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.
PREI Sells 450,000-SF Redevelopment Project By Eric Peterson Last updated: April 25, 2006 04:07pm
HAMILTON, NJ-Preferred Real Estate Investments is under contract to sell its 450,000-sf American Metro Center project here. The site is the redevelopment of a former American Standard manufacturing plant.
According to a published report, Lincoln Equities Group, Meritage Properties and Avenue Capital are teaming up to buy the property. PREI would not comment on the pending sale, and representatives of the buyers would not comment other than to confirm the pending sale. The Conshohocken, PA-based PREI bought the 112-acre site and its 750,000 sf worth of buildings nearly two years ago from the Piscataway, NJ-based American Standard, which had used the property for many years to make bathroom fixtures before shuttering it several years ago. The acquisition price was not released at the time, but industry sources put the number in the $50-million range.
PREI’s plan was to reduce the building stock to 450,000 sf and convert it into class A office space, replete with conference rooms, auditoriums, a fitness center and a full-service cafeteria. After a remediation effort to remove such contaminants as barium from porcelain glazes, that redevelopment remains under way and near completion.
The trio of buyers is headed by Lincoln Equities, based in Rutherford, NJ. Meritage Properties, meanwhile, is a New York City-based company with real estate holdings in major Northeast metro areas, and Avenue Capital is an investor group.
According to reports, the building is approximately one-third preleased. American Metro Center has been listed on PREI’s website with an asking rate of $23.50 per sf, compared to asking rates that are generally in the $26 to $30 range in the surrounding Route 1/Princeton area marketplace.
The center itself is within this township’s 1,000-acre redevelopment zone. A residential community of nearly 700 multifamily homes has been approved by township officials, although work has yet to begin on that. NJ Transit is also planning to redevelop state-owned property around the Hamilton commuter rail station within the zone.
And while the interior of American Metro Center is being converted from manufacturing to a class A office environment, the exterior will feature a touch of the past. PREI’s redevelopment is highlighted by a restoration of the building’s terracotta tile exterior, mosaic design work and red brick walls.
posted by Jones Lang LaSalle NJ News Blog at 11:36 AM
Polo Ralph Lauren Extends 161,000-SF Lease By Eric Peterson Last updated: April 25, 2006 09:50am
LYNDHURST, NJ-Polo Ralph Lauren has extended its lease for 161,000 sf of office space at Copper Ridge Center, signing on at least through 2019. Terms of the extension were not disclosed by landlord Wells Real Estate Investment Trust, which issued a statement reading, "Wells Real Estate Funds does not release details regarding transaction pricing."
In the transaction, the Norcross, GA-based Wells REIT was represented internally by senior vice president George Wells and associate asset manager Kevin Pell, and externally by Jon Meisel of Jones Lang LaSalle, Parsippany. Polo was represented by David Goldstein of Studley, Rochelle Park.
Copper Ridge Center, located on six acres at 9 Polito Dr. in the Meadowlands submarket, was completed in 1989. As reported by GlobeSt.com, Wells acquired the 10-story, 268,000-sf class A building in the summer of 2003, paying a reported $47 million, or just over $175 per sf for the asset. The seller was the Utah State Retirement Fund of Salt Lake City.
The New York-based Polo, which uses the location for its administrative and support operations, has been in the building since 1992. The apparel and accessories giant will continue to occupy approximately 60% of the asset, sharing the location with such other tenants as Mitel Networks and TeleCheck.
"Polo Ralph Lauren is among the leaders in its industry, and we’re very pleased to be able to serve their real estate requirements for another 13 years," Wells says.
posted by Jones Lang LaSalle NJ News Blog at 11:33 AM
Realtor Study Says Market May Be Cooling, but Slowly By VIKAS BAJAJ
The housing market is not slowing as fast as economists expected, according to a report yesterday, but some say the data suggest a more pronounced contraction in the next few months.
In a report that carried mixed signals, the National Association of Realtors said sales of existing homes edged up last month, the number of homes for sale rose markedly and prices increased more slowly.
Sales of existing homes, which make up about 85 percent of all homes sold, increased 0.3 percent in March, to an annual pace of 6.92 million. That was higher than the 6.9 million pace in February and the 6.57 million pace in January but lower than the 6.97 million pace in March 2005. Sales were up in the Northeast and Midwest but dropped slightly in the West and South. Economists expected sales to fall to a pace of 6.66 million, according to a survey by Bloomberg News.
The national median selling price — half the homes sold for more and half for less — was $218,000, up 7.4 percent from a year earlier. The increase was smaller than the 9.5 percent gain in February and the 11.7 percent increase in January.
The number of homes on the market rose 7 percent, to 3.2 million. At the current sales pace, that amounts to a 5.8-month supply, up from 5.5 months in February and four months in March 2005. Economists say the rising number of homes on the market makes it harder for sellers to demand higher prices, as buyers take advantage of greater choice and their increased bargaining power.
"The bidding fever that was present a year or so ago has all but disappeared, and that's another sign that this market is slowing," said Anthony Chan, chief economist at J. P. Morgan's private client services group.
Starting late last year, buyers and sellers of homes, particularly in the East and West Coast markets, appeared to be staring each other down. Many buyers, sensing a slowdown coming, said they were holding out for a better deal, while sellers, believing they still controlled the market, refused to cut their prices.
The increase in sales in February and March indicate that the standoff is easing as sellers cut asking prices to lure buyers, economists said.
Real estate speculators in particular were affected, said David Lereah, chief economist for the Realtors. In many Florida and California cities, he said, investors who bought condominiums and other property in a bid to make a quick profit are scrambling to unload them as interest rates rise. The average rate for a 30-year fixed mortgage was 6.32 percent in March, up from 6.25 percent in February. "They are all leaving at once, particularly in Miami and Naples and some of the California markets," he said.
Mr. Lereah said the small sales increases in the last two months were temporary. "Interest rates have gone up and we will see sales come down a little more," he said.
Separately, the Conference Board said that consumer confidence rose to its highest level since May 2002 as Americans felt more optimistic about the job market. The index registered 109.6 this month, up from 107.5 in March.
posted by Jones Lang LaSalle NJ News Blog at 11:32 AM
When GlaxoSmithKline began talking to Roche three years ago about commercializing the prescription diet drug Xenical, the timing could not have been better for Steven L. Burton. An executive with Glaxo's consumer heath care division, Mr. Burton had been overweight for years, carrying 270 to 275 pounds on his 6-foot-1 frame. Those measurements put him well into the "obese" category, a condition shared by 30 percent of American adults. And his doctor had just issued a stern warning to Mr. Burton.
"I didn't think seriously about a serious weight-loss program until I had a couple of kids and I had a doctor who was telling me pretty bluntly that it was time to do something about my blood pressure and high cholesterol and weight for the sake of my kids," he said recently. "That's pretty motivating."
Now Mr. Burton, 47, has the job of motivator in chief as Glaxo prepares to market an over-the-counter version of Xenical. During the last three years, while ramping up the marketing plans, he has been using the drug himself. And while he does not envision himself posing for the before and after shots in a diet ad, he can offer personal testimony to the drug's potential benefits. In his three years on Xenical, Mr. Burton said he has dropped to 210 pounds from 270, and kept it off.
Those results, he warns, are better than the drug's typical user will achieve because he has been particularly faithful to his regimen of exercise and diet. But he can hope his dieting success and good luck carry over to the challenge of turning the drug into a successful over-the-counter weight-loss product.
Xenical, sold by Roche in the United States since 1999, has had only moderate success as a prescription drug in this country.
Part of the problem has been what Mr. Burton refers to as the "oops" factor — the drug's potentially embarrassing side effects. They can include diarrhea, flatulence and episodes of incontinence.
The drug's popularity has also been hampered by the only moderate and, sometimes, fleeting, weight loss it typically yields — and the fact that many insurance companies do not cover its use. But Glaxo, which paid Roche $100 million and an undisclosed share of future revenue for over-the-counter rights to Xenical, is betting that Mr. Burton and his team can make a consumer version an attractive option for many of the two-thirds of Americans who are overweight. At stake is a piece of the estimated $15 billion annual market for weight-loss drugs and products. "Even a small percentage of that market is going to be a significant commercial opportunity," said Mr. Burton, who is vice president for weight-control products in the consumer health care unit.
Mr. Burton already has a track record in such efforts. Although he was never a smoker, he led Glaxo's successful over-the-counter introduction of the smoking-cessation products NicoDerm patch and Nicorette gum, which were sold only by prescription until 1996.
For Xenical, the Food and Drug Administration recently issued what is known as an "approvable" letter for over-the-counter sale of the drug, which Glaxo plans to market under the trade name Alli (pronounced al-EYE.)
The F.D.A. letter means the agency wants more information before the product gets final clearance. It can sometimes take weeks, months or — in some cases — years to answer those F.D.A. questions. Still, Mr. Burton said he was optimistic that Alli would be on drugstore shelves this year and at a price affordable to most Americans: $2 to $3 a day.
Drug companies increasingly are turning to over-the-counter versions of their brands to extend the product life and generate steady cash flow. But for a prescription drug to be cleared for over-the-counter sales, it must be proved safe even when misused by careless consumers. It is not rare to sink millions into a switch only to be rejected by the F.D.A.
Merck and Johnson & Johnson experience that last year when an F.D.A. advisory panel voted against their plan for the over-the-counter sale of Mevacor, a cholesterol-lowering drug. Glaxo recently abandoned an idea to take the nasal spray Flonase over-the-counter, following speculation that the F.D.A. would be reluctant to approve the commercial sale of a synthetic steroid-based spray.
Even if it receives final F.D.A. clearance, the gamble for Glaxo will be particularly uncertain given Xenical's marketing history. Despite its reputation as generally safe, and evidence that it helps people lose at least some weight, the product never became the blockbuster once envisioned.
Steven Francesco, who operates Francesco International, a pharmaceutical consulting business based in South Orange, N.J., said, "It never went very far on the prescription side, partly because they couldn't get reimbursement." Diet drugs are generally not reimbursed by insurance companies.
And diet drugs carry heavy negative image connotations, as a category that has included some of the most colossal failures of the pharmaceutical industry.
Nearly 10 years after the drug Redux was withdrawn, for example, the maker, Wyeth, is only now drawing near the close of $21 billion in litigation over Redux — which was half of the diet combination known as fen-phen that was found to damage heart valves and cause pulmonary hypertension.
Xenical has a generally clean safety record. But the consumer watchdog group Public Citizen recently called for its withdrawal, citing research that some scientists say links the drug to colon changes that can be precursors to formation of polyps and colon cancer.
A Glaxo company spokeswoman, Malesia A. Dunn, said long-term testing in humans had demonstrated no increased risk of colon cancer in the drug's users.
Despite Xenical's moderate success as a prescription drug, Mr. Francesco said that some lackluster prescription products had better potential on the over-the-counter market, where they can be sold in attractive packaging from drugstore aisles rather than dispensed by a pharmacist in amber plastic bottles. Xenical might be one of those.
"There are a lot of marketing opportunities for this on the consumer side which aren't available on the prescription side," Mr. Francesco said. "Glaxo paid a fortune. They saw the potential because they saw the benefits to a complete program."
Another industry marketing consultant, Gaurav Kapoor of the New England Consultancy Group in Westport, Conn., said that Glaxo's understanding of the consumer market should not be underestimated. "Obviously, Steve's no dummy," Mr. Kapoor said. "He's got a whole group who's doing a lot of research on this."
At Glaxo, Mr. Burton envisions Alli being sold at free-standing drugstore kiosks along with a colorful kit containing 250-page booklets with diet advice and meal plans, calorie counters and dining-out guides. Consumers would also be able to sign up for a free online behavioral support program, along with e-mail newsletters and chat rooms where people can trade stories of their diet successes and lapses.
Already, the company has started a Web site, QuestionEverything.com, where dieters can post comments and take part in surveys — an advance look at what the Web-based marketing might look like.
Full details of the Alli marketing plans have not been released. But if past is prologue, here is a clue: Shortly after the introduction of Nicorette and NicoDerm, Glaxo's NicoVan traveled the country advising patients on how to quit smoking. The products quickly grabbed 90 percent of the $575 million smoking-cessation market.
Emphasizing that the drug is not a magic pill, Mr. Burton said the company would look for committed consumers — those who are ready to make long term changes in the way they eat and exercise.
Mr. Burton also said the campaign would very clearly warn consumers about the drug's side effects, like flatulence and diarrhea, that become worse when the drug is taken along with a high-fat meal.
"I'll never forget having a fish sandwich and loading it up with tartar sauce and having French fries," Mr. Burton recalled. Luckily for Mr. Burton, what he refers to as his "classic oops" episode happened on a Saturday when he was running errands, not during an important meeting. So he simply ran home to change clothes.
The drug works by blocking the absorption of fat in the intestine, meaning that about one-third of the fat a user eats is never absorbed — the reason a high-fat diet can cause problems.
Restricting the amount of fat eaten helps control the problems to some degree.
A diet devoid of fat, though, would make the pill largely superfluous.
So Glaxo's approach will emphasize discipline, rather than deprivation. For example, consumers taking Alli would be instructed that when eating at an Italian restaurant, chicken Marsala is a better choice than stuffed manicotti. "Fettuccine Alfredo probably is a poor choice," Mr. Burton said.
The big questions are whether, with all the competing diet potions, foods and programs, Glaxo can generate enough interest in Alli and, even if so, whether the product will have staying power.
"You can guarantee it will be a full army of effort," said Mr. Francesco, who predicts a major advertising campaign. "Weight reducers tend to be passionate and then burn out, then they go to the latest and greatest. This could hit a potential $500 million a year, then sink like a stone. Or maybe it is something that can be sustained."
One reason for doubt is that in a Glaxo study of patients taking Xenical at over-the-counter dosage, about 3 percent of the users quit because of the side effects.
That is why, Mr. Burton said, "we have to go out of our way to make sure people understand how the product works."
"That's part of the honesty, the bluntness, the candor that we're going to put into our communications," he said. "If you don't stay with this program, you're at risk for things like having to go to the restroom more frequently," he added. "We don't want people to be surprised."
posted by Jones Lang LaSalle NJ News Blog at 11:31 AM
A group of investors has purchased the Flatiron Building (pictured), a New York City landmark with 281,000 square feet of office space in the Flatiron District. The family-owned, 11-story building at 11 W. 19th St. was sold to the investment group, led by The Kaufman Organization's Bob Savitt. Eastern Consolidated represented the seller.
posted by Jones Lang LaSalle NJ News Blog at 11:30 AM
New York venture capital funding up 12%: report by Amanda Fung
Venture capital investments in New York metro area companies increased 12% to $348 million in the first quarter from a year earlier, according to a national survey released on Tuesday. Fifty-eight New York companies received venture money last quarter, according to the MoneyTree report by PricewaterhouseCoopers and the National Venture Capital Association. A little over a quarter of the New York funding, $90 million, went to nine companies in the life sciences industry, while two software companies received $22 million. The same amount went to five media and entertainment companies.
It was the first time since the third quarter 2005 that venture capitalists invested in this industry. Four media and entertainment companies received $19 million during that period. "While it is still too early to tell, if the first quarter is a positive indication, as deal flow is up," said David Silverman, managing partner of PwC's venture capital practice, in a statement. "We are seeing renewed interest in industries which have been considerably quiet during the past few quarters."
The regional results mirror national venture capital activity. Nationwide, venture capitalists invested $5.6 billion in 761 deals last quarter also up 12% from last year, the report said. Nationally, funding in the media and entertainment industry reached a four-year high, up 80% over the prior quarter, with $396 million going toward 57 deals. Companies focused on delivering content via the Internet accounted for approximately half of the total invested and number of deals.
(AP) — World Trade Center site developer Larry Silverstein said Tuesday he would agree, with conditions, to the government's offer to take over building the Freedom Tower and a second skyscraper in the messy rebuilding negotiations at Ground Zero.
In a letter to the site's owner, Mr. Silverstein -- who holds the lease to millions of square feet of destroyed office space -- said he would accept economic terms of the government's latest offer, which would have him build three towers on the site by 2011.
"This is not about profits," Mr. Silverstein wrote top executives at the Port Authority of New York and New Jersey. "This is about moving the rebuilding forward as quickly as possible in order to revitalize the city's historic downtown."
Officials have continued to say that construction of would begin on the 1,776-foot Freedom Tower by the end of the week.
Janno Lieber, a Silverstein vice president, said Tuesday that work can begin "immediately" if an agreement is reached.
Port Authority officials weren’t available for immediate comment Tuesday.
Mr. Silverstein, who signed a 99-year lease for the Twin Towers six weeks before they collapsed in 2001, said he would agree to pay an additional $1.75 billion in rent in exchange for promises to fill more than 1 million square feet of office space at ground zero with federal, state and city leases.
But he also asked for several conditions, including that the Port Authority immediately approve the deal. The agency, which has a board meeting on Wednesday, had proposed waiting until September for final approval.
Mr. Silverstein also sought guarantees that he wouldn't lose development rights if the agency couldn't get the government leases or prepare land for him to build in time.
SL Green sells two Manhattan office buildings by Catherine Tymkiw
SL Green Realty Corp. agreed to sell two Manhattan office buildings for $63 million, and to acquire stakes in two retail properties through a joint venture. The real estate investment trust is selling a 22-story tower at 286 Madison Ave. and a six-story building at 290 Madison Ave. to Kenneth Aschendorf and Berndt Perl of APF Properties for about $420 per square foot. SL Green said it expects to reap a gain of over $30 million from the sales
posted by Jones Lang LaSalle NJ News Blog at 11:29 AM
Office Collaboration, the Wiki Way As Wikipedia's popularity has soared, businesses have begun to investigate its underlying technology as a way to share business and financial knowledge among employees, suppliers, and customers.
John Edwards, CFO.com April 24, 2006
"Wiki," the Hawaiian word for "quick," is also the name for collaborative Web sites that let users add and edit content quickly and easily.
The best-known of these collaborative sites is Wikipedia, a multilingual Web-based encyclopedia. Unlike conventional online reference works, which are updated on regular schedules by professional writers and editors, Wikipedia is written entirely by volunteers and allows most articles to be changed, edited, or updated by any user at any time. This continual, "community oriented" publishing approach has enabled it to become the world's most largest and most current encyclopedia — though hardly the most accurate, say detractors.
As Wikipedia's popularity has soared, businesses have begun to investigate its underlying technology as a way to share business and financial knowledge among employees, suppliers, and customers. Why use highly structured content management software, they reason, when a wiki's collaborative process can get the job done faster and easier?
Some software providers are already taking the hint. Stellant recently added features to its Universal Content Management application that will allow businesses to build their own internal wikis atop a Web-based content-management platform. iUpload is offering a new version of its Enterprise Blogging Suite that connects wiki and blogging software to compliance, workflow, and other content-management processes. "For small workgroups, wikis fill the space between E-mails, which are hard to follow and manage, and formal content management tools," says iUpload founder and CEO Robin Hooper.
Kate Trgovac, a Web manager at oil and gas company Petro-Canada, believes that wikis can pick up where company-based blogs leave off. Using iUpload's software, her company plans to transfer hard-to-search blog entries and comments into indexed wiki articles. "Our purchasing group, for instance, wants to capture ideas on negotiating better contracts and setting pricing across our dealer network," Trgovac says. "We think wikis will work just fine."
Expanding on Petro-Canada's notion, Stellent vice president of product management Todd Price suggests that intranet wikis and blogs can be complementary technologies. "You could use a wiki to create a competitive analysis or review documentation online," says Price, and use a blog "to gather immediate feedback from employees, partners, and customers about new product features."
True, the very feature that has made wikis so popular — their ability to enable almost anyone to create or edit information — can also be a weakness. When no editor vets user contributions for honesty or accuracy, readers can easily be misled, innocently or intentionally. Indeed, after numerous edits by congressional staffers to the Wikipedia entries of their senators and representatives — as well as the entries of congressional rivals — the online encyclopedia implemented a one-week block on access originating from the House and Senate offices, according to published accounts.
Price insists, however, that wiki veracity will be much less problematic in the business world than on the public Web. "In a corporate setting, the experts are the people controlling the wiki," he notes. "They're going to challenge any content that isn't accurate." For her part, Trgovac expects to see plenty of give and take in Petro-Canada's wikis. "That's the whole idea," she says. "To get people to share ideas, collaborate, and arrive at a consensus."
And, presumably, to check their partisan politics at the door.
Trimming Hemlines and Deadlines The faster pace of the apparel industry has prompted companies to focus more on the speed of inventory turnover. Helen Shaw, CFO.com April 24, 2006
In the late 1990s, managers of clothing boutiques began freshening up the inventory in their stores every few weeks. The accelerated turnover—quite hefty compared to the industry standard of three to four times a year—spurred them to place increased importance on metrics that could help them produce the best business performance.
The boutiques, which had solid deals with manufacturing sources, were able to respond to customer feedback and deliver new products within two weeks. "The Zaras and H&Ms of the world, small specialty stores, became very nimble," recalls Sue Welch, chief executive officer of TradeStone Software, a company that develops programs for store buyers. "Department stores were caught flat-footed," said Welch.
To compete, the big outlets had to switch to equally frequent changeovers of the goods on their racks. As a result, the finance chiefs of the entire industry became focused on inventory turnover. The metric refers to the fraction of a year that an average item remains in inventory or, equivalently, to the ratio of a company's annual sales to its inventory.
In the latter case, a turnover rate of zero means that a company is unable to sell its entire inventory in a year, a sure sign of inefficient sales performance. "If the turnover number goes too low, it adversely affects our working capital and we have to borrow money to cover the excess inventory," says Andrew Demott, CFO of Superior Uniform Group, a wholesale apparel company whose customers are hospitals, grocery stores, and other businesses with uniformed workers.
If purchased inventory stays in the warehouse for too long, it soaks up financial resources that could be put to work, for example, in earning interest, he explains. Further, if the need for warehouse space increases, so do those costs.
If, on the other hand, the inventory-turnover ratio is too high, it's likely that desired goods wouldn't be on the shelf, according to Demott. That might cause a customer to shop elsewhere. The metric hooks into measurements of the overall health of a company. "Inventory turnover is critical to us because that directly translates back into how much cash we have on the books," the Superior Uniform executive says. The turnover ratio for the company is about 180 days or two times a year, which means it takes six months to sell all of its inventory.
The relatively low turnover stems from the employee churn rate at client companies, which drives the need for new uniforms, explained Demott. Another reason is that the company keeps excess inventory on the shelf to meet customer demands while the uniforms are being shipped to the company from far-flung offshore sources. About 75 percent of the uniforms come from Central America and 15 percent come from Asia.
To be sure, the pressure for fast turnover is much greater for apparel retailers, which have seen the need for speed triple in the last decade. But the strain affects the entire supply chain, including distributors, transporters, storage-facility operators, and suppliers as well as retailers. In recent years, the speed of moving goods through the entire apparel supply chain has shortened from 360 days to 90 days or less, according to Welch. "It is a huge strain on getting new product designed, developed, and delivered," she says.
Speed, however, isn't everything. Another important metric in the apparel industry is dilution to gross margin stemming from item markdowns and returns. Susan Ding, a credit analyst at Standard & Poor's, looks at the measurement to get a sense of how well a company sells items at their full prices. The metric can suggest whether the company is producing the right goods for its consumers, she added.
Dilution is usually expressed as a percentage of gross sales, and the average mark in the apparel industry ranges from 5 percent to 20 percent. Ten percent or less is considered a good number, said Ding.
Since companies don't tend to report dilution numbers in their financial statements, the analyst acquires them directly from apparel makers on a monthly or quarterly from companies. The upside of reporting the metric is that if a company can "manage dilution to a minimal level or improve it year-over-year, that is considered a favorable event," the analyst explained. "The smaller the dilution, the more sales they can recognize."
Liberty Property Profit Rises By TSC and IRIS Staff 4/25/2006 7:02 AM EDT
Liberty Property Trust (LRY:NYSE - news - research - Cramer's Take), a real estate investment trust operator, said its first-quarter earnings rose 98.3% from the year-ago period, on $59.6 million gain on the sale of properties.
The company earned $90.4 million, or $1.01 a share, in the quarter, compared with $45.6 million, or 52 cents a share, a year ago. Adjusted for $59.6 million, or 66 cents a share gain on the sale of properties, earnings were $30.8 million, or 35 cents a share in the most recent quarter. On that basis analysts surveyed by Thomson First Call were expecting earnings of $32.9 million, or 37 cents a share in the most recent quarter.
First-quarter revenue rose 4.2% from a year ago period to $168.8 million. Analysts were expecting revenue of $175.1 million in the most recent quarter.
The company expects to earn $2.41 a share to $2.75 a share in the year 2006. Fund from operation is expected to be $3.10 a share to $3.20 a share in the year 2006. Analysts were expecting earnings of $1.55 a share in the year 2006.
"During the quarter, we executed our expanded disposition plan rigorously, and this execution has resulted in acceleration in both the timing and projected volume of sales for 2006. We now expect our 2006 sales activity to be nearly double previous projections," the company said. "Real estate markets continue to strengthen. We are pleased that in the first quarter we saw same store growth turn positive, but this progress is clearly slow and will only begin contributing to earnings in a meaningful way toward the end of the year.''
First-quarter operating income fell marginally 0.2% from a year ago period to $67.5 million and operating margin fell 174 basis points to 40%.
During the first quarter, the Malvern, Pa.-based company acquired six properties for a total investment of $33.8 million. These properties, which contain 610,000 square feet, are 97.1% leased, with a current yield of 8.7% and a projected stabilized yield of 9.1%.
On April 13, the company announced that it has sold an 80% interest in Comcast Center, a 1.2 million square foot office development project in Philadelphia, to Commerzbank AG, in a deal that values the property at $505 million.
posted by Jones Lang LaSalle NJ News Blog at 11:25 AM
Rutgers biz school moving within Newark Leading donor's building to become its new home Tuesday, April 25, 2006 BY MATTHEW FUTTERMAN Star-Ledger Staff
Rutgers University plans to move its Newark business school to a building owned by one of the universitys major boosters, school officials announced yesterday.
Stephen Diner, provost of the universitys Newark campus, said he signed a letter of intent for the business school to pay $31 million for the bottom 11 floors of 1 Washington Park, the former Verizon Communications building across from the citys Broad Street train station.
The building is owned by Fidelco, a real estate and development firm whose chairman is Marc Berson. Fidelco purchased the vacant, 17-story office tower in 2004 for $26.5 million. Berson, who received both his bachelor's and law degrees from Rutgers-Newark, has been one of the school's leading donors in recent years, giving roughly $500,000, according to his own estimate. Diner said the university has been interested in moving the business school to the Washington Park tower for several years, since before Berson owned the building.
Given the recent scandals at the University of Medicine and Dentistry of New Jersey, Diner said he is especially sensitive to questions about the deal with Berson. He said it is an ideal location for a school that has been looking for a presence on Newark's main thoroughfare and a city trying to raise the university's profile as one of its anchor tenants.
"We were deeply conscious as we went into project and we had strict instructions from our board that whatever we do needs to be completely justifiable," Diner said. "We could not go forward unless the transaction was entirely transparent and at arms length."
During the past decade, Berson helped raise several million for the Rutgers law school on Washington Street, where the Berson Board Room was named in his honor. Until last fall, he was a member of the university's Board of Overseers, which monitors investments of the Rutgers University Foundation, and a member of the Rutgers Business School's Advisory Board, which advises the school's dean on planning and policy.
In an interview yesterday, Berson said he voluntarily stepped down from those boards when talks between Fidelco and the university intensified and a transaction appeared likely. "I never bought the building to sell," said Berson, whose company is investing $20 million to renovate the building.
"If you look at my portfolio, I usually just sit and hold buildings. But Rutgers is a different story," he said. "I couldn't subject them to taxes and not let them take advantage of borrowing capabilities they have as a university or of the residual gains they will get from owning."
Berson, who also co-owns the Newark Bears minor league baseball team, described the deal as part of a decade-long effort by a group of well-known philanthropists, including Raymond Chambers, to revive Newark's core business district. The group created the not-for-profit New Newark Foundation in 1998, but failed to finalize any major development deals.
Meanwhile, Berson tried to convince university officials to expand their presence in the city as he sought real estate deals for his private company that would take advantage of a light rail system that will connect the city's Broad Street and Penn Stations. Those parallel pursuits are on the verge of coming together.
"We're feeling very positive about the investment working out and setting a stage for bigger things to come on the north end of Broad Street," Berson said.
Diner said the university is pursuing federal tax credits for the deal, which he hopes to finalize this summer.
Under the terms of the agreement, the university will buy the lower two-thirds of the building and commit another $50 million for renovations that will include a pavilion in front of the building and a series of tiered lecture halls. He said the university was shocked to find out from the deal's independent appraiser, Appraisal Consultants of Livingston, that Newark's real estate prices had risen so quickly from 2004 when Berson and Fidelco purchased the building.
"The big issue was the issue of price," Diner said. "But we've had our eye on this one for quite some time. We had done analyses to build a comparable space, and every time the cost comes out less by going in this direction."
Jeff Greenberg, whose company, Heritage Management, owns two office towers on the northern end of Broad Street and bid for the Washington Park tower in 2004, said the purchase price was substantial but not outrageous.
"It passes the giggle test, which is whether I giggle when I hear the number," Greenberg said. "But everybody knew as far back as 2003 Rutgers was interested in the building. The deed went to bid and Marc won the deal."
Mortgage Rates Near Level Last Seen in '02 By a WALL STREET JOURNAL Staff Reporter April 21, 2006; Page C4
NEW YORK -- Long-term home mortgage rates rose to their highest levels in nearly four years, said Freddie Mac, the housing finance agency.
The average for 30-year fixed mortgage rates for the week ended yesterday was 6.53%, up from 6.49% a week earlier. The rate hasn't been higher since July 2002, when it averaged 6.54%, Freddie Mac said. One year ago, 30-year mortgages averaged 5.80%.
The average for 15-year fixed-rate mortgages this week was 6.17%, the highest since June 2002, and up from 6.14% one week ago and the year-ago 5.36%.
Five-year Treasury-indexed hybrid adjustable-rate mortgages were 6.16%, up from 6.13% one week ago and the year-ago 5.22%. One-year treasury-indexed ARMs were 5.63%, up from 5.61% a week ago and the year-ago 4.26%.
"As a result of higher mortgage rates, housing market activity is beginning to slow, as evidenced in the lower housing starts statistics for March," said Frank Nothaft, Freddie Mac vice president and chief economist.
posted by Jones Lang LaSalle NJ News Blog at 11:17 AM
$21M Takes 150-Key Staybridge Suites By Eric Peterson Last updated: April 21, 2006 01:39pm
PARSIPPANY, NJ-Hospitality Properties Trust has acquired the new 150-key Staybridge Suites hotel within the Morris Corporate Center here. The property traded for $21 million; the seller was Intercontinental Hotels Group.
IHG will still have a hand in the property, which had just opened for business this past February. According to a statement released by a spokesman for the Newton, MA-based HPT, the hotel was added "to a long-term management contract with a subsidiary of Intercontinental Hotel Group, which includes 30 additional Staybridge Suites hotels. The term of this contract was extended to 2031."
Under the terms of the ongoing agreement, HPT’s minimum annual incremental return for the property, which is guaranteed by IHG, will initially be $1.7 million a year until April, 2007. At that point, it will increase to $1.8 million per year. HPT "may also receive a percentage of gross revenue increases at this hotel starting in 2009 and the net cash flow after payment of management fees to IHG," according to the spokesman.
The five-story extended-stay property went under construction in late 2004 leading up to its opening earlier this year. It’s located within the Morris Corporate Center, a 2.2 million-sf class A office campus near I-80 owned primarily by the locally based SJP Properties. The hotel property itself, beside its 150 guest suites, has a library, business and fitness centers, an indoor pool and 1,000 sf of meeting space.
For HPT, the hotel was acquired free and clear of all mortgage debt, according to information released by the hotel REIT. Funding for the acquisition came from a draw on the company’s unsecured revolving bank credit facility. With the acquisition, HPT now owns some 310 hotels in 38 states, Puerto Rico and Canada.
posted by Jones Lang LaSalle NJ News Blog at 11:15 AM
UPDATE: Knightsbridge is 26 Journal Square’s Buyer By Eric Peterson Last updated: April 21, 2006 08:59am
JERSEY CITY-When it was reported at the end of March that the 100,000-sf 26 Journal Square office building had been sold for $15 million by Blumberg & Freilich Equities, the buyer was identified only as "a New York investor." Now, that buyer has been revealed as Knightsbridge Properties, a Manhasset, NY-based company better known for its healthcare-related holdings on Long Island and in Manhattan. The acquisition is Knightsbridge’s first in the Garden State.
"Knightsbridge is looking to expand its portfolio with mid- to upper-level properties in New Jersey," says Jose Cruz of Cushman & Wakefield’s Metropolitan Area Capital Markets Group, who was part of the firm’s team that arranged the deal. "26 Journal Square represented a good opportunity for them to gain a foothold in the area." The firm did not respond to a request for comment by deadline.
Built in 1927 and also known as the Labor Bank Building, 26 Journal Square was acquired by Blumberg & Freilich for $2.8 million in 1998 and subsequently renovated at a cost of $4 million. 100% leased at the time of sale, the building now has a block of 6,773 sf of space available. Its current tenants include a mix of law, healthcare staffing and financial services firms.
posted by Jones Lang LaSalle NJ News Blog at 11:14 AM
The Cherenson Group to Merge with Success Advertising Joao-Pierre Ruth NJBIZ Staff4/21/2006
Human resources communications firm Success Advertising and public relations firm The Cherenson Group, both in Livingston, agreed to merge by the end of April and move to Parsippany. Kurt Schwartz, president of Success Advertising and Glenn Gershaw, executive vice president of the Cherenson Group, will own and operate the company.
The new firm will be called Success Advertising Network. Schwartz will be CEO and Gershaw will be president and COO following the merger. Success Advertising and The Cherenson Group have shared office space and personnel at 3 Regent Street in Livingston for 15 years. The new firm purchased a building at 26 Eastmans Road in Parsippany with plans to relocate in the summer.
posted by Jones Lang LaSalle NJ News Blog at 11:09 AM
Lofts proposed for E. Newark Friday, April 21, 2006 By ROSE DUGER JOURNAL CORRESPONDENT
EAST NEWARK - A developer is proposing constructing between 700 and 800 loft apartments, as well as commercial space, at the First Republic industrial complex on Passaic Avenue. The mammoth site, which is currently leased to a number of commercial tenants, houses several four-story brick structures that date to the mid-1800s.
Mayor Joseph R. Smith said preliminary plans call for commercial space to occupy the first two floors. The $100 million project would roll out over a span of three to five years, he added. Several other developers have also expressed interest in the site and have presented plans for projects including two-family houses, a hotel and a big-box home improvement store.
"I can honestly say the others didn't seem to have a logical theme," Smith said. "There were also concerns about traffic. These plans are tentative, but if we can keep the building there's a historical value to that."
The buildings once housed the Clark Cotton and Thread Company, a firm that is widely credited with drawing the influx of Scottish and Irish immigrants to the West Hudson area in the late 1800s and early 1900s. At one time the company was the largest thread manufacturer in the nation.
Row houses were constructed on North Third Street for the mills' managers, with a smaller group of row houses on John Street for the mill workers, according to Smith. The row houses are still standing today.
The industrial complex is now owned by First Republic Corporation.
Borough officials are updating East Newark's master plan and have hired Anne Babineau, an attorney specializing in redevelopment matters, to advise them.
"We're working on updating the master plan and when that's complete we'll set up a redevelopment agency," said Smith, who explained that the borough's agency would be comprised of himself and members of the borough council. "In my opinion that will give people a voice in who's on the board. If they don't like what the mayor and council are doing they can vote us out."
Housing, offices, hotel in game plan for Jets' site Preliminary design for new headquarters and training facility includes 120 buildings Sunday, April 23, 2006 BY JOHN WIHBEY Star-Ledger Staff
As part of the Jets' new headquarters plan, more than 120 buildings for housing, hospitality and office space are to rise on a campus in Florham Park, according to a preliminary design submitted to the state.
Local officials are anxious to review the final plans but two deadlines have already been missed according to the timetable the developers submitted to the New Jersey Sports and Exposition Authority.
"We're waiting and we're ready to go," borough planning board Chairman Sam McNulty said. "They said they wanted to get a shovel in the ground by June. But we haven't seen anything yet. We're ready to do whatever it takes to get the Jets project going."
The 260 acres of the former Exxon headquarters site where the redevelopment will take place would host 600,000 square feet of new office space, a 200-room hotel, a 15,000-square-foot day care center and up to 550 units of age-restricted housing.
Two recreational fields would be built on an adjoining parcel in Madison. The fields would be served by a parking lot and an access road off Park Avenue.
The Jets' corporate and training facility, which occupies 20 acres, and the other development are on separate tracks and timetables, according to McNulty.
Local officials have no regulatory power over the Jets' facility, according to the terms of the deal. The Sports Authority, which is purchasing the Jets' site, is exempt from local zoning laws. "We are aggressively moving forward," said Jets spokeswoman Marissa Shorenstein. "We want to get in there as soon as possible."
The Jets' campus will feature an air-supported dome that could be as tall as 125 feet and outdoor light towers up to 100 feet high. A courtesy review will be provided to the borough planning board and council, allowing for public comment.
"We're going to make sure the public gets a good look," McNulty said.
The Gale Co. and Rockefeller Group Development Corp. are developing the entire site.
A design review scheduled for an April 10 planning board meeting was tabled because Gale had not yet submitted any plans. The full site plan should be ready for a special planning board work session on May 10, officials said. A call to Gale was not returned.
The borough council still must take a final vote to rezone the entire 485-acre ExxonMobil property to allow the projects accompanying the Jets facility to move forward.
Last year, the site's southern portion -- where all of the redevelopment will take place -- was assessed at $73 million, generating $1.2 million in taxes.
According to local officials, the preliminary site plan and documents obtained by The Star-Ledger from the Sports Authority:
Five buildings would contain the 600,000 square feet of new office and hotel space. The Jets' 20-acre campus would include a 110,000-square-foot corporate building, a dome-covered field and three outdoor practice fields. The team's site will be about 2,500 feet from Park Avenue.
About two-thirds of the remaining 225 acres of the ExxonMobil property are wetlands and are to be preserved as open space.
Two access roads from Park Avenue will lead to the various facilities. The Jets organization will contribute up to $1 million for road improvements.
Borough officials concede that potential traffic problems, particularly at the intersection of Columbia Turnpike and Park Avenue, will need to be addressed by Gale Co. "They know already that they're going to have to address that issue," McNulty said.
Earlier plans that called for 1.8 million square feet of office space met with widespread opposition from surrounding towns in part because of the traffic congestion they would likely cause.
The scaled-back Jets plan has now rendered a "non-issue" the idea of a Route 24 connector road, which had been debated as part of the former plans, according to Florham Park Mayor Frank Tinari.
John Wihbey covers Florham Park. He may be reached at jwihbey@starledger.com or (973) 539-7910.
Trained in Manhattan, Graduating to the World By ALISON GREGOR
TO swim to the top ranks of commercial real estate brokers in New York City, Barry M. Gosin perfected an elegant crawl. But now, as the chief executive of Newmark Knight Frank, he has to maneuver the waters of a much larger pond.
Mr. Gosin's company — formerly known as Newmark & Company, which expanded nationally only about five years ago — sealed a partnership in January with Knight Frank of London, one of the world's largest privately owned property consulting firms. Last year, the firms handled transactions that, combined, were valued at more than $41 billion, with annual revenue of more than $545 million.
Mr. Gosin will oversee the operations in North and South America, while Knight Frank's chairman and senior partner, Nick Thomlinson, will oversee the rest of the offices throughout the world.
Besides supervising Newmark's 26 offices in the United States, Mr. Gosin will have under his auspices five existing Knight Frank offices in Brazil and three that will open later this year in Lima, Peru; Santiago, Chile; and Buenos Aires. Mr. Gosin, 55, who grew up in East Flatbush, Brooklyn, seems eager to take on the global arena. "Someone told me a long time ago, if you don't grow, you die," he said. "Every business has to be dynamic."
Mr. Gosin and a business partner, Jeffrey Gural, bought Newmark in 1978 from Mr. Gural's father, Aaron Gural, who had taken over the company from Dave Newmark, its founder. At the time, Mr. Gosin was a fledgling real estate entrepreneur who had joined the firm to learn how to buy real estate.
And that he did. Mr. Gosin and several Newmark principals have an eight-million-square-foot commercial real estate portfolio that includes the landmark Flatiron Building in Manhattan. "Aaron Gural came out of the Helmsley-Spear school of real estate," Mr. Gosin said, referring to the real estate company. "He taught us how to buy property, and it was a great platform for us." Newmark also expanded into development, forming a construction division several years ago that specialized in converting office buildings into apartments. Until recently, Mr. Gosin and his partners, along with the developer David Walentas, owned about 10 buildings in the Dumbo area of Brooklyn, and worked to transform Dumbo from an obscure industrial area into a trendy residential neighborhood.
Mr. Gosin, a history buff, is enthusiastic about a purchase in 2004: for about $4 million his company acquired the former headquarters of Bethlehem Steel in Bethlehem, Pa., and the surrounding 125 acres. The deal includes the headquarters building, designed by Sanford White, and three million square feet of structures. Mr. Gosin and his partners envision a development worth more than $400 million that is to include a casino with 5,000 slot machines — state license permitting — a hotel, theater, retail stores, residential buildings and a museum commemorating the country's industrial history.
"The steel for most of the large buildings in New York City was forged here," he said. "This is where the 20th century was built."
But the allure of ownership aside, Mr. Gosin's first love is brokering deals. As he points out, Harry Helmsley, the legendary New York City real estate magnate, also worked as a broker until the day he died in 1997.
"It's an exciting business, and a great way of being a part of what happens in the city," said Mr. Gosin, who began cultivating Newmark's brokerage and advisory division when he sensed a lull in the city's real estate market in the late 80's.
"I saw a disconnect between the fundamentals and the values, so the underlying demand was not there," Mr. Gosin said. "The prices were continuing to go up in the late 80's. Rents didn't go up. It just didn't appear to be right, so we needed to find an alternative to keep us busy." During Mr. Gosin's tenure, Newmark's brokerage business has flourished.
"We have a unique perspective on the advisory business in that we're one of the few brokerage firms that has a significant investment portfolio," Mr. Gosin said. "And we think that the fact that we own property and the fact that we run property gives us a unique vantage point from which to represent companies who rent space and properties."
Mr. Gosin represents mostly big tenants and has handled some of New York City's largest and most intricate leasing deals, including the consolidation of the new Manhattan headquarters of Bloomberg L.P. at 731 Lexington Avenue, between 58th and 59th Streets, in the One Beacon Court building. (Construction on the Bloomberg Tower was completed last year.)
Mr. Gosin said his team first had to sell the move to Michael R. Bloomberg, the company founder, who was not yet mayor of New York. "My first conversation with Mike went like, 'You're on so many floors, you're in so many buildings, it would be a good opportunity for you when your lease expires to consolidate,' " Mr. Gosin said. "And Mike is fairly glib. He said, 'If you can prove that it makes economic sense, go talk to my head of real estate, and we'll do it.' " "The exchange probably lasted 15 minutes, because that's about as long as, I guess, Mike would give somebody for the first time," he said.
Mr. Gosin said Newmark then had to persuade the principals at Vornado Realty Trust, the developer, to let Bloomberg lease a portion of One Beacon Court tower, which had not yet been built. It had been largely slated for residential use.
"We went to Steve Roth and suggested that we be the anchor tenant in the base of the building," Mr. Gosin said, referring to the chief executive of Vornado. "At the time, they had a preference for more residential, and had they known the market would have shot up the way it did, they probably would have done even more residential."
Still, the Newmark team pulled off the deal, leasing 700,000 square feet in a building that didn't yet exist, and ensuring that its client, as an anchor tenant, would be able to design the building according to its needs.
"We spent 18 months torturously negotiating a lease for Bloomberg so they'd build a new building" for the company, Mr. Gosin said. "The building, which is beautiful, is designed with Bloomberg specs."
Mr. Gosin said jokingly that he should have been paid by the hour on that transaction. But Jeffrey Gural, the chairman of Newmark Knight Frank, said, "As a broker, Barry's real strength is he really and truly tries to do a good job for his client — even if it means not making a commission."
Mark Weiss, an executive vice president at Newmark who joined from a competing brokerage firm, Studley, almost four years ago, described Mr. Gosin as a caring boss. Shortly after arriving at Newmark, Mr. Weiss said, he discovered that his wife had breast cancer. Mr. Gosin "walked into my office, put his arm around me — and I didn't really know this guy, it was a new relationship — said, 'Anything you need, we're here for you,' " Mr. Weiss said. "He had promised a pretty big bill of goods, and he has delivered on all fronts."
BUT does Mr. Gosin also have that toughness to lead a company on a large and impersonal global front, against giant competitors like CB Richard Ellis, Cushman & Wakefield and Jones Lang LaSalle?
Perhaps a clue lies in his tennis game.
When osteoarthritis was diagnosed in his left shoulder several years ago, Mr. Gosin, a southpaw, learned to serve "righty" and continued to dominate his competitors.
Mr. Gosin will need to be just as adaptable to succeed in the global commercial real estate market.
"Barry's as good as they come," said Robert J. Alexander, chairman of the New York regional practice at CB Richard Ellis. "But I think his company's got a lot of challenges ahead, and the results will speak for themselves over the next few years. Clearly, this is no slam-dunk."
posted by Jones Lang LaSalle NJ News Blog at 10:51 AM
Jones Lang LaSalle Hotels has been selected to exclusively market for sale WW Lodging, Inc., a private REIT. The assets of the REIT include the Best Western Lake Buena Vista in Lake Buena Vista, Florida; the Hilton Harbor Island in San Diego, California; and the Radisson Fisherman’s Wharf and its adjacent square feet of retail space in San Francisco, California."WW Lodging Inc. offers investors the chance to gain access to three of the country’s most exciting markets at the same time," said Arthur Buser, managing director for Jones Lang LaSalle Hotels.
"The San Diego and San Francisco hotels are located right on the water in their respective markets, with ocean views from a majority of their room inventory. The Lake Buena Vista property is located right next door to Walt Disney World and set in a lush, tropical setting." "All three of these hotels are being offered free and clear of management encumbrances," said John Strauss, senior vice president, Jones Lang LaSalle Hotels. "And each property presents an unmatched opportunity to take advantage of the robust hotel market through targeted capital injections to further maximize ADR gains recently seen at these assets.
Added to these exceptional hotel assets is 45,000 square feet of prime retail space, one of the hottest real estate investments in today’s market, located in the heart of Fisherman’s Wharf."
posted by Jones Lang LaSalle NJ News Blog at 10:47 AM
Imagine the offices of Rockefeller Center, emptied out and then seeded with a scattering of government bureaucracies. Imagine the center's retail as a mix of drug stores, lunch counters and off-price clothiers. From that base, imagine trying to encourage the kind of tenant needed to transform the historic complex into a 24/7 urban platform, an engine of prosperity for Midtown and an anchor of New York's global business leadership.
Imagine that it would take three decades and cost untold fortunes in public monies to make that happen: to entice tenants and tourists and shoppers and thus create a thriving destination. Imagine it finally works.
Then imagine abruptly tearing it down and doing the same thing all over again exactly as before. And imagine giving a single developer a substantial fortune to do just that. Finally, imagine taking credit for such an accomplishment.
Last week, governors George Pataki and Jon Corzine of New York and New Jersey and Mayor Michael Bloomberg of New York City emerged into view as the Unified Front for the Liberation of Ground Zero. Presenting two "very reasonable offers" (as described in an editorial in Saturday's New York Times to Larry Silverstein, they made it appear as if the imminent redevelopment of the World Trade Center was a fait accompli, brought about by their persevering vision and sacrifice. If Silverstein agrees with them--as he may, after a period of huffing and puffing about his own persevering vision and sacrifice--the public is apt to feel the sacrifice that comes from an extreme lack of vision at the highest levels of government. But the public will persevere, although it may not prevail, in this tug of war for legacy bragging rights between money and power.
Along with its general sour taste, there are many things to dislike about this latest version of the Ground Zero plan. Two elements stand particularly large. The first, and the closer it comes to reality the more it bears repeating, is Freedom Tower itself. If all goes as currently set forth, construction will begin in earnest on this building within a month. When completed, it will rise as a stark counterpoint to the new 7 World Trade Center, which is arguably architect David M. Childs' finest building. As much as the shimmering No. 7 lights up the northern edge of Ground Zero, Freedom Tower will occlude its piece of sky, standing not as a beacon but looming like an unfortunate headstone on the jagged horizon of Lower Manhattan.
Governor Pataki has sought from the start of the rebuilding process to mold it as a testament to his leadership. The current state of affairs is certainly just that, even if he may not like what it reveals. He has pushed Freedom Tower because it will serve as the expression of that leadership, despite the mounting evidence that its construction is ill-advised for many reasons, from its still-born design to the stark fact of a virtually non-existent tenant base. Although 7 World Trade is only 20% leased today, it will likely fill up or nearly so within the next 12 to 18 months. The challenges that Larry Silverstein's leasing agents at CB Richard Ellis have faced there are essentially market-related. But leasing out Freedom Tower will be something else entirely: representatives of the large corporations and law firms that are such a building's prospective
Where it will rise, the public will be shut out by the absence of needed public space beyond the memorial, outside the retail.
Even this, however, is not the most onerous--and astonishing--part of the government's proposal to Larry Silverstein: the planned office complex will essentially recreate the World Trade Center, not just in size, as has been blithely planned all along to satisfy insurers, but in its family values. It will be a half-empty government office ghetto.
If Silverstein accepts the proposal, he will be required to build more than six million square feet of office space on the site in the next six years; the Port Authority will start by building the 2 million-square-foot Freedom Tower. The government has pledged that it will fill a total of 1.2 million square feet in Silverstein's buildings, although it could decide against doing that between now and September even if Silverstein accepts the plan, leaving him without any tenant base at all.
(A fifth site, now occupied by the condemned and soon-to-be demolished Deutsche Bank tower, would be built by the government or sold to another developer.)
What would be lost if nothing is built until it is needed? Billions in insurance and Liberty Bond payments to Silverstein; the former will only be paid for the reconstruction of office space. While that money poured into the Lower Manhattan economy can only help, the presence of see-through office buildings, whether hulking or heroic in design, built to satisfy political aspiration, the will of giant insurers and the ambition of a New York developer, will bring us back to where we were on September 10, 2001. While we may wish that to be the case, it just isn't so. We owe it to those who perished and to those who survive them, and even more to those yet to come, to raise the bar.
