong Kong, financial intelligence practice, for leading U.S. business analytics provider SAS. "In 2004, total revenue for the BI industry in Asia Pacific was US$230 million. By 2010, we will see spending on BI total US$600 million." Says John Kiesel, business unit executive, Worldwide Business Intelligence, at IBM: "You will see BI inside every application that's delivered to the desktop in five years' time in Asia. Business intelligence is available only to a company's business analysts today; tomorrow it would be available to everyone in the office."
Users will no longer need to frame queries and set parameters in order to get answers to specific questions, as business analysts do now. Instead, the BI software will analyze historical and real-time data continuously and alert staffers to potential problems through their laptop, EDA, and even mobile phone. "And not all BI is decision support," adds Hale, the IBM analytics leader. "Some really advanced BI will change the operation of the company automatically." One such system is already in place at some stores in the U.S. When there are bargain sales on beer, for example, the BI system will automatically increase replenishment orders for chips and pretzels. The BI software can also track employee performance, grade, and rank it, and publicly display the results. "Bank One in the U.S. was losing something like US$500 million a year because it was driven by revenue growth, not profits," Kiesel recounts. "When Jamie Dimon became its CEO [in 2000], he gave finance officers 90 days to put together a portal containing all the tools that would help branch managers improve their unit's profitability. The portal also had a BI application that ranked every manager based on his or her unit's financial results. The top performers got big bonuses. The bottom ones got canned." It was stressful but effective. "In two years," says Kiesel, "Bank One made US$3 billion in profit."
6: Virtual Collaboration
How people work will obviously change as a result of developments in office infrastructure, IT tools, and business processes. "They will free up the organization and enable it to have a worldwide labor pool, so you can use people from everywhere," says Kathy Harris, group vice president at Gartner. "The hottest workplace application will be collaboration." With high-speed access to enterprise portals, mobile devices, and a constant stream of company data, staffers can easily form and reform various working groups across the global organization, and even tap suppliers, customers, and other outsiders, as they go about their daily tasks.
Harris estimates that up to 80 percent of all knowledge sharing today is done through email, but she sees new collaboration drivers in instant messaging, blogs, wiki (a server software that allows anyone to create and edit web pages) and web conferencing. "Organizations can also engineer communities, such as those that build customer communities out on the web," she adds. "These customers talk and give each other advice about the company's products, pulling a lot of the work out from call centers and company agents."
Last year Microsoft issued an upgraded Live Meeting web conferencing service, which runs on any PC with an internet connection. "You can use Live Meeting with a camera, you can use voice, you can use document sharing, or everything at once," says C.K. Taneja, general manager in India of U.S. market researcher Greenfield Online. The system allows staffers from different parts of the world to collaborate on the same Excel spreadsheet, Word document, Powerpoint presentation, and other Microsoft applications, as well as PDF files. Every participant sees and can make changes to the document on his PC screen in real time.
The faces are tiny on a computer screen, but a Live Meeting session can be projected to a full screen in the office conference room. Taneja says he detects no time lag or synchronization problems if the session is hosted in the U.S. or Singapore, where Live Meeting has servers. "But there would be some time lag if you host in India, because Live Meeting does not yet have a server here," he adds. Live Meeting's competitors include WebEx, eCollaborate, and Cisco's MeetingPlace.
Coming up: virtual-reality conferencing. Working with Hollywood studio DreamWorks, HP is developing Halo, which requires special rooms with very high bandwidth connectivity and wall-to-wall projection screens. "You can have a user sitting here in Singapore and one in California and one in New York and essentially it looks like you are sitting in a single room talking to a group of people across the desk," says Steve Huhn, HP's worldwide vice president of IT outsourcing/managed services. "Halo is engineered to make people feel intimate, to have the ability for eye contact, and see facial expressions and body language."
These collaborative technologies work just as well with third-party providers, helping boost the trend of global multi-sourcing, in which companies hire a multitude of specialists from anywhere around the world to handle various business processes so they can focus on their core competency. By 2009, predicts Gartner, Asia Pacific companies will be spending US$7.8 billion on business process outsourcing, 79 percent more than in 2004, and US$15 billion on outsourced IT services, up 63 percent in five years.
Among the new service providers will be pay-as-you-go public grid computing centers. In March, Sun will open in the U.S. a "retail grid" with thousands of Sun Fire x64 servers. It will charge clients US$1 per CPU per hour to run complex calculations such as Monte Carlo simulations of risks and analysis of geological surveys.
Multi-sourcing should be helped along by virtualization technologies that make various databases running on multiple servers work as one. Virtualization will be extended to the hardware level this year when Intel ships VT chips that allow multiple applications to run in the same space. Users will see a single, unified interface that masks the complex of resources fueling the company's operations, from multi-location data centers to supplier and customer networks to global outsourcing providers. And because a company's servers and PCs are, in effect, one virtual machine, workloads can be parceled dynamically depending on which parts of the network are underutilized.
Your Move, CFO
How long do companies in Asia have before this tsunami of IT changes descends on them? Not that much, it appears. "In the old days, you spent millions on an IT project with a three- to four-year life cycle," says Sybase's Chow. "No one wants that today. Now, the treasury department wants this, credit cards wants that. They cannot wait for the entire organization to move. They need business intelligence, RFID, whatever, now, this minute." This poses a challenge to the CFO and the CIO, who have to make sure that the various systems can eventually be knitted together.
More and more, it is the business side, rather than the IT department, that drives technology adoption across Asia. Says Chow: "Some IT people tell me, 'If I know one more thing, I'm going to explode.' But the business people always show interest. They would say, 'That guy down the road is doing this, so I have to do it too.'" Often, IT simply executes what the business units decide to do, all the more reason for the CFO and CIO to keep lines open.
The good news is that companies that are reasonably up to date with their IT systems will need only incremental upgrades, not a total overhaul. "It's not like you have to change everything," says Lai of NCS. "You must be very clear about what is serving you well and which you don't have to change so much." The question of best-of-breed solutions versus one vendor responsible for everything will resurface with new urgency, as will the issue of open source versus proprietary software. Dion Wiggins, vice president and research director at Gartner, expects open-source software solutions to directly compete with closed-source products in all software infrastructure markets by 2008.
"Open source is already mature in key areas such as development tools, operating systems, and security," he says. "Directory services, management, and application services are a little bit behind, with relational databases further down." Wiggins notes the rise of Asianux, a consortium between Hansoft in Korea, Miracle Linux in Japan, and Red Flag Linux in China. The three-country coverage (with the prospect of more joining) may encourage global vendors to certify their applications on this open-source platform.
As they move forward, however, CFOs must not forget that machines do not determine success. As vice president for finance, Asia, at U.S. software company Computer Associates, Jeff Hunt has business-intelligence applications at his fingertips. "BI is very, very powerful because it gives you a view across your business with a dashboard, rather than having to go to 20 or 30 places and ask the same questions," he says. But has the system ever told him something that his gut instinct says is plain wrong? "Absolutely," says Hunt. As it was in the past and as it is today, the human software will remain the most important technology in the office of the future.
