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.
LCR Terminates Contract for $7B-Plus Olympic City By Anita Howarth (For more retail coverage, click GlobeSt.com/RETAIL.)
LONDON-London & Continental has started termination proceedings with the consortium selected to develop the euro 5.9-billion ($7.5-billion) Stratford City project--a key part of London’s Olympic plans. L&C's lawyers issued a notice to end its contract with Stratford City Developments, which is owned by Stanhope, Westfield, Multiplex and the Reubens' Aldersgate, indicating that it has "little faith" that the shareholders would settle their differences. They have allowed a six-week remedial period that gives the parties a last attempt to resolve their differences and ensure that one wins the development rights. A remedial period is a standard procedure in any termination notice. L&C has appointed Jones Lang LaSalle and UBS to find a development partner for the project.
"We are no longer hopeful that the auction process could be brought to a successful conclusion," says Stephen Jordan, managing director at L&C. "It is in the project's best interests that we now begin the process to terminate the contract."
But Westfield and the Reuben brothers believe they are close to arranging an auction to settle who will win the rights to develop the 180-acre key Olympic site. Talks have been overseen by mediator Robert Leitao at NM Rothschild but have missed several self-imposed deadlines. London & Continental has not decided whether to appoint more than one developer for the different parts of the scheme.
On watch for the next LTCM Commentary: Bridgewater's disturbing predictions E-mail Print Disable live quotes By Peter Brimelow, MarketWatch Last Update: 12:01 AM ET May 11, 2006
NEW YORK (MarketWatch) -- All eyes are on the Fed, and one respected institutional service thinks there are reasons to dislike what they're seeing.
It's nearly eight years since the Long-Term Capital Management hedge fund cratered. At that time, the Federal Reserve engineered an extraordinary bailout on the (highly debatable) theory that the financial markets would otherwise be fatally disrupted.
What would happen if there was another LTCM today?
The Connecticut-based institutional service Bridgewater Daily Observations, which itself manages over $150 billion, has been asking this disturbing question and getting a fairly disturbing answer.
In recent issues, Bridgewater pointed out that money invested in hedge funds is now five times higher than in 1998, when the LTCM debacle occurred.
Bridgewater also tried to show through a sophisticated analysis that hedge funds do tend to march in lockstep. That means, paradoxically, that they are vulnerable to the same things: "tight credit, widening credit spreads, and falling equity markets."
Bridgewater's summary: "We estimate that an unfavorable environment, in degrees comparable to 1994, 1998, and 2000/01 will cost ...equally to about 2/3 of the S&L crisis and twice the size of the Mexican default in 1994 - i.e. it is material, but not system threatening."
That's the good news. The bad news: "'the system can withstand a moderate economic crisis (like those that occurred post-1993) but not a major one (like 1974)."
Bridgewater estimates that losses with the current hedge fund regime would have been $80-$100 billion in the post-1993 crises, $300-$350 billion in 1974 (and $500-$600 billion in 1929). And then there's the REALLY bad news: Bridgewater also expects a major international system crunch exactly like the collapse of the fixed exchange rate Bretton Woods system, which lead directly to the inflationary crisis of 1974. See my March 16 column
Wednesday morning, Bridgewater's Daily Letter was headlined, "The Tremors Before the Big One" and concluded: "We believe the odds of a dollar/ U.S. debt crisis in the next twelve months are elevated (say 50 percent)."
A week earlier, Bridgewater pointed squarely at China's manipulation of its exchange rate and at new Fed Chairman Ben Bernanke's handling of the situation.
In an issue titled "Bernanke's Test begins," Bridgewater wrote: "Today's imbalances are much larger and global in scale. They have been sustained for a longer time because China, and many other countries, are not defending a declining currency with shrinking reserves. Instead, they are resisting rising currencies with increasing reserves, a much more sustainable action."
The result, according to Bridgewater: "bigger imbalances that have taken longer to build, have been sewn deeper into the economic fabric, and will take much longer to unwind, with dramatically larger financial consequences."
Bridgewater's savage summary: "...Now you've got a new, academic, waffling Fed chairman, a falling dollar, a falling bond market, rising gold and commodities prices, and an underperforming stock market all with a giant current account deficit ..."
Its caustic conclusion: "Bernanke is rapidly losing control."
posted by Jones Lang LaSalle NJ News Blog at 10:42 AM
Merrill seeks to buy mortgage lender -report Last Update: 1:17 PM ET May 11, 2006
NEW YORK (MarketWatch) -- Merrill Lynch & Co. (MER) wants to buy a mortgage lender and is having "dialogues" with possible targets, Chief Administrative Officer Ahmass Fakahany said in an interview with Bloomberg News.
"When I say mortgage origination will take capital, that's because it requires an acquisition," Fakahany said in an interview Bloomberg said took place last week.
"Building a mortgage capability is a priority," Fakahany told the news service. "You can't just build it out of thin air."
Dow Jones Newswires reported in March that Wall Street firms, hungry for assets to support the lucrative mortgage-backed securities business, are in the market for acquisitions of big issuers of home loans.
As an example, the article quoted people familiar with the matter saying Merrill and other investment banks took a look at North Fork Bancorp Inc. (NFB) due to their interest in its national mortgage lending unit, GreenPoint.
The banks, however, balked at the high price North Fork was seeking. North Fork ultimately was bought by Capital One Financial Corp. (COF) in a cash and stock deal now worth about $14.5 billion.
Fakahany, in his conversation with Bloomberg, confirmed Merrill had been interested in the GreenPoint unit. He also said Merrill will put more capital to work in trading - particularly fixed-income trades in which the bank's own capital is at risk and "statistical arbitrage" strategies for trading stocks - and will triple its investments in other companies within two years.
He also told Bloomberg Merrill is interested in acquiring more regional brokerages like Advest Group Inc., teams of traders and specialized companies with "bank-like" products.
Analysts have speculated Wachovia Corp.'s (WB) cash and stock deal to buy Golden West Financial Corp. (GDW), now worth about $23.6 billion, could spur further deals for companies that issue mortgages.
Other big lenders and frequently mentioned potential targets include Washington Mutual Inc. (WM), Countrywide Financial Corp. (CFC), IndyMac Bancorp Inc. (NDE) and Downey Financial Corp. (DSL). -Contact: 201-938-5400
posted by Jones Lang LaSalle NJ News Blog at 10:42 AM
Vornado Debt Proposal Leads to Standoff Dan Freed May 8, 2006
Vornado Realty Trust, one of the largest and savviest REITs, has been pulling out all the stops in an effort to amend covenants on three of its outstanding bond issues to enable it to take on more debt. Facing stiff resistance from a slim majority of bondholders, some of the top executives at Vornado adviser JPMorgan, including Chairman Bill Harrison and Vice Chairman Jimmy Lee, picked up the phone to urge large investors to go along with the consent solicitation. The amendments would allow Vornado to increase its leverage by some $2.5 billion, or close to 20% of the total value of its assets, according to estimates by bondholders and analysts.
Approval requires a majority of votes on each of the three bond issues in question. Initially, Vornado came up barely short and extended the deadline for the consent solicitation twice. The latest cutoff was Friday, after IDD's Thursday evening deadline, but one executive involved in the transaction was doubtful that bondholders would approve the current deal. Vornado could sweeten the terms and try again, however.
Successful or not, Vornado's consent solicitation represents what is arguably the most aggressive move to date by a REIT in pushing for more issuer-friendly terms on its bonds. Because the real estate market was in a shambles in the early 90s, restrictive covenants were commonplace in REIT bonds, even though most REITs have investment-grade ratings.
Beginning in 2002, REITs including Vornado began taking advantage of the improved real estate market by including looser covenant packages on their new bond issues. However, the easier terms did not take effect until after previous issues with tougher covenants matured. Vornado is the first REIT to try to make wholesale changes to the covenants on its existing bonds.
Raising bondholder temperatures is a feature of the deal that effectively turns it into a game of chicken. Bondholders who agree to the amendments will receive additional compensation-three eights of a point on the two longer-dated issues involved ($250 million of 4.5% notes maturing in 2009 and $200 million maturing in 2010). Those who vote against the amendments would not be compensated but would still be bound by its terms.
A group of 15-20 bondholders, many of which are insurance companies, banded together in what had (as of Thursday) been a successful effort to thwart Vornado's effort. The margin was incredibly slim, with some $5 million worth of bonds the difference between success and failure. Bondholders of a third issue involved-$500 million of 5.625% notes maturing in 2007-approved the amendments. The short maturity of the issue made it an easy decision for them.
Some bondholders who were particularly incensed by the proposal said it flies in the face of some of the marketing tactics used in February to place Vornado's most recent bond issue-$250 million of 5.6% notes of 2011. They said the sales pitch by leads Citigroup and Banc of America was that the looser covenants contained in the new issue were of minimal importance since they would not take effect until all of the bonds with stricter covenants had matured, or not until 2010. Deutsche Bank was also a lead on the deal.
Despite all the fuss, bids on the 2011 issue softened only slightly when the consent solicitation was announced-to 84 bps over Treasuries from 81 bps over, according to an investor. And while the move certainly got the attention of credit rating agencies, it did not lead to any specific actions. "We get concerned when the covenants start disappearing completely," said Philip Kibel, an analyst at Moody's.
Other REITs are undoubtedly watching the Vornado situation closely, as the New York-based company is widely seen as an industry trendsetter. "I'd be very surprised if other REITs don't follow this example if Vornado turns out to be successful," said Tara Innes, an analyst at Fitch. (c) 2006 Investment Dealers' Digest Magazine and SourceMedia, Inc. All Rights Reserved.
posted by Jones Lang LaSalle NJ News Blog at 10:40 AM
Iron Mountain Goes to Pieces in Jersey City Martin C. Daks NJBIZ Staff 5/11/2006
Iron Mountain today opened a shredding facility in Jersey City. The Boston-based company specializes in records management and data-protection services. The new flagship location, described as the largest of its kind in the world, can shred up to 200 tons of sensitive paper files each day. The facility can also destroy x-rays, microfiche, computer disks, videotapes, CDs, DVDs and other media. The company did not release the cost of the new facility.
posted by Jones Lang LaSalle NJ News Blog at 10:40 AM
Vornado Talks Up Moynihan Station By Barbara Jarvie
NEW YORK CITY-Moynihan Station plans and international investment were two of the subjects discussed during an investor call with Vornado Realty Trust officials. The firm’s Penn Plaza concentration, which encompasses the Moynihan Station effort, is being called the "gateway to the Far West Side," said David R. Greenbaum, president of the New York Division.
The total redevelopment aggregates 16 acres and approximately 8.5 million sf of real estate product. Plans do call for moving the current Madison Square Garden one block over. The effort will be separated into Moynihan East and Moynihan West. "We’re working on this 24 hours a day," Greenbaum said. Michael D. Fascitelli, president and trustee, pointed out that India--where the firm already has a $25-million dollar investment--has "enormous profit potential." He believes the firm will "hopefully increase" its investment in that country. When it comes to investing in other countries, he said the "European market is very interesting and very expensive." Steven Roth, chairman of the board and CEO, added that the Vornado "should take a more international view. We’ll look abroad with enormous care and restraint. We’re getting the itch." He also noted that REIT legislation is "sweeping the world."
Vornado officials are also concentrating efforts in the Washington DC area, where as many as 290,000 new jobs are anticipated. "Crystal City is our biggest opportunity so far," said Mitchell N. Schear, president of Charles E. Smith Commercial Realty Division. "It’s proven itself to be one of the strongest markets in the country."
"Vornado is a big group, but size is not our goal. Making money is our goal," said Roth. "Our balance sheet is a fortress. With regard to the Toys ‘R’ Us acquisition, he advised, "Make babies and buy a lot of toys. We’re begging you."
Supply Company Leases 30,000 SF By Eric Peterson (To read more on the industrial market, click here.)
EDISON, NJ-General Plumbing Co. has leased a total of 30,000 sf of flex space at 226 Talmadge Rd. here. The firm is using the space as an adjunct to its existing headquarters location nearby.
The transaction was arranged for owner Sherwin Williams Co. by CB Richard Ellis, specifically by vice president Scott Belfer, senior vice president Mindy Lissner, first VP Lou Belfer, project manager Susan Strauss and sales associate Stacey Weinberg. Terms were not released. The paint manufacturer continues to occupy the bulk of the building.
"This was a good space solution for General Plumbing Supply," Scott Belfer says. "They decided to lease the space in this flex building because of its location near their current Edison facility."
HACKENSACK, NJ-NAI James E. Hanson, based here, has created a new group, the Government Services Division, to handle the real estate requirements of public sector entities. The division is headed by Peter A. Cohen, with the title of director, and sales associate John B. Aires.
"We formed this division in direct response to the strong government need for real estate advisory services," Cohen says. "Our objective is to provide government organizations with help in operating more efficiently and economically, and to help these municipalities make better decisions in today’s real estate market."
The division is already working on several projects for the City of Jersey City. The largest is the recent relocation of municipal employees from 325 Palisade Ave. to 24,000 sf at One Journal Square Plaza. The deal, according to Cohen, involves an initial five-year term with option for five more years. The group also negotiated a deal for an additional 3,200 sf on the building’s fourth floor.
Besides the One Journal Square Plaza deal, the group is also working on projects for Jersey City’s health and human services divisions, emergency services, city hall and the fire department. "And we plan to branch out to additional municipalities across New Jersey," Cohen says.
Cohen is no stranger to Hudson County, where Jersey City is located. Before joining NAI Hanson eight years ago, he had served as the director of community development for the City of Hoboken, and as chief of staff to a former Hudson County Executive. He’s also held positions in the New Jersey Department of Community Affairs and Department of Environmental Protection.
Developer Defends Atlantic Yards, Saying Towers Won't Corrupt the Feel of Brooklyn By NICHOLAS CONFESSORE
From across the room, the new plastic-and-wood model of Brooklyn's proposed Atlantic Yards project — revealed by the developer Forest City Ratner at a news conference yesterday — looked a lot like the old one sitting a few feet away: a 22-acre swath of glass, brick and metal towers that would loom over the surrounding neighborhoods and alter the borough's otherwise sparse skyline.
But in an hourlong presentation of the project's latest design, Frank Gehry, the project's architect, and Laurie Olin, its landscape designer, emphasized details that they said would harmonize the planned arena and commercial and residential buildings with the neighborhoods they would border.
They described shorter and thinner buildings on Dean Street, where the project abuts a mostly low-rise neighborhood; extensive use of glass walls at street level; and what Mr. Olin described as "the biggest stoop in Brooklyn," a sort of public porch planned for the southeast corner of Flatbush and Atlantic Avenues.
"It still feels like Brooklyn," said Mr. Olin.
But their presentation also made clear that the developer and its opponents still have vastly different visions of what, exactly, Brooklyn should feel like, at least in this corner of the borough, where the downtown commercial district shades into a quiet neighborhood of brownstones to the southeast.
"They should've been picketing Henry Ford," Mr. Gehry said yesterday, dismissing critics who have questioned the pace and scale of development in the borough. "There is progress everywhere. There is constant change. The issue is how to manage it."
Opponents of the project have criticized the density of Mr. Gehry's designs, among other issues, and the government's possible condemnation of property to make room for them. They have backed alternative plans for the site, including proposals by rival developers that would include mostly low-rise buildings and not require eminent domain. (Forest City Ratner is the development partner of The New York Times Company in building its new Midtown headquarters, a project that itself involved government condemnation of private property.) Daniel Goldstein, a spokesman for Develop Don't Destroy Brooklyn, said the new design "puts a Gehry sheen on top of repudiated 1960's-style urban renewal."
He continued, "It's still way too big, and does not change the fact of 16 skyscrapers slammed on top of and next to low-rise, historic neighborhoods."
Mr. Goldstein also criticized Mr. Gehry for declining to meet with area residents. The project "remains an urban planning disaster," he said, because "Mr. Gehry and Mr. Ratner continue to ignore the community."
Yesterday's orchestrated presentation — Junior's, the famed Brooklyn cheesecake place, catered breakfast — came amid a contentious period in the two-and-a-half-year struggle over the Atlantic Yards.
The developer's decision last month to pare back the project's size by about 5 percent has done little to mollify its most astringent critics. And in the next few months, the Empire State Development Corporation, the state agency sponsoring the project, is expected to release a draft study of its potential environmental impacts that will almost certainly be the subject of legal action.
The Council of Brooklyn Neighborhoods, an association of about 40 Brooklyn community groups, announced yesterday that it had hired Phillips Preiss Shapiro Associates, a real estate planning firm, to review the draft study.
Earlier this week, Develop Don't Destroy Brooklyn announced the formation of an advisory board to help with fund-raising, outreach and education. The board includes celebrities who live near the proposed site — such as the novelists Jonathan Lethem and Jhumpa Lahiri and the actors Heath Ledger and Michelle Williams — as well as preservationists, activists and politicians.
Yesterday's presentation is unlikely to temper the passions that have rallied them against Forest City Ratner. Though Mr. Gehry had previously suggested the project would be scaled back significantly, he was more elusive yesterday, saying that he had been "paring back" the design. "It is a process," he added.
Mr. Olin dismissed criticism from some community leaders and outside architects that the project's roughly seven acres of open space were too isolated from surrounding streets to be welcoming to residents.
"I don't think one has to worry about trying to draw people into open space in New York City," he said. "If there's open space that isn't closed or fenced in, people find it."
Much of yesterday's discussion focused on the project's 18,000-seat basketball arena, designed after a lengthy survey of arenas around the country. It is designed to "create intimacy" in an otherwise vast space, Mr. Gehry said, with tiers of seating structured so that "the people in the cheap seats are no longer second-class citizens."
Mr. Gehry spoke in sweeping language of his efforts to create "different levels of iconicity," varying the buildings' degree of unconventionality to create a skyline that would fit into the area. A few buildings would still be adorned with Mr. Gehry's trademark undulating panels, including the project's tallest, dubbed "Miss Brooklyn," which he described as a bride with flowing veils. On the Dean Street side of the project, spaces between buildings have also been widened significantly from some early renderings to create better lines of sight from one side of the project to the other."We didn't take this lightly," Mr. Gehry said. "We spent an enormous amount of time studying Brooklyn."
posted by Jones Lang LaSalle NJ News Blog at 10:36 AM
Hindu group plans to build vast complex E. Windsor plan features temple, shopping Friday, May 12, 2006 By JOYCE J. PERSICO Staff Writer
EAST WINDSOR -- A proposed $142 million spiritual and commercial complex planned by a Hindu sect on 152 undeveloped acres near the New Jersey Turnpike will get a public airing later this month.
The complex, in development for more than two years, could prove a powerful draw for central New Jersey's Indian population if plans suggested by the B.A.P.S. sect -- Bochasanwasi Shri Akshar Purushottam Swaminarayan Sanstha -- are well received during the public meeting May 25.
Preliminary plans call for a house of worship, assembly hall, shopping center, food court, restaurant, library, research facility and monument as well as centers for conferences and exhibitions, youth, yoga and meditation.
"This is the first proposal of its kind in New Jersey," said Anthony "Skip" Cimino of the Manalapan-based Schoor DePalma Engineering, a firm hired by B.A.P.S.
"The organization has deep roots in India and wants to be a good community citizen," said Cimino, who is a former Hamilton school board member, Mercer County freeholder, state assemblyman and state personnel director.
Before plans for the complex on land near Turnpike Exit 8 are submitted to the township government, the B.A.P.S. sect wants township residents to ask questions, express concerns and learn what the project will involve.
According to the proposal, the complex would be open to the public, and more than half its land would be preserved as open space.
At the May 25 presentation, representatives of the Indian socio-spiritual organization, with 1 million members worldwide, will detail what is proposed for the farmland tract west of Milford Road along the Turnpike and the Rocky Brook. Access would be from Milford Road.
B.A.P.S. bought the land two years ago and now leases it to farmers. Last year, the group approached the township with its intentions, and Mayor Janice S. Mironov suggested a public presentation before plans are offered.
"They approached the township with some informal discussions," Mironov said. "At this point, they haven't even finalized enough of a concept to make a public presentation."
Mironov said the complex would be "much more than a house of worship" but the buildings would cover "only 20 of the 152 acres."
Currently zoned industrial, the project would require a zoning change. The Conair Corp. is to the south of the property, which is at the edge of the township's business park.
"We have a significant presence of Indians and Asians in the township," Mironov said.
According to the 2000 Census, Asians were the fastest growing racial group in New Jersey during the 1990s, up by 77.3 percent (209,437 people), representing 5.9 percent of the state's total population.
According to the documentary "Coming from India," New Jersey ranks third in the United States in Asian Indian population after California and New York.
"This is a large project in its very initial stages," Cimino said. "We agree with the mayor that it's important to receive public input regarding our concept from the initial stages."
He said the site near the Turnpike makes for easy access without disrupting the community. Cimino said it was "too premature" to "roll out a timeline" on the project. He said representatives of B.A.P.S. and lawyers Mark Citron and Henry Kent Smith will "detail the benefits to the community."
The proposed cultural center campus would include landscaped areas with ponds, fountain and gardens, with various facilities available for public use.
B.A.P.S. has a center on Woodbourne Road in Levittown, Pa., and others in Metuchen, Clifton, Edison, North Bergen, Cherry Hill and Jersey City.
Officials at the Metuchen offices of B.A.P.S. Inc., a non-profit organization, could not be reached for comment.
The conceptual plan will be presented at the Ramada Inn on Monmouth Street in East Windsor at 7:30 p.m. on May 25.
Contact Joyce J. Persico at jpersico@njtimes.com or at (609) 989-5662.
John Comer, Charlie Reese, Chris Michael, Craig Ambrose, Brett Lowy Receive Honors Hartz Mountain Industries Inc., a private commercial real estate owner in Secaucus, NJ, announced promotions for five new executives.
John Comer, who joined the company in 1979 and spent his first 10 years working in the architectural department, was promoted to senior vice president of building construction. Charlie Reese was promoted to vice president of leasing. He joined the company in 1988 and worked closely with the leasing and marketing department.
The new vice president of assistant general counsel, Curtis Michael, started with the company in 1990 and focuses on environmental and commercial litigation.
Craig Ambrose was promoted to assistant vice president, senior associate general counsel. Ambrose started as file clerk in the legal department in 1988.
Brett Lowy was promoted to assistant vice president, assistant general counsel where he works on the negotiation of retail leases as well as tenant and bankruptcy related issues.
posted by Jones Lang LaSalle NJ News Blog at 10:34 AM
Despite Slow Quarter, Big Needs Await Manhattan Office, C&W Exec Says May 11, 2006 By Paul Rosta, Senior Associate Editor
Despite weak first-quarter leasing activity, the Manhattan office market is poised for an historic period, but the lack of new product in the pipeline could seriously constrict future growth. That was the prediction of Joseph Harbert, COO of Cushman & Wakefield Inc.’s New York City metropolitan region, during the firm’s annual forum in Manhattan this morning.
Last month’s watershed agreement allowing construction at the World Trade Center to start will greatly influence the market, Harbert said. Still, the amount of new product in the pipeline--less than 20 million square feet--pales in comparison to the 56 million square feet built in the 1980s, which followed upwards of 50 million square feet built in the 1970s. "You can’t fill buildings that don’t exist when the market turns," Harbert argued.
Manhattan leasing activity dropped 19 percent from first quarter 2005 to 5.4 million square feet--a figure barely above recession levels, Harbert pointed out. Of the city’s three major office submarkets, only Midtown South showed positive absorption in the first quarter, with a 400,000-square-foot gain. Yet only seven blocks of space 250,000 square feet and larger are available in Manhattan today--none of them in the Midtown South submarket.
That will drive rates up even faster for large blocks than the significant appreciation expected across Manhattan. Based on projections from what Harbert called the comparable period of 1995-2000, average Midtown asking rents could rise from $47.71 at the end of last year to as much as $54.84. Downtown could see rents increase from $35.73 to $38.19 by the end of the year. "I’m predicting that $20 rents will disappear from Manhattan entirely in 2006," Harbert said.
In his keynote address following Harbert’s presentation, former Walt Disney Co. chairman & CEO Michael Eisner discussed the impact of the Internet on the world of entertainment and beyond. "The world has become a single dot as everyone finds themselves occupying the same time and the same space," Eisner noted. Yet the importance of bricks and mortar remains undiminished: "We will still need to be anchored in places in the real world to access all the infinite places in the ether world," he said.
posted by Jones Lang LaSalle NJ News Blog at 10:34 AM
Turning to China Wednesday, May 10, 2006 By HUGH R. MORLEY STAFF WRITER
Prologis knows ports, and knows what drives them.
The Denver-based company, which has warehouses around the globe, owns 19 million square feet of property at New Jersey's ports, and plans to build 5 million square feet more.
But on Tuesday, the eyes of company Vice President Walter C. Rekowich were fixed firmly on the East. At about 11:40 a.m., he was one of 63 American executives to simultaneously sign contracts with the government of Chinese province Zhejiang.
After a brief introduction from a moderator, the businessmen -- each paired with a Chinese official on one of two raised platforms -- picked up their pens and signed the deals.
The unusual mixture of showman- ship and business -- which took place at a "trade and investment symposium" at the Waldorf-Astoria in New York -- offered a window into the weeklong visit of Zhejiang officials to New York and New Jersey.
While they sought to lure U.S. investors to one of the fastest-growing economies in China, American businessmen milled around the forum with their own agenda: to gain access and sell goods to the Far Eastern powerhouse.
Rekowich -- who signed a contract to spend about $50 million on building warehouse parks -- said Zhejiang's economic growth and population of 48 million were hard to resist.
"The region is one-quarter of the size of the U.S.," he said. "It's a very, very significant region in the business of China.
"Where there are people," he added, "there is a need for manufacturing and warehousing." The forum followed a visit by the province's Communist Party Chairman Xi Jingping to Trenton to meet Governor Corzine. The two regions have maintained a "sister" relationship since 1981, and Corzine officially extended the agreement another 25 years.
Zhejiang Vice Governor Zhong Shan noted that his province had been ranked the 20th most competitive area out of 60 around the world, according to a Swiss business school study.
Located just south of Shanghai, the province has a strong education system, average economic growth of 13.1 percent a year and "one of the highest levels of personal income in Mainland China," he said.
Several American businessmen clearly saw opportunity in the booming region. "We believe there is great potential," said Eric Dormoy, president of DM Industries, a Miami-based hot tub and bathtub manufacturer. The company signed an agreement to form a joint venture with a Chinese manufacturer, he said.
Bill Waters, an accountant for Missouri Walnut of Norwood, Miss., said the deal his company signed is modest -- $2 million to boost its distribution operations in China.
"Basically, that just gets us a foot in the door," he said. The company, which supplies Walnut timber for flooring and furniture manufacture, was bought by a Chinese investor several years ago, and already has a logging facility in Shanghai, he said.
It's now looking to open another, perhaps in Zhejiang, Waters said. He called the trade conference "very useful" because it gave the company a host of contacts in the region. He noted the challenge of doing business in China, where the government controls commerce.
"In China, it's difficult," he said. "You have to have permission to build a plant or anything like that."
May 11, 2006 -- Boston Properties, the real estate investment trust controlled by Daily News Publisher Mort Zuckerman, has agreed to buy out its partners in Citigroup Center in a deal that values the tower at $1.115 billion, The Post has learned.
Zuckerman's REIT will shell out about $700 a square foot, or nearly $400 million, for the 35 percent share of the 1.65 million square foot signature trophy from Allied Partners - a move that could pave the way for Boston Properties to sell the entire tower.
The Post has also learned the REIT recently paid Citigroup about $1.5 million to obtain the valuable naming rights to the slant-topped skyline landmark at 153 E. 53rd St. That means a future tenant or purchaser could rebrand the iconic tower.
The building is close to 100 percent occupied and Citigroup's lease for the bottom 23 floors has a decade left to run.
"To be the sole decision maker of an asset of that stature has a value in and of itself," said Studley investment broker Woody Heller, who sold Allied and Boston Properties the 59-story skyscraper in 2001 for $725 million.
Allied Partners, a private real estate firm headed by Chairman Richard Hadar and CEO son Eric Hadar, agreed to sell its interest to Zuckerman's REIT after negotiations that began last fall, sources said.
The Hadars made the original deal for the Citigroup Center and brought in Boston Properties as their partner.
Because of security issues, the Hadars have long sought to physically separate the shopping atrium from the offices. After 9/11, the cantilevered tower's leg was also reinforced against possible truck bombs.
Boston Properties recently agreed to sell 280 Park Ave. to the Dubai-based Istithmar, which at the same time decided to back away from the purchase of the REIT's 5 Times Square, apparently because its auditors, Ernst & Young, are the major tenants.
Istithmar divisions have already purchased 230 Park Ave. along with the Essex House Hotel, and is in contract to buy 6 Times Square, and it would not be a stretch to say they may be interested in a tower like the Citigroup Center.
posted by Jones Lang LaSalle NJ News Blog at 2:29 PM
Novartis to build vaccine plant in U.S. By Val Brickates Kennedy, MarketWatch Last Update: 7:23 PM ET May 10, 2006
BOSTON (MarketWatch) -- Novartis AG plans to build a new vaccine plant in the United States that will use the latest technology to produce avian-flu vaccine more quickly for the U.S. market in case of a pandemic, according to Novartis Chief Executive Daniel Vasella.
In an interview with MarketWatch late Wednesday, Vasella said that the plant, which will likely cost around $400 million, will tap new cell-based culturing technologies. The executive declined to speculate on how long it will take to bring the plant on line, saying only it could take "several years." Although Novartis (NVSnovartis a g sponsored adr NVS ) has not made a final decision yet on where it will be sited, Vasella noted that North Carolina is a strong possibility. He said that the nation's two largest states for the biotechnology sector, Massachusetts and California, were not being considered. "We have three sites now we are evaluating," added Vasella. "I think within the next few weeks, we will be able to make a decision and be able to make an announcement."
Currently, flu vaccines are created from cells cultured in chicken eggs, a process that ranges from six to nine months -- a painfully long time to wait in the face of an international pandemic. Health experts also have pointed out that an avian-flu pandemic could also result in the decimation of the very birds needed to produce those vaccines.
Cell-based production, experts say, could shorten that time line to three to six months, while reducing the reliance on bird flocks.
Last week, Novartis was awarded a $221 million contract by the U.S. Health and Human Services Department to work on cell-based production technologies as part of the government's avian-flu pandemic plan. HHS has likewise awarded similar contracts to Belgian conglomerate Solvay SA, U.K. drugmaker GlaxoSmithKline, European conglomerate Sanofi-Aventis, U.S. defense contractor Computer Sciences Corp. and Gaithersburg, Md.-based MedImmune Inc. 'In every country, where you produce, you expect the country to knock on the door and say, "Serve me first."' — Daniel Vasella, Novartis
Vasella said that while the plant would be initially used to produce flu vaccine, it could later be used to produce other vaccines and biotech drugs such as monoclonal antibodies.
When asked if Novartis expects to be able to bid more easily for U.S. contracts with an American facility in place, he replied: "It's the opposite -- we will be obliged to have U.S. contracts.
"In every country, where you produce, you expect the country to knock on the door and say, 'Serve me first.' That's natural; it's to be expected, and I wouldn't expect anything else," Vasella added.
In April, Novartis acquired California vaccine maker Chiron Corp. , of which it already owned about a 40% stake, for more than $5 billion.
Chiron had been awarded a U.S. contract for $62.5 million in October 2005 to supply the government with its experimental avian-flu vaccine. Because of ongoing quality-control problems at its flu-vaccine plant in the United Kingdom, the order is not expected to be filled until later this fall. Chiron also has had similar problems at its vaccine-manufacturing facility in Germany.
Novartis is carrying on Chiron's work of developing its avian-flu vaccine, which also contains a compound known as an adjuvant. Vasella said that the Chiron adjuvant should make the vaccine more effective in combating variants of the H5N1 avian-flu virus, which could allow for mass inoculations ahead of a pandemic.
Vasella, a physician by training, said that he is a member of the company's ongoing human clinical trial for the vaccine. "I actually have H5N1, or at least part of the virus, in me right now," he remarked.
In related news, Vasella declined to comment if Novartis will bid on Pfizer Inc.'s consumer-products unit, citing company policy. Pfizer has said that it is interested in selling the division, which some analysts have valued at about $14 billion. Novartis has been speculated to be a leading bidder.
posted by Jones Lang LaSalle NJ News Blog at 2:17 PM
Law Firm Relocates, Doubles Space By Eric Peterson
HACKENSACK, NJ-The law firm of Rivkin Radler LLP is relocating its New Jersey office from Summit to the Court Plaza office complex here. The firm has signed a new long-term lease at the complex, and its new 6,337-sf space is more the double its previous space. Rivkin Radler is based in Uniondale, NY and has a New York City office as well.
Rivkin Radler was represented by Richard Van Houten Jr., president of the Van Houten Group, an Allendale, NJ-based corporate real estate advisory firm. "The space also provides room for expansion," Van Houten says. The owner of the complex, locally based Alfred Sanzari Enterprises, was represented in-house by Frank C. Pratt. Terms of the signing were not disclosed.
Court Plaza is a two-building, class A property totaling 325,000 sf. Situated in this city's downtown, the asset is across Main St. from the Bergen County Courthouse. It was originally developed in phases by Sanzari, which continues to own and manage it.
For sale' sign to hang on Hoboken municipal garage
The Hoboken City Council has approved a "compromise" plan for the 1-acre municipal garage site, sparking a mad dash to sell the property in time to infuse an expected $5 million into the city coffers before the end of the 2006 fiscal year on June 30.
"We tried to put together a plan that is broad enough to attract developers and narrow enough to let the city do what it needs to do," said Lane Bajardi, chairman of the Observer Highway Advisory Committee. "This is not the end of the process; it is the beginning of the busiest part of the process."
The ordinance was adopted May 3, two weeks after developers and real estate agents failed to urge the council to approve a plan allowing for a 12- to 15- story building.
The following day, officials had already posted a request for proposals on the city's Web site — which must be received by 11 a.m. on May 26.
posted by Jones Lang LaSalle NJ News Blog at 2:15 PM
A TWO-MAN BAND Chief execs of Alteon and HaptoGuard link their biotechs in hopes of scoring on heart drug Thursday, May 11, 2006 BY JEFF MAY Star-Ledger Staff
In the biotech industry, success can take years to announce itself. The same holds true for failure.
That's the dilemma facing shareholders of Alteon, a tiny Par sippany company that has gone through several cycles of rising buzz and near-bust. Which way is it headed now? The struggling biotechnology firm looked like it was ready to give up the ghost this year after a two- decade run. After its lead drug showed no promise in a critical clinical trial last summer, the company said it was exploring "strategic options," and its auditor issued a "going concern" note -- unnerv ing for even the steeliest investor.
Management slashed payroll, halted drug development and watched while key employees drifted off to other jobs.
"For a guy who likes to build companies, it was the worst experience of my life," said Kenneth Moch, Alteon's chief executive since 1998.
But Alteon appeared to gain a new lease on life last month, when it announced a merger with Hapto guard, a private biotech based in Saddle Brook. The $8.8 million deal gives the company a new drug compound to pursue that might reduce the risk of death in diabetics who have suffered heart attacks. The catch: Alteon has run through $222 million since it was founded in 1986, and will require tens or even hundreds of millions more as it moves forward.
Is the planned merger enough of a reason to believe for investors? It's a tough selling job for Moch and his new partner, HaptoGuard Chief Executive Noah Berkowitz. The two are planning to hit the road to woo potential investors, starting with a presentation Monday at the Rodman & Renshaw health-care forum in Monaco.
"We're not a widely followed stock at this point," Moch said. "We're in the proverbial biotech doghouse."
Before the proposed Haptogu ard merger could be struck, Alteon had to wangle some concessions from the biotech powerhouse Genentech, which had made an early investment in the company and owned a huge block of preferred stock. The stock was worth more than Alteon's market capitalization, a situation that spooked other would-be investors. Genentech eventually agreed to take tens of millions of dollars in paper losses in exchange for future potential payments from Alteon and the right to negotiate a deal on HaptoGuard's product if it pans out.
Alteon shareholders will own a majority of the new company, and seat four directors on the board to HaptoGuard's three. But the chief executive of the company will be Berkowitz -- not Moch -- and a key scientific role will be filled by HaptoGuard's director of clinical development, Malcolm McNab, a former Novartis researcher. Moch, a high-profile manager who has served as head of New Jersey's biotech council, will become non-executive chairman.
Berkowitz and Moch insist the merger is not a classic "public shell" acquisition, in which a private company takes over a public one to avoid the time and expense of an initial public offering. Alteon last year hired Burrill & Co. to look into options for the company, and the investment firm came up with four biotech companies that were interested in a merger, but not in Alteon's lead drug, alagebrium, Moch said.
The fact that HaptoGuard was targeting the same treatment areas as Alteon helped swing the deal.
"If we were merging with an alu minum storm-door company, it would have been a different call," Moch said.
Berkowitz said Alteon would continue to develop alagebrium jointly with HaptoGuard's compound, BXT-51072.
"We absolutely believe that ala gebrium has a future, and a very strong one, in heart failure," Berko witz said. "That's why we were at tracted to the deal."
McNab's expertise at Novartis was in hypertension and heart failure, and he saw enough in the preclinical data from alagebrium to see it might have possibilities, Ber kowitz said. The HaptoGuard CEO, a physician and former scientist at the National Cancer Institute, said he was familiar with seeming dead-ends in drug development.
"In oncology, it's not uncom mon to have a drug fail initially but to find out that the drug works," Berkowitz said.
HaptoGuard is essentially a two-man operation, with most drug development duties contracted out. Alteon will be run in the same lean fashion, with clinical work farmed out to Israel and the Czech Republic.
Berkowitz is already working to expand the new company's drug portfolio. Earlier this week, Hapto guard announced it was licensing a number of compounds developed by Thomas Back, a University of Calgary researcher.
Still, the odds are against Al teon and most small biotechs. For every 5,000 to 10,000 drug compounds discovered, only one goes on to win marketing approval by the Food and Drug Administration, according to the industry's trade group, the Pharmaceutical Research and Marketing Association.
Jeff May covers the pharmaceuti cal industry and can be reached at jmay@starledger.com or (973) 392-4282.
Corzine buys the ticket for Trans-Hudson rail tunnel in 2009 Thursday, May 11, 2006 BY DUNSTAN McNICHOL Star-Ledger Staff
Promising to help North Jersey commuters make a great escape from mounting congestion, Gov. Jon Corzine and top members of his administration said yesterday groundbreaking for construction of a railroad tunnel linking New Jersey and Manhattan will happen in 2009. "For a lot of personal reasons, in 2009 there will be a shovel in the ground that year," said Corzine, who could be seeking re-election that year, too. "I am absolutely committed to that project, and it will happen."
Plans for the $6 billion Trans- Hudson Express (THE) tunnel dominated the annual Governor's Transportation Conference in Trenton, with top officials from New Jersey Transit, the Port Authority of New York & New Jersey and the state Department of Transportation laying out funding schedules and timetables for the project.
Philip K. Beachem, president of the highway contractor's lobbying group Alliance for Action, kicked off the seminar by unveiling a bi- state campaign to promote the project with the New York Building Conference.
Preliminary studies already are under way, and George Warrington, executive director of New Jersey Transit, said his agency is scheduled to hire an engineer in July to lay out the full alignment of the tunnel and its approaches through the Meadowlands, Palisades and under the Hudson River. By the end of the year, he said, the agency plans to seek a construction manager. "We are very, very committed to delivering this project to the people of New Jersey over the next decade," he said. "It is the most impor tant project in 100 years."
Anthony Coscia, chairman of the Port Authority, added his agency's endorsement, saying construction of the tunnel was as important to the current generation as the building of the Lincoln Tunnel and George Washington Bridges were earlier.
"I'm committed to the Port Authority making a multibillion-dollar investment into that project," he said. "That's a project that clearly people years from now will look back and say it was the turning point in creating a regional economy."
Warrington said the current two tracks under the Hudson carry a maximum of 23 trains per hour. He said the state already has taken steps to expand the existing tun nel's carrying capacity by adding cars to trains, improving signaling, and preparing to introduce double- decker cars later this year.
"We're all done squeezing; there's simply nothing left to wring out," he said. "We must build a tunnel and we must build it now."
Dunstan McNichol covers state government issues. He may be reached at dmcnichol@starled ger.com or (609) 989-0341.
DTZ Holdings Buys Interest in Rockwood Realty Associates
DTZ Holdings P.L.C. has purchased a 50 percent interest in investment banking firm Rockwood Realty Associates L.L.C. for $45 million, plus an earnout consideration. London-based DTZ Holdings will rename the company DTZ Rockwood.
posted by Jones Lang LaSalle NJ News Blog at 2:09 PM
W.P. Carey Completes Multi-Store Sale-Leaseback with Kings Super Markets
W.P. Carey & Co. has completed the sale-leaseback acquisition of 26 Kings grocery stores in Northern New Jersey. Six of the stores were purchased by the company's real estate fund Corporate Property Associates 16. Following the transaction, an investor group acquired Kings Super Markets Inc. for $61.5 million.
posted by Jones Lang LaSalle NJ News Blog at 2:08 PM
Mack-Cali Completes Gale Acquisition By Eric Peterson
CRANFORD, NJ-Mack-Cali Realty Corp., based here, has completed its previously announced acquisition of the Gale Real Estate Services Co., Florham Park, as well as interests in some 2.8 million sf of office properties in New Jersey. As part of the deal, Gale president Mark Yeager will continue in that role and add the title of executive vice president of Mack-Cali.
"This is a watershed event for Mack-Cali," says Mitchell E. Hersh, the REIT's president and CEO. "It solidifies our dominant market position, and it provides us with a powerful engine for further growth."
As reported earlier, the deal calls for Mack-Cali to pay $12 million in cash, $10 million in common shares and up to another $18 million in cash based on a three-year earn-out for Gale Real Estate Services. During that period, Stan Gale will serve as non-executive vice chairman of Gale Real Estate. Hersh will be the company's chairman and CEO in addition to his Mack-Cali duties.
The deal also calls for Mack-Cali to pay $378 million to a joint venture of Gale and SL Green Realty for 13 class A office properties totaling 1.9 million sf in Northern and Central New Jersey. Mack-Cali is also spending $127.5 million to buy one-half ownership interests from Gale and SL Green in seven class A office properties totaling 900,000 sf in Northern and Central New Jersey, and is paying Gale another $1.8 million for a 10% interest in a 550,000-sf office property in Princeton.
Finally, under the terms of the deal, Mack-Cali may also acquire ownership interests in up to 10 other properties, subject to third-party consent and other conditions, for approximately $24 million. The interests, which would be acquired from Stan Gale and/or his affiliates, range from 1% to 50%, and include office properties, developable land and project development rights.
According to information released by Mack-Cali, the acquisition transactions are being financed through the assumption of mortgage debt, the placement of new mortgage debt, credit facility drawings, cash and the issuance of nearly 225,000 common operating partnership units valued at $44.50 per unit.
Israeli drugmaker Teva Pharmaceuticals (TEVA:Nasdaq - news - research - Cramer's Take) reported a gaping first-quarter loss Wednesday due to a charge related to its acquisition of Ivax. Its adjusted earnings missed Wall Street forecasts.
Teva, lost $1 billion, or $1.40 a share, in the quarter, compared with earnings of $259.1 million, or 38 cents a share, a year ago. The latest quarter had a charge of $1.2 billion for Ivax. Excluding that and a 1-cent stock-options expense, Teva earned 38 cents a share in the latest quarter, missing the Thomson First Call estimate by 3 cents.
First-quarter sales rose 28% from a year ago to $1.67 billion, also short of the Wall Street consensus, which was for sales of $1.9 billion. Teva said sales of its multiple sclerosis drug Copaxone rose 29% from a year ago to $329 million. By region, North American pharmaceuticals sales rose 17% to $851 million, making up 57% of total sales, while European pharmaceutical sales rose 17% to $381 million, or 26% of total sales.
"We are very pleased with the results of this special quarter in which we began, and have made excellent progress in, the integration of Ivax into Teva," the company said. "Today, Teva's scope, scale, and geographic reach are unmatched in the industry -- and this allows us to create exceptional value for patients, for customers, and for our shareholders."
"This was an especially good quarter for Copaxone, which continues to break sales records and to outpace the growth of the global MS market. We are very excited about 2006, which we believe will be a great year for Teva."
The stock closed at $42.91 Tuesday.
posted by Jones Lang LaSalle NJ News Blog at 11:24 AM
At the same time that three new buildings are going up on Route 1, two very big blocks of space have gone on the market - the Technology Center of Princeton (the former Lucent property in Hopewell) and the former Rhodia property in Cranbury - and they will compete with the new Class A space on a price basis. Even more hazardous to the health of the Route 1 buildings, some say, will be the developments to the south. Right next to I-95 in Ewing Township, Opus East is developing the Atchley tract, which it bought from Bloomberg (see Life in the Fast Lane, page 62).
More imminent: Brandywine Realty is leasing the vacated Lenox building on Lenox Drive and is moving swiftly to build on that property as well. Lenox Drive has excellent access to I-95 and appeals to companies with one foot in Philadelphia.
Milt Charbonneau of Colliers International represented the Lenox Drive owner, Kentucky-based Brown Forman, in the sealed-bid sale of the 90,000 square-foot building to Brandywine for just over $10 million. Lenox will be moving in the next couple of months to Bristol, Pennsylvania. Brandywine's Steve Jennings is leasing the Lenox Drive property and the two speculative buildings that will be built behind it. Philadelphia-based Ewing Cole is doing the design.
Charbonneau is the son of a realtor who works for the Indianapolis branch of Colliers. He graduated in 1981 from Miami University of Ohio and worked for Colliers in New York before coming to New Jersey, where he works in the Somerset office and also in the new Princeton Forrestal Village office opened last fall by Doug Twyman.
With 1.2 million square feet of new construction, vacancy signs are hanging out in the neighborhoods of all three new buildings. An entire building emptied out when Bloomberg left the Forrestal Center, at least one floor at the Carnegie Center is looking for tenants, and Alexander Road is lined with vacancy signs. "The nay-sayers in our industry might say this proliferation of new product threatens to heighten the vacancy rate and flatten rents," says Twyman. "We prefer to view these events as new opportunities."
posted by Jones Lang LaSalle NJ News Blog at 11:22 AM
Reckson's giant building at Route 1 and Alexander Road has five floors, like its competitors, but each floor is 50,000 square feet, compared with 32,000 feet for Patrinely. For now at least, Reckson hopes to lease no less than one floor to a tenant, and it claims to be entertaining a couple of proposals to lease the whole building for a company's world headquarters.
Like Hilton Realty, Reckson Associates is essentially a family business, even though it is a publicly traded company. Todd Rechler, corporate senior vice president and managing director for New Jersey, is the grandson of the founder and grew up with construction talk at the dinner table. "In the late 1970s my father and uncle developed some of the first fully amenitized office buildings, perhaps on the east coast, certainly on Long Island, with cafeterias and health clubs," says Rechler. "Our goal is to have a premiere building in a premiere location, that has premiere service for our tenants."
He graduated in 1991 from Rhode Island-based Roger Williams University with a double major in business and construction. He and his wife, who is opening a New Jersey division of a charity organization, the Breast Cancer Emergency Fund, have two school-aged children. The Rechler family firm went public as a real estate investment trust. Reckson's father and uncle have retired, and his brother, Scott, is the CEO of the firm.
University Square has a granite facade (gray tinged with pink) and reflective glass windows, a two-story atrium with a 21-foot ceiling. front and rear entrances, and 1,077 parking spaces spread around the building. The amenities also include a dining facility (promised to be upscale and gourmet) a gym (promised to be state-of-the art with plasma TVs, locker rooms, and saunas), a team room for teleconferencing, four elevators, and a loading dock.
Reckson's advantages are its dominant location, overlooking Route 1, and its formidable list of amenities. But it does not have a basement or the inclination to lease to smaller tenants, at least right now. "At a later date there could be an opportunity for smaller tenants," says David Simson of GVA Williams in Parsippany. He is marketing the building along with Tom Romano and Steve Tolcash of GVA Williams Buschman on Lenox Drive.
Rental price: Not published, but around $35, or comparable to the competition. Construction is on schedule and delivery is supposed to be by the end of this year.
"If activity is at all indicative of future results, we are overwhelmed and extremely pleased with current marketing efforts," says Simson. "A high profile company from New York City is looking at a major portion of the building along with three prospective tenants within the greater Princeton area. In our opinion, the location is the preeminent site being developed in the greater Princeton area."
Reckson Associates Realty Corp., 51 JFK Parkway, Short Hills, NJ 07078. 973-313-3300; fax, 973-313-3301. Todd Rechler, corporate senior vice president.
posted by Jones Lang LaSalle NJ News Blog at 11:21 AM
Carnegie 902 is a five-story Class A structure with 136,000 square feet of office space. Rental cost: $35 per square foot plus electricity and heating costs.
"Location and quality is the pitch on this," says Matt Malatich, who recently came to Hilton Realty from marketing the American Metro Center for Preferred Real Estate Investments. "Our mechanicals are state of the art, and we have access to Route 1 from Meadow Road, Alexander Road, and Carnegie Center Boulevard."
Other advantages: Covered parking, proximity to restaurants and shops, and willingness to divide the building for tenants who need 5,000 to 15,000 feet. "What will make us unusual is that with a brand new Class A building, we are willing to split floors in two or four tenants per floor," says Hilton Realty's Mark Hill. The first floor could accommodate offices from 4,612 square feet to 7,400 square feet.
Another deal maker might be the basement. Basement? Few Class A buildings come with basements, but they are useful for storing files. Space underground will rent for just $10 or less than a third of the swanky space. "Some of our tenants in other buildings may have filing and storage requirements, and the humidity-controlled basement can free up the more expensive office space. It is more costly to construct but is an amenity," says Malatich. The design also allows the landlord to stow mechanical systems underground, thus saving space on the first floor.
George Sands has been a developer since 1952, and now his son Jeffrey is in the business as well. George Sands began by buying farms and building housing developments and apartments in Montgomery, East Windsor, and Hamilton. Research Park took a decade to build, starting in the mid 1960s, and the first tenants were Educational Testing Service and the Gallup Poll. The small retail strip near Research Park grew into a Buxton ice cream store at Montgomery Center (now Friendly's) and then into shopping centers on Route 206 and in the Windsors.
The first Class A buildings were two acquired in 1999 near Philadelphia, flanking the Pennsylvania Turnpike. Other Class A acquisitions were 821 Alexander, 4301 Route South, plus 101 and 104 Interchange Plaza, located at Exit 8A, where the firm is seeking approvals for a 60,000 square foot building.
Hilton bought the Carnegie Center property, complete with architectural designs and approvals, from Advance Realty Group. Unlike the Patrinely firm, Hilton Realty does not "build to sell." It operates on a conservative investment model. "We like multi tenant assets, five solid tenants rather than one building with one tenant," says Hill. "We buy or build the best building that can possibly be built, fill it with the best tenants, and own it forever."
Hilton now owns seven million square feet of real estate, including office, retail, and apartments. Though the firm has 16 people in the Princeton office, it has 115 nationally, including facilities and apartment managers and leasing brokers. Robert Parry, who is doing the Carnegie Center job, is one of three project managers who do the general contracting. Fletcher Thompson of East Brunswick did the design, which Malatich describes as having "a ton of glass on the outside and a two-story atrium lobby with four entry doors."
As for leasing activity, "I have talked to quite a few existing tenants about expansion to 902 and have gone into second and third meetings," says Hill.
Hilton Realty Co. LLC, 194 Nassau Street, Suite 21, Princeton 08542; 609-921-6060; fax, 609-921-0939. George H. Sands, senior partner. www.hiltonrealtyco.com
posted by Jones Lang LaSalle NJ News Blog at 11:21 AM
If a large tenant needs 130,000 square feet, or needs to be north of Princeton, the Patrinely choice would be obvious.
Patrinely's 1100 Campus Road, the first of several planned buildings there, is made of clad and precast stone and granite. The smallest unit is on the first floor, 5,000 square feet, and that floor also has 8,000 and 10,000-foot spaces, plus a fitness center and cafe. The top three floors have 36,000 square feet. "It is not our intention to have 25-30 tenants in a building like this, but we could," says Tom Bermingham, Patrinely's senior vice president of the northeast region. Cost: $36.50 per square foot, plus electricity.
Founded in 1984 by Dean Patrinely, who had worked with the well-known developer Gerald Hines, Patrinely is a privately held firm that focuses on build-to-suit projects. Based in Houston, Texas, it has a portfolio valued at about $1 billion in residential and commercial development. In addition to the Forrestal Center project, others are underway in Phoenix, Tampa, Miami, and Bethesda.
Patrinely's philosophy: to develop buildings and sell them. For instance, it built 225,000 square feet at College Road West and cashed out with an early sale to Miami-based New Valley Corporation for $54 million in 2003. It was resold two years later to a Swiss-based investment group for $71.5 million or $317 per foot, one of the highest prices paid in the Princeton market. The larger of two buildings here is the North American headquarters of Novo Nordisk, and another major tenant is American Re.
For Patrinely's Campus Road project, the financial partner is San Antonio-based United Services Automobile Association. It was designed by Terry Steelman, a former Hillier Architect who is now with Ballinger in Philadelphia, and built by Driscoll Construction.
"We felt the Princeton market was underserved for Class A office space, because nothing had been built in the last five years, so we purchased property for a five-building 800,000 square foot campus," says Bermingham. A 1973 Boston College graduate, he is the son of RCA's general counsel who managed RCA's merger with General Electric.
"Contrarian in view, but still very bullish on Princeton, we decided to go ahead with the project, totally on spec."
One advantage for Campus Road is its design flexibility, because it is column free. "Our columns are on the exterior and on the central spine, so no columns interfere with layout and design. Buildings that are more square will have columns piercing the slab and running through the center," says Bermingham. For instance, the Hilton building has columns at 40-foot intervals.
Who might want a clear vista and an open floor plan, with not many closed-door offices? Financial services firms, trading operations, sales firms, pharmaceutical companies, and software designers, says Bermingham. "We are having a good amount of activity, and two proposals are under consideration."
Other competitive advantages: good parking (four cars per 1,000 square feet) and a site large enough to allow for companies to expand.
The price is lower than space in downtown Princeton, higher than older buildings at the Carnegie Center, and about equal to values in Bergen County. But as Bermingham points out, Bergen County has no new buildings.
Historically markets like Princeton have acted as a pressure valve market, because when prices go higher in New York, companies move to Princeton. "Midtown is as costly and tight as it has been for a decade and a half, more than $100 per square foot," says Bermingham. "In my experience, Princeton attracts companies that are there now and need to expand, or those coming from New York or Philadelphia. Certainly it is less costly for employees and there is less turnover than in north Jersey, The area in Bergen/Morris counties has a more New York-centric attitude."
The New Jersey economy has not been as robust in terms of creating jobs as might have been hoped, which has kept significant amounts of space open, says Bermingham. "As property ages, it slips in class, and now there is a large amount of Class B space on the market."
"Patrinely was finished last October, and it had a six to nine month advantage in terms of being able to show finished product. In ordinary times it could have capitalized on that and have an advantage," says Knights, who represents the Forrestal Center. "But the lack of demand for office space has eroded that advantage for Patrinely. The other two are catching up."
posted by Jones Lang LaSalle NJ News Blog at 11:20 AM
Princeton's last experience with a building boom was followed by a bust, comparable to a game of musical chairs where the same child is left standing time after time. From its completion in 1991, Crossroads Corporate Center was famously unoccupied. Standing sentinel on Route 1, just north of I-295 with access from a back road near the Department of Motor Vehicles, it remained vacant for six years.
Now three big projects are in various stages of completion. One is built and two are well under way, but meanwhile the market for office space has softened. Softened is a euphemism, actually, because some say it is worse than soft. "It's flat," says David Knights of Picus Associates at the Forrestal Center, which hosts the most recently competed building.
Pull up your chairs to watch this contest. When the music stops, which building will be left empty?
The list of competitors starts at the Forrestal Center, where the Patrinely Group has finished a five-story, 166,900 square-foot building at 1100 Campus Road, accessible from Scudders Mill Road. It is called Princeton Corporate Campus at the Forrestal Center. The Houston-based Patrinely organization has a good track record at the Forrestal Center, because its previous buildings on College Road West earned a tidy profit for everyone involved. The Patrinely strategy is "Build and Sell."
But the Campus Road building has stood empty since its completion date last October. If you go south on Route 1 to just before MarketFair, Hilton Realty is finishing a 136,000 square-foot Class A building at Carnegie Center West (the MarketFair side of Route 1). Like the Patrinely Group, Hilton Realty is a private company. It is owned by the George Sands family, known in Princeton as the principal donor for the new Princeton Public Library building, and it is also the Nassau Street-based landlord for 7 million square feet of office, retail, and residential space. The Hilton strategy is "Build or Buy - and Hold."
Driving back north on Route 1 to the Alexander Road overpass you will see, looming over the highway, a humongous building. At 313,000 square feet, it is bigger than the first two put together. Reckson Associates is developing this property, which accesses Route 1 from Alexander Road.
Reckson owns more than 20 million square feet of Class A properties in the tri-state area and though it began as a family firm, it is now publicly-traded real estate investment trust (REIT). "The absolute shocker to the system is Reckson's building - it is bigger by itself than the two other buildings put together," says Knights. It also has the advantage of deep pockets. "Reckson is not a developer that is going to go away."
So three new five-story buildings, all on Route 1, all with the fabled Princeton zip code, will come into the Princeton market in one calendar year.
"The trick is, there is only so much demand for absolute Class A properties and yes, there are three buildings," says Matt Malatich of Hilton Realty. "But each has its distinguishing factors." What critical factors will make one building successful but perhaps leave another building empty?
posted by Jones Lang LaSalle NJ News Blog at 11:20 AM
Undaunted by the prospect of construction on the Scudders Falls bridge, Craig Guers has bought the Atchley tract for his firm, Opus East, and will start development next month. The tract, located in Ewing just off I-95, previously was owned by Bloomberg and had been considered as a new location for its operations now based on Route 518 in Montgomery Township.
Guers also happens to be the buyer who rescued Crossroads Corporate Center from unleased oblivion. The building had stood empty for six years at the intersection of I-95/295 and Route 1 (see page 16) when Guers, who at that time represented Leggett McCall, decided that south of Princeton would be the next hot area. Taking the advice of Aubrey Haines, he bought the building in 1996 for Leggett McCall, and the first tenants moved in the following year.
Guers has followed Haines' lead again, this time to buy land from Bloomberg for Opus East, his current firm. Jay Biggins of Nassau Street-based Stadtmauer Bailkin Biggins was a consultant to Bloomberg, which sold the property directly to Opus East.
Opus East has already signed its first tenant, for the first 110,000 square-foot building, and though Guers cannot reveal the name of the company, he is optimistic about finding tenants for a total of 750,000 square feet.
"Crossroads Corporate Center leased up very quickly," claims Guers, who believes that "southern Princeton," the area around I-95/295, is "the path of progress." For instance, a survey of the Crossroads Corporate Center workers showed that 65 percent of them live in Bucks County.
Guers exemplifies his beliefs: He moved from West Windsor to Burlington County when he went to work for a Philadelphia-based firm. Haines also lives in that area, and he has his real estate business, Mercer Oak Realty, in Burlington.
Bert Steinmann, a councilman in Ewing Township who also sits on the planning board, says that the new owners will cluster the buildings together more closely than under the Bloomberg plan, and there will be fewer people working there than under the Bloomberg plan, which called for 1 million square feet.
Steinmann also reports that Bloomberg bought the tract for under $14 million and sold it for more than $21 million, but that Bloomberg invested time and money to get the property ready. For instance, the state department of transportation has agreed to put in a traffic signal on Route 31.
Opus East plans to start construction on the road system next month. Though there is talk of a hotel and restaurants, they are not in the original design. Guers has not yet made an appearance before Ewing's planning board, but he hopes to finish the first building on the Atchley tract by the end of next year or the beginning of 2008.
The Atchley family had owned a farm that was bifurcated by the construction of I-95. To get to the office park, workers will take Exit 4 from I-95, turn on Route 31, and turn at the planned traffic light into the complex.
"When the first part is built out, it will bring $2 to $3 million a year in taxes, and the full project will bring in $12 to 13 million," says Steinmann. "It is very exciting for the township." Opus East, says Guers, is a merchant builder that buys, develops, and leases projects "and then we sell them to a cadre of investors with whom we have longstanding relationships." Family owned, it was founded in Minneapolis in the early 1950s. Guers' initial project for the recently-opened Philadelphia office were Turnpike Crossing, 1.2 million square feet of warehouses on Davidson's Mill Road at Exit 8A, which was sold to Allianz.
Guers claims that the current traffic backups at the Scudder's Falls bridge, which can extend for 1 1/2 to two miles, are less onerous than the bumper-to-bumper rush hour traffic on Route 1. He is not really worried about the delays that could result from the planned bridge-widening construction. Says Guers: "If the property is for sale, I can't say to Bloomberg, `Why don't you wait three years?' I will take my chances with the bridge."
posted by Jones Lang LaSalle NJ News Blog at 11:18 AM
Healy backs warehouse Healy 'yes' to warehouse Wednesday, May 10, 2006 By EARL MORGAN JOURNAL STAFF WRITER
In a surprise move, Jersey City Mayor Jerramiah Healy showed up at the City Council caucus Monday and lent his personal support to a proposed warehouse at the site of the old PJP landfill near the Tonnelle Circle.
Healy urged the council to approve a resolution tonight appropriating $15,000 for a traffic study to determine how the proposed 883,000-square-foot development would impact the roads and traffic patterns in the area.
But several council members, including Bill Gaughan, Michael Sottolano and Council President Mariano Vega, said they were concerned about some of the issues raised by residents, such traffic snarls that could result from an influx of trucks on Route 440 and other streets.
The developer is supposed to reimburse the city for the traffic study.
Bob Cavanaugh, the attorney for the California-based company that wants to build the warehouse, said he's confident the plans made to bring container trucks in and out of the warehouse will have a minimal impact on traffic.
Healy stressed the $1 million a year in taxes he said the development would generate, as well as 300 jobs. Healy also said the cost of remediation of the landfill, whose stench afflicted the city for years, will be borne by the developer.
Sources say there is some tension between Hudson County and Jersey City officials over the project, with the county favoring plans to convert the landfill into a golf course.
NJ Added 3,700 Jobs in March while Unemployment Rate Dropped to 4.5 Percent
New Jersey's unemployment rate in March was 4.5 percent, a decline of 0.2 percentage point from the February rate of 4.7. The U.S. rate dropped slightly from 4.8 percent in February to 4.7 percent in March.
According to preliminary estimates from the New Jersey Department of Labor and Workforce Development's monthly survey of employers, the number of persons working on nonfarm payrolls, on a seasonally adjusted basis, rose by 3,700 from February to 4,069,100 in March. Based on more complete reporting from employers, the previously announced gain of 4,700 from January to February was reduced by 1,300 to 3,400.
Private-sector payrolls accounted for almost all of the over-the-month increase as jobholding improved by 3,300 to 3,421,900.
"The data show that New Jersey continues to maintain a healthy economy with a record high employment level last month," said Acting Commissioner David J. Socolow. "Governor Corzine is focusing the State's resources in a strategy to encourage innovation and prosperity in the industry clusters that offer the greatest potential for continued job growth."
Up by 2,200 over the month to 344,100, the leisure and hospitality supersector accounted for about two-thirds of the private-sector gain. Hiring by food services and drinking places contributed most to the advance with jobholding improvement also noted in the arts, entertainment and recreation sector.
The education and health services supersector added 1,700 to boost employment to 569,100. The healthcare/social assistance segment accounted for most of the increase.
The trade, transportation and utilities supersector also experienced a gain over the month as 1,100 jobs were added to reach a level of 880,300. Increases were noted in the wholesale trade sector and several retail trade segments.
Supersectors, remaining at about the same level, were information and "other" services (includes automotive and equipment repair, personal care services, religious organizations and grant-making institutions). There were declines of 100 each in the manufacturing and financial activities supersectors.
The supersector with the largest loss was professional and business services, down by 1,100 to 594,800. A smaller loss occurred in construction where payrolls were down by 500 to 171,000. The government supersector rose by 400 with the other local government segment contributing most to the increase.
Since March 2005, the unadjusted workweek for manufacturing production workers rose by 0.4 hour to 42.0, average hourly earnings by $0.19 to $16.44, and weekly earnings by $14.48 to $690.48. Over the month, the workweek expanded by 0.3 hour to 42.0, hourly earnings by $0.14 and weekly earnings by $10.77.
posted by Jones Lang LaSalle NJ News Blog at 11:17 AM
Port Authority of NY & NJ Adds 407-acre site in South Kearny to Foreign Trade Zone 49
A 407-acre industrial site in South Kearny is granted Foreign Trade Zone status, providing its tenants with significant financial benefits.
The new status will provide companies located in the Port Authority-administered Foreign Trade Zone 49 with lower insurance costs, the ability to shorten transit time for their deliveries by removing delays from U.S. Customs clearances, and the ability to either defer duty rates or eliminate them entirely if the goods are reshipped out of the country.
Port Commerce Director Richard M. Larrabee said, "Our foreign trade zone has consistently been ranked No. 1 in the country, supporting billions of dollars in economic activity and more than 6,800 jobs. The 2,911-acre zone helps to stimulate economic growth and development in the region, while creating a stronger system to support international trade."
The South Kearny site consists of buildings totaling 5.5 million square feet, with a potential expansion that would include additional buildings totaling 500,000 square feet. It includes businesses that manufacture, warehouse and distribute various kinds of merchandise. Tenants include distributors for garment companies, department and specialty stores, and handlers of perishable foods.
In addition to South Kearny, the zone includes the Port Newark/Elizabeth-Port Authority Marine Terminal complex; an industrial park in Elizabeth; the Port Authority Auto Marine Terminal; Global Marine Terminal and the Greenville Industrial Park, both in Jersey City; a site at Route 169 and Pulaski Street in Bayonne; and a 40-acre tank farm and fuel distribution system at Newark Liberty International Airport.
Foreign Trade Zone 49 also sponsors seven active subzones in New Jersey: Bristol-Myers Squibb Company in New Brunswick; Chevron Products Company in Perth Amboy; AZ Electronic Materials USA Corp. in Somerville; ConocoPhillips in Linden; Firmenich, Inc., in Newark and Plainsboro; Merck & Co. Inc. in Rahway; and Movado Group, Inc. in Moonachie. More than $3.9 billion in foreign merchandise was received in Foreign Trade Zone 49's general-purpose zone in fiscal year 2004, according to the latest report of the U.S. Commerce Department's Foreign Trade Zone Board. Total merchandise received and forwarded in the general-purpose zone and subzones was $17.3 billion.
posted by Jones Lang LaSalle NJ News Blog at 11:17 AM
