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.
Landlords charging for phantom space: study by Julie Satow June 02, 2006
Landlords of several major midtown office towers claim their buildings are larger than they were a few years ago-despite no physical changes.
Landlords who own several major midtown office towers are claiming their buildings are much larger than they were only a few years ago-despite the fact there has been no physical changes, according to a brokerage firm study. "It's as if you occupy a one-bedroom apartment but pay the rent that would be due for a three-bedroom place," says Marisa Manley, the president of the Commercial Tenant Real Estate Representation, which reviewed 50 randomly selected midtown office towers.
At 666 Fifth Ave., for example, the building has reportedly grown by 260,000 square feet over the last 15 years, making it possible for the landlord to charge an additional $16 million a year in rent. Ms. Manley's company found that between 1990 and 2005 nearly one-third of the buildings inflated their square footage by more than 5%. As a result of these inflations, New York City tenants end up paying about $387 million a year for renting square footage that does not physically exist. In Manhattan, the actual area that a tenant occupies is often less than the area upon which the rent is based. This difference between the two is known as the "loss factor." The loss factor is often made up of common areas such as hallways, lobbies and restrooms.
However, in recent years, the loss factor also included nonexistent space. Some of the buildings with the largest phantom square footage include 230 Park Ave., which grew by 225,000 square feet between 2002 and 2005 to a loss factor of 12.5% and generating an annual rent increase of $9 million; 1 Penn Plaza, which was inflated by nearly 16% for $8.6 million in additional rent; and 800 Third Ave., which grew by 21% and created $5.8 million in additional rent. "The existence of the loss factor is well known, but few tenants realize it can change arbitrarily over time," says Ms. Manley. "Landlords are within their rights to offer their space at whatever rentable area they like, but tenants should remember that "square foot" is a term of art rather than a science."
posted by Jones Lang LaSalle NJ News Blog at 4:25 PM
What do you call an industry that generates sales of over $50 billion each year? "Remarkable," "amazing," and "downright incredible" easily work as appropriate adjectives to describe the booming U.S. biotech business.
By Lisa A. Bastian, CBC
An estimated 17,200 biosciences-related organizations — including more than 1,500 biotech firms — pay an average of $60,000 per year to their 900,000-plus employees according to a study conducted by Ernst & Young for the Biotechnology Industry Organization (BIO), a Washington, D.C., group representing over 1,100 companies, academic institutions, and biotech centers in the United States and other nations. No wonder decision-makers for U.S. economic development organizations, both large and small, have considered adding biotech to their long-term development plans. While many states and communities have already turned their thoughts into action, some are still debating the issue. And others wisely realize bio simply won't work for them no matter how it's packaged. Truth be told, not every U.S. community has the capacity to establish, grow, and/or support biotech activity, let alone a biotech cluster.
Ingredients for Biotech Success
So what sets apart those locations with thriving biotech activity from those without it? It's a host of factors working in harmony. Apparently such fortunate communities offer these ingredients for success:
• Universities, research institutions and centers with a life-science focus, and possibly a national or global reputation for innovation; • Incubators, business assistance, and lots of capital to help players grow in every stage of the business cycle; • A well-educated, abundant pool of scientists and others possessing skill sets and knowledge geared toward life sciences; • Direct, generous funding for basic academic research and ground-breaking R&D efforts; • A smooth technology-transfer system from the lab to commercialization; • Excellent networking and collaborative opportunities within the biotech sector and with other allied sectors; • Access to state-of-the art equipment and facilities; and • Full and long-term community support in the areas of regulatory issues and taxes, and a general pro-industry environment.
With all that said, every successful biotech community is unique, using its individualized strengths to build something special no place else in the world can duplicate.
"King Kong" Biotech States
Information about how, why, and where biotech is being cultivated is becoming more abundant and focused. The reason is three-fold: First, as the industry ages, there are naturally more companies and data to analyze and track over time. Secondly, states are backing biotech big-time. At least 40 states have identified biotechnology as a target industry, 33 states have established bioscience associations, and 37 states support bioscience incubators (according to BIO). Thirdly, more monies are now invested to pay credible research groups to study the industry in a methodical fashion.
For example, the Milken Institute, a globally renowned think tank, provides an insightful state-by-state look at the biotech and pharma industries in "Biopharmaceutical Industry Contributions to State and U.S. Economies." The study, published October 2004, shows the industry has impacted all sectors of the economy with "more than 2.7 million jobs and $172 billion in real output in 2003." It's obvious why so many states want a piece of the bio pie, which is filled with dream-like levels of potential new income streams and jobs.
Specifically, the Milken report examines the biopharmaceutical industry's economic impact in four areas:
1. Industry Geographic Location and Performance: The report reveals the industry's economic importance in each state by measuring its concentration and growth of employment and output. According to these measures, the top states are New Jersey, Indiana, Massachusetts, North Carolina, and Pennsylvania.
While it's true New Jersey and Pennsylvania are two states that capture the bulk of employment in the pharmaceutical industry, big pharma companies are "now trying to mitigate costs by learning to outsource," explains Perry Wong, a senior research economist for The Milken Institute and one of the report's authors. "In headquarter regions, employment gains aren't as robust." Employment growth of a sort is happening, however, in the form of pharmas making big investments in small and medium-sized biotechs, many of which are located in other states.
Wong calls North Carolina "a very interesting state...25 years ago it had no biopharma activity, but [its leaders] did the right thing by lobbying for biosciences to be a primary piece of the economy. Now it has the Research Triangle, a major biosciences center. Today, the state continues to leverage that growth rather rapidly."
Specifically, the University of North Carolina's decision to invest in building major computing sites beginning in the 1980s "has proven to be a very wise choice," Wong says, adding that these centers are renowned for their state-of-the-art modeling programs supporting many amazing biotech initiatives. For example, this computing power is often tapped to simulate growth patterns of certain biocompounds so scientists can find out (without the cost/time of using human subjects) how they will impact human tissue.
2. Innovation Pipeline: The report measures a state's assets needed to produce a "strong and viable" biopharmaceutical industry, including the skills of its work force and how much R&D monies it gets. Top states are Massachusetts, Maryland, Connecticut, New Jersey, and Pennsylvania, according to this measure.
"Innovation is the key driver for biotech success," asserts Wong. "It'll be like that for as long as we use bioproducts. Both biotechs and pharmas live or die according to how many products are in their pipelines. Innovation is definitely the most critical aspect of the industry." He singled out Massachusetts (notably Boston) for its "almost boutique R&D environment that most states can't duplicate. It has great quality research and a high level of commitment to supporting the industry."
Wong also is very impressed by Maryland's high-end, theoretical research and patent-creating track record. "Maryland is one unique location due to Washington, D.C., and Johns Hopkins University, which produces the most papers in terms of research," says Wong. And even though it may not have the infrastructure [necessary] to produce a large number of products, "many important trials originate in that state. It's good at developing 'frontier' ideas." He cites Maryland's "very good corporate and financial structures" as being pillars for the region's biotech firms.
3. Multiplier and Tax Impact: This is a measurement of how much additional economic activity is created by the industry (including additional jobs and output created in other sectors, as well as tax revenues). States showing the most impressive activity in this respect are California, New Jersey, Pennsylvania, North Carolina, and Illinois.
4. 10-year Industry Projections: The report predicts likely growth of the industry in each state by employment and output. States with the biggest gains in absolute numbers in the next decade include California, Massachusetts, Pennsylvania, New York, and Maryland.
Five Sectors to Explore
In June 2004 BIO published another comprehensive report, "Laboratories of Innovation: State Bioscience Initiatives 2004," which analyzed the scope of bioscience programs and employment in each of the 50 states. According to that report — prepared for BIO by the Battelle Memorial Institute, one of the world's largest nonprofit contract research organizations, and the State Science & Technology Institute — the bioscience industry is divided into five sectors: agricultural feedstock and chemicals; drugs and pharmaceuticals; medical devices and equipment; research and testing; and academic health centers, research hospitals, and research institutes.
Renowned biotech industry consultant Dr. Walt Plosila, vice president of Battelle's Technology Partnership Practice, knows well the changing landscape of America's bio industry. In reference to the study, he was asked to identify states doing well in building their life science industries. Without hesitation he named Pennsylvania, Arizona, Utah, Colorado, and Maryland.
Why those states, most of which are not on the typical top-10 lists for the industry? "They are all trying to diversify in a smart way, picking their niches, and creating strong university structures, while still making sure they have ways to commercialize the products," says Dr. Plosila. In particular, Plosila is impressed with the fact that Pennsylvania spends in excess of $60 million a year on life sciences, while Arizona is investing $440 million in university research facilities.
While some states publicly proclaim they desire to build world-class biotech centers, they are unable to implement these plans as they lack the financial, academic, and technological resources — or the political will to back the procurement of said resources. Wisely or unwisely, notes Plosila, a few states are backing off from announced big plans to heavily invest in biotech.
However, in many states the lion's share of new biotech initiatives is now in the process of being funded courtesy of the tobacco industry, which agreed in 1998 to reimburse states $300 billion for medical care given to smokers in poor health. Starting that year, and to continue over a 25-year period, individual states began to receive payments ranging from $200 million to $28 billion.
Already more than two dozen states are using such funds to fuel biotech initiatives. For example, Missouri has earmarked $36 million annually into life sciences from 2007 through 2025. Pennsylvania plans on investing $2 billion of the funds into life sciences. And Florida already has spent $310 million of tobacco settlement money on plans to bring the East Coast branch of San Diego's Scripps Institute to a site in or near Palm Beach; it will then work on building a biotech cluster to support it.
Will all the planned state initiatives make each region a biotech powerhouse? Only time will tell, but common sense indicates more than money is needed to create viable bio clusters.
On the Coasts & Elsewhere
Where are successful U.S. biotechs found? Many are clustered in a small number of regions, where they expend their energies not only growing their own businesses but also building synergy with like-minded groups to create a viable local biotech industry. They're in places where you may expect them to be, on the East and West coasts, as well as in locales you'd never expect.
"America's Biotech and Life Science Clusters," a 2004 study produced by the Milken Institute (in cooperation with Deloitte & Touche) focused on 12 clusters identified by prior studies as being the most dynamic in the nation. Using 44 measurements, the study evaluated those dozen metros using five criteria: R&D inputs, risk capital, human capital, biotech work force, and current impact. The "innovation pipeline" of each area proved to be a key evaluation factor, according to the authors.
San Diego, the number-one biotech metro, received high marks for its "interlocked" and "multilayered cluster" offering a "uniquely entrepreneurial and creative dynamic." Translated into economic terms, the cluster is responsible for 55,600 jobs and $5.8 billion in income. Next came Boston, followed by Raleigh-Durham-Chapel Hill; San Jose; Seattle-Bellevue-Everett; Washington, D.C.; Philadelphia; San Francisco; Oakland; Los Angeles-Long Beach; Orange County, Calif; and Austin-San Marcos, Texas.
However, report authors noted that if life sciences (encompassing medical devices and pharmaceuticals) were in included in the measurements, the ranking would change slightly: Boston first, then San Diego; San Jose; Raleigh-Durham-Chapel Hill; Philadelphia; Seattle-Bellevue-Everett; San Francisco; Washington, D.C.; Oakland; Los Angeles; Orange County; and Austin-San Marcos.
Surprising Emerging Biotech Metros
Increasingly biotech growth is becoming "very much region-driven" rather than state-driven, points out Dr. Plosila. That partly explains why some bioscience firms are thriving in places you'd expect as well as in places that make you wonder.
Everyone knows companies on the coasts seek to tap into the biotech mentality of innovation and the highly qualified talent pools found there. For example, Genentech, the world's second- largest biotech firm, is headquartered in the San Francisco Bay area. It's part of the larger northern California biotech community of over 500 bioscience firms, many of which access the area's four major research universities, 12 private research institutions, and four federal research labs.
On the East Coast, Boston (also known as "Genetown") nurtures almost 300 biotech/pharma companies. It, too, has long-standing relationships with renowned universities and biotech centers such as Harvard, Northeastern, and MIT (affiliated with The Whitehead Institute for Biomedical Research, the world's largest DNA-sequencing facility). Firms here include Pfizer, Millennium, Genzyme, BioGen, Novartis, and Merck.
What other American cities — and non-coastal locales — are doing biotech work without a media spotlight on them? Warsaw, Ind., is one of those "off the beaten path" places. For the past 25 years it's been home to Biomet, a global leader in the manufacturer of joint-replacement products. Another fairly unknown medical device cluster can be found in Memphis, Tenn.
Dr. Plosila adds that many people may be surprised to learn that both individual biotech firms and clusters are cropping up in "Rust Belt" communities such as Indianapolis, Peoria, Pittsburgh, and St Louis. "St. Louis has embarked on a comprehensive biosciences strategy around its strengths in plant and life sciences," he explains. "Already it has raised nearly $500 million in private dollars for venture capital; embarked on a medical district/park plan to offer shared facilities with its universities and industry; and created innovative mechanisms such as the St. Louis BioGenerator to commercialize research from both universities and industry." Other "surprise" regions, not in the Rust Belt, that are examples of places "seizing the initiative to build on their research niches" include Memphis, Oklahoma City, and Springfield, Mass., according to Dr. Plosila.
In a related development, some of the traditionally manufacturing-focused regions are players in the new industrial revolution fueled by "industrial biotechnology," a term referring to biotech manufacturing processes using genetically enhanced microorganisms and enzymes to prevent or greatly lessen pollution. Besides "greening" the environment, these processes often help firms produce higher-quality goods and lower their energy costs, according to a 2004 BIO report.
A Glimpse at Canada/Europe
Canada ranks second after the United States for having the most biotech companies, and first for R&D expenditures per employee (source: InPharma, 2004). The Canadian government reports that the country's four biotech clusters of note are as follows:
1. Toronto, Ontario, is said to contain the single largest biomedical, biotechnology, and pharmaceutical cluster of any North American metro area. Its more than 100 biomedical firms represent about 40 percent of Canada's total number.
2. Montreal, Quebec, is headquarters for 200-plus health-related biotech firms, home to the National Research Council's Biotechnology Research Institute (world's largest specialized research center), and a hub for genomics. Quebec itself has the third-largest number of biotechs (150) of any North American state or province.
3. Vancouver, British Columbia, known for its major strengths in health and genomics, is recognized as one of the top 20 North American biotech regions.
4. Ottawa, Ontario, employs more than 11,000 people in its life sciences sector focused on biotechnology, medical technology, and health-related systems.
Europe's biotech industry posts almost $23.2 billion in revenue, invests $7.32 billion in R&D, and has 95,000 workers, according to an October 2005 European Commission report on 27 European industries ("European Industry: A Sectoral Overview"). As per the report, nations with the most biotech firms are the UK, Germany, France, the Netherlands, Sweden, and Denmark. Consolidation of firms is on the rise, resulting in a recent slight decrease in employment. About 60 percent of the biotechs employ fewer than 20 workers.
About a dozen European bioregions compete with clusters in North America and Japan. "BioValley" is the name for Europe's leading life-sciences cluster. Nearly 40 percent of the world's pharmaceutical industries have a presence there, and some 30,000 people are employed in life sciences work. BioValley operates as a tri-national network, encompassing the area found between Alsace in France, northwest Switzerland, and South-Baden in Germany. Here, active collaboration is encouraged between biotechs, research institutions, and other related groups to further science, business, and technology transfer.
Specifically, Europe's most renowned bio clusters are located in Basle, Berlin, Cambridge, Helsinki-Turku, Lyon-Grenoble, Munich, Oxford, Paris, Stockholm-Uppsala, and Zurich. (Both Barcelona and Madrid are poised to join the group soon.)
Vacancies are down, rents are up. How can your company buck the trend and save money? By Paul Whitman, Executive Vice President, and Karra Parker Guess, Chief Operating Officer for Southwest Client Services; The Staubach Company
After a downslide in the early part of this decade, office rental rates are on their way up in many major markets nationwide. The nationwide average vacancy rate — 12.5 percent — has continued to decline, and rental rates have increased 2 percent since the end of 2004. For most companies, rent is a major expense, second only to personnel in the effect on the bottom line. But even in a tough market, smart executives can manage costs by using several proven strategies.
Anticipate the Market Revival
If your company is willing to extend its lease past the original expiration date, many landlords will renegotiate up to three years in advance. Not only does this allow you to restructure parts of your original lease that might need updating, but can act as a hedge against upcoming rate increases. This strategy is a winner for both sides — the landlord wins with a longer term, and your company wins with a better lease and a hedge against rate inflation.
The Staubach Company used this strategy very effectively in the rising markets of the late 1990s and early 2000s. We even built a proprietary model to show tenants and landlords the efficacy of going to the negotiating table early. By starting lease negotiations with three years left on the lease term, we saved a major law firm $5.8 million over 13 years. Even shorter term leases are a target for this strategy. A local oil company had three and one-half years remaining on its lease; we negotiated a four-year extension past the original term and saved the company $3.4 million over seven and one-half years.
If your company has multiple locations, make a list of those where your risk of real estate cost increases is greatest. Then have your real estate representative call your landlord when there are two to three years left on the lease term.
Know Your Landlord’s Bottom Line
In major markets, most office buildings are owned by large, publicly traded real estate investment trusts (REITs), insurance companies, or pension funds. A quick check of your landlord’s website or 10K and a few conversations with industry insiders will yield information about required rates of return, your building’s occupancy, and your landlord’s economic objectives. This knowledge will help your company in its negotiations. Some large institutional landlords even go public about their pricing and occupancy objectives in major buildings. REITs are particularly good about making disclosures of this nature.
Several years ago in Dallas, a major REIT publicly announced that it was lowering rental rates in various downtown buildings to increase occupancy. The REIT’s representatives even explained what was driving the decision and how their profit targets were derived. We were able to use this information to save several clients significant real estate costs. In addition, we helped two nonprofit corporations find affordable space in one of the REIT’s buildings, an assignment that is very difficult to fulfill in major markets.
Leverage the Competition
Find at least two comparable buildings that would be suitable for your company and negotiate with both simultaneously. Be open about your interest in both. Sometimes this strategy can result in savings of 10 percent or more off an original offer. These buildings do not have to be in the same submarket; often, forcing a downtown building to compete with one in the suburbs results in more savings. Be careful, though, to pick realistic possibilities for your company, because you may get an offer you can’t refuse. Publicly traded corporations that turn down low-cost offers may get into hot water with their boards and their shareholders.
Rent Is Not the Only Issue
Remember, the rental rate is only one component of a lease transaction. Other economic factors such as remodeling allowances, operating expenses, parking, and even important legal provisions can add significant savings to a transaction. If an owner will not give your company the rate required, try to negotiate other savings in the form of increased construction allowances, a cap on operating expense increases, or reduced parking charges.
Take parking, for instance. In Dallas, parking costs typically add $2.75 per square foot per year to the overall lease costs. In New York, Chicago, San Francisco, and Los Angeles, these costs are even higher. So it’s worth paying attention to line items other than rent.
Your Company’s Renewal Option
In extremely tight markets, a renewal option can save your company from an expensive move or rapidly increasing rates. Most renewal options include rules to fix the renewal rental rate. Since a renewal option is binding, an owner must honor the provisions of the option even if a larger tenant is willing to sign on the dotted line at a higher rate. Our San Francisco office successfully used this strategy for Cisco’s multiple leases during the technology boom of the late 1990s. Had Staubach not negotiated strong renewal options for Cisco in the first place, in many cases Cisco would have been asked to vacate in favor of the latest startup telecom company willing to pay exorbitant rates. For companies executing leases in new locations, a renewal option is absolutely essential.
Garbage In, Garbage Out
Good real estate data is imperative if your company has multiple locations. You would probably be surprised at how many large companies Staubach has represented that have not populated a real estate lease administration database. It’s impossible to manage real estate requirements without a central database or file that contains accurate, pertinent information. The bottom line is this: If you don’t have good data for your multiple locations, you cannot do a reasonable job of managing costs in a rising market.
We signed a national contract with a company with thousands of locations across the United States about three years ago. The company had a poorly populated database with inaccurate information and had recently missed the deadlines for several renewal options (resulting in more than $1 million in lost savings). We hired temporary paralegals to abstract every single lease and populate a new lease administration database. Within a year, we had saved the company in excess of $10 million in real estate costs.
Covance in $8.9M Signet Acquisition Martin C. Daks NJBIZ Staff 6/1/2006
Covance has announced that is has acquired substantially all of the assets belonging to Signet Laboratories for $8.9 million. Princeton-based Covance is a drug development services firm. It works with pharmaceutical and biotech companies, providing research and development, clinical trial, regulatory and other services. Signet is based in Dedham, Mass., and provides antibodies used in the research of cancer, infectious and other diseases.
posted by Jones Lang LaSalle NJ News Blog at 4:22 PM
Signs point to slower hiring Economists expect payrolls grew by 175,000 jobs in May By Rex Nutting, MarketWatch Last Update: 6:31 PM ET Jun 1, 2006
WASHINGTON (MarketWatch) -- The signs are only tentative, but some early indicators point to a slower pace of hiring.
After getting a sluggish start coming out of the 2001 recession, payroll growth has been fairly steady for the past three years. It's been almost too strong, with the unemployment rate falling to 4.7%, low enough to start feeding inflation, some economists say.
The Labor Department will release its May employment report on Friday at 8:30 a.m. Eastern time. Economists surveyed by MarketWatch look for payrolls to grow by about 175,000 in May, following a disappointing 138,000 gain in April. The unemployment rate is expected to stay at 4.7%.
Payroll growth has averaged about 165,000 over the past 12 months and about 200,000 per month since November, when payrolls began to bounce back from the hurricanes. Warm weather in the first months of the year also boosted payrolls, as some seasonal workers got some extra weeks of work.
Slowdown
Now it looks like hiring could throttle back just a bit from that pace.
The jobs report should reinforce a sense of moderation in the labor market, said Ed McKelvey, an economist for Goldman Sachs.
"The recent uptrend in claims suggests that employment growth has started to slow," said Maury Harris, chief U.S. economist for UBS.
Harris says it's possible payroll growth could be a bit weaker than expected in May. Jobless claims have been trending higher, which can be a sign of weaker hiring. The help-wanted index dropped to a four-decade low. The new ADP employment report forecast a gain of about 133,000 jobs in May. And, finally, the Institute for Supply Management's employment index slipped in May.
The employment report has taken on new importance as the Federal Reserve and the markets try to figure out the path of growth and inflation for the rest of the year. A lot is riding on Friday's report.
"We should not overreact to the payroll report, at least in terms of what it means for the Fed," said Joseph LaVorgna, an economist for Deutsche Bank. "There is a lot of data between now and the end of June."
And unfortunately, one jobs report really can't tell us much about the future of growth or inflation.
Looking in rear-view mirror
Slower growth, and slower hiring, would be welcomed at the Fed, because it would reduce inflationary pressures. But employment is not a leading indicator. Nonfarm payrolls tell us more about how the economy was faring a few months ago than they do about how it will fare a few months from now.
Lower inflation would also be welcomed at the Fed. But once again, the employment report won't have much new to say. The markets, of course, will react anyway.
So far, inflationary pressures from higher wages are still in the theoretical phase. There's no evidence that a tight labor market is leading to higher wages, which in turn are fueling inflationary expectations.
Economists expect average hourly earnings to rise 0.2% or 0.3% in May, after a 0.5% gain in April that shocked the bond market. The year-over-year increase in average hourly earnings was 3.8% in April, the highest in five years. It's likely the year-over-year rate will continue to accelerate in May; anything more than 0.2% would do the trick.
If wages rise 0.4% or more, look for the market to solidify its expectations for a June rate hike. Despite some big increases in hourly earnings in the past few months, wage growth in the past year is barely higher than the inflation rate. Real average hourly earnings (that is, adjusted for inflation) are lower now than they were at the end of the recession in 2001. In fact, they are lower now than they were at the end of the recession in 1970.
The productivity numbers that were revised Thursday show that unit labor costs are up just 0.3% in the past year. The employment cost index tells a similar story.
If the Fed is going to sell us a story about wage-based inflation, "it has to be sold as a matter of forecast," not reality, said Jay Feldman, an economist for Credit Suisse. "The current data say loud and clear that labor costs - which account for about 70% of business costs - are not an inflation problem today."
"Despite growing indications of an increasingly tight labor market, wage inflation is not the primary source of inflationary pressures in the U.S. economy," said Stu Hoffman, chief economist for PNC.
Other economists don't see it that way, however.
"Inflation is lurking, and the Fed knows it," said Gina Martin, an economist for Wachovia. "Average hourly earnings are on the rise, which should pressure compensation higher. Unless economic growth slows enough to slow the labor market and thus earnings, unit labor costs are likely to rise in the quarters ahead." And that would lead to higher interest rates from the Fed. The Fed has a public relations problem: The two best-known and most closely followed statistics - nonfarm payrolls and the consumer price index - are backward-looking indicators. The CPI, in particular, changes long after peaks or troughs in the economy.
But markets look to payrolls and inflation to forecast what the Fed will do next.
Game of chicken
"It is important to emphasize that a moderation in real economic growth, which seems to be unfolding, would have little impact on the inflation measures through year-end 2006," said Mickey Levy, chief economist for Bank of America. Levy now expects the Fed to raise rates three more times this year, even though it will have no impact on inflation this year.
So why would the Fed keep raising rates even as growth slows? "Financial markets are challenging the Fed's inflation-fighting credibility," Levy says. In other words, the markets are daring Fed Chairman Ben Bernanke to raise rates, even if that goes against his better judgment, just to appear tough.
The Fed would like to focus its attention on the near-term future, the next six to nine months, not on the near-term past. But that's hard to do when the markets react so strongly to the backward-looking data.
The Fed has a choice to either let the market bully it into abandoning its forward-looking policy, or to better communicate to the public how the economy works, particularly the lags in growth, interest rates and inflation.
Rex Nutting is Washington bureau chief of MarketWatch.
posted by Jones Lang LaSalle NJ News Blog at 4:21 PM
Two Leases Gain on Void Left by Aetna By Marita Thomas
FORT WASHINGTON, PA-Leases aggregating 27,395 sf take occupancy in the 65,000-sf office building at 475 Virginia Dr. to 60%, gaining on a void left by Aetna Insurance, which vacated the building as it downsized. The three-story, class A property was built in 1996 and 1997.
Without disclosing the terms and individual values of the transactions, Eric K. Gorman of the King of Prussia-based Jackson Cross Partners tells GlobeSt.com, both are long-term, "and the aggregate value of the two transactions is in excess of $2.5 million." Gorman represented the owner, the Newton, MA-based HRPT Properties Trust.
The largest by far is by Information Resources Inc., which is taking 25,000 sf. The Chicago-based IRI provides market analysis to the consumer package goods, retail and healthcare markets. Benjamin Bader of the Philadelphia office of Jones Lang LaSalle represented IRI.
The Parsippany, NJ-based First Managed Care Options has leased 2,395 sf in the building. It is relocating and expanding from a facility at 467 W. Pennsylvania Avenue here. First MCO provides medical management services, including claims control, to the healthcare industry.
NEW YORK CITY-A local investment group has acquired a 12-story pre-war office building for approximately $26.5 million. The site, also known as the Craftsman Building, was sold by the Winter Organization.
The 87,447-sf building occupies a full block-through site at 6 East 39th St. between East 38th and 39th just east of Fifth Avenue. The buyer, 6 East 39th St Holdings LLC, fulfilled a 1031 requirement with the purchase.
The site is currently 99% occupied by tenant mix that includes video, film and television production companies, not-for-profit foundations, attorneys and business consultants. Office tenants include City Light Productions and the Jewish Life Network.
Brian Ezratty, vice chairman and principal together with Scott Ellard, director, financial services of Eastern Consolidated, exclusively represented the seller. The firm’s senior managing director’s Ronald A. Solarz and Eric M. Anton and Daniel Volk, associate broker, represented the buyer.
While the Midtown South market for office space continues to strengthen and with many of the existing leases at below market rents, there is significant upside in the property’s potential cash flow, the brokers say. "This was an excellent investment play," notes Anton, "because there’s steady cash flow from the existing tenants over the course of the next several years while the new owner determines his leasing strategy. The fact that the property can be converted to a hotel is another distinct advantage."
Ezratty says the firm‘s clients are "bullish" on Midtown South as an office location, especially as availability in Midtown tightens. He adds that the site had recent capital improvements including a new boiler and burner in 2002, a new roof, upgraded elevator systems and façade work.
905-909 Broad St. Goes on the Market By Eric Peterson
NEWARK-Independence Community Bank has given Trammell Crow Co. the assignment to sell or lease its 905-909 Broad St. building here. The building’s office space once served as the headquarters of Broad National Bank, which was merged with the Brooklyn, NY-based Independence Community Bank several years ago. The banks’ combined headquarters operations subsequently made the 905-909 Broad St. space surplus.
The building is located in the Downtown area, directly across from both city hall and the planned New Jersey Devils arena. The five-story building combines ground-floor retail, currently 100% occupied by a Duane Reade pharmacy and an Independence Community Bank branch, with upper-floor office space that’s largely vacant. The property also has 132 on-site parking spaces.
Dudley D. Ryan of TCC’s Florham Park office is handling the assignment. "This property presents both buyers and potential tenants an opportunity to be in one of the city’s best locations."
Christopher Marr was named chief financial officer of U-Store-It Trust, a real estate investment trust, effective June 5. Most recently, Marr was senior vice president and CFO of Brandywine Realty Trust; previously, he served as finance chief of Storage USA and worked as an audit manager with Coopers and Lybrand. At Brandywine, vice president of finance Tim Martin and vice president and chief accounting officer Scott Fordham will share interim CFO duties while the integrated real estate company searches for a successor to Marr.
posted by Jones Lang LaSalle NJ News Blog at 4:19 PM
Fort Lee, NJ...June 1, 2006...Alpharma Inc. (NYSE:ALO), a leading global specialty pharmaceutical company, announced today that the board of directors has named Dean J. Mitchell President and CEO, effective July 1. Mr. Mitchell will succeed Ingrid Wiik, who previously announced she planned to retire as CEO once a successor was named. Mr. Mitchell, 50, has nearly three decades of senior management experience working at global pharmaceutical companies including Bristol-Myers Squibb Company and GlaxoSmithKline. In addition to overseeing various multi-billion dollar businesses, Mr. Mitchell also worked in strategic planning and product development and commercialization. He was most recently President and CEO of Guilford Pharmaceuticals, where he directed a comprehensive overhaul of the biotechnology company's strategy leading to its acquisition by MGI Pharma Inc. Alpharma plans to elect Mr. Mitchell to its board of directors on July 1; Ms. Wiik will retire as CEO on June 30, but will remain a director.
"Dean's extensive industry experience, leadership abilities, and proven track record of running pharmaceutical businesses make him ideally suited to oversee Alpharma's growth and expansion," said Peter G. Tombros, chairman of Alpharma's board of directors. "Dean has already demonstrated that he can successfully transition from working at major pharmaceutical companies to one with a more specialized and entrepreneurial focus, and we are excited that he has agreed to commit his expertise to Alpharma."
Mr. Mitchell commented: "Alpharma in the past 18 months has completed an impressive restructuring of its businesses, operations, and balance sheet, and I'm delighted to have an opportunity to lead the company as it enters a growth stage of development. I look forward to working with Alpharma's exceptional senior management team and to helping build a strong, market-driven Specialty Pharma company for the benefit of its customers, shareholders, and employees."
Prior to joining Guilford, Mr. Mitchell held a broad range of operations and strategic positions at Bristol-Myers Squibb, lastly being responsible for developing corporate strategy. Previously, he was president of its North America Primary Care and International Pharmaceuticals businesses, where he oversaw the launch of Abilify for the treatment of schizophrenia and bipolar disorder, one of the top 10 drug launches in the U.S. Mitchell also served on various Bristol-Myers Squibb senior management and governance committees, including its Corporate Executive Committee. Before joining Bristol-Myers Squibb, Mr. Mitchell spent 14 years at GlaxoSmithKline and its predecessor companies in the U.S. and Canada where he held various general management, product strategy and business development positions. His last role combined the global clinical development and global marketing organizations into a group which shaped products for effective commercialization.
Born in the U.K., Mr. Mitchell earned his MBA from City University Business School and his Bachelor of Science degree from Coventry University. He is previous Vice Chairman of the National Pharmaceutical Council, and a member of the board of directors of ISTA Pharmaceuticals and MGI Pharma.
Alpharma press releases are also available at our website: http://www.alpharma.com. Alpharma Inc. (NYSE: ALO) is a global specialty pharmaceutical company with leadership positions in products for humans and animals. Alpharma is presently active in more than 60 countries. Alpharma has a growing branded franchise in the chronic pain market with its morphine-based extended release KADIAN® product. In addition, Alpharma is among the world's leading producers of several specialty pharmaceutical-grade bulk antibiotics and is internationally recognized as a leading provider of pharmaceutical products for poultry and livestock.
posted by Jones Lang LaSalle NJ News Blog at 4:18 PM
Completion of Gadsby Hannah Acquisition brings 430-Lawyer McCarter & English to Boston
Newark, NJ, June 1, 2006 – McCarter & English, LLP announced the completion of its combination with Boston's 64-lawyer Gadsby Hannah LLP.
Now with 430 lawyers in eight Northeast Corridor offices, McCarter & English offers significantly expanded regional coverage and increased depth and breadth of services to the clients of both firms. The expansion follows the highly successful 2003 addition of 30 lawyers from Connecticut's Cummings & Lockwood.
"We welcome and look forward to working with this distinguished group of lawyers," said Andrew T. Berry, McCarter's Chairman. "We've watched them for a long time and believe that the quality of their work and the range of their practices is an excellent fit and will greatly benefit all of our clients."
"McCarter's geographic and industry reach offer us a wonderful platform for expanding our scope," said Leonard Lewin, formerly Chairman of Gadsby Hannah's Executive Committee. Founded in 1963 by a former Chairman of the SEC, Gadsby Hannah has counseled businesses, entrepreneurs, government agencies, investment firms, and financial institutions in numerous industries, including higher education, emerging growth, hospitality, infrastructure, and technology.
Bridget Maguire, of Maguire Consulting in New York City, introduced Gadsby Hannah to McCarter and represented the Firm in connection with searching for opportunities in Boston. McCarter & English, LLP established more than 160 years ago, has offices in Boston, MA; Hartford and Stamford, CT; New York, NY; Newark, NJ; Philadelphia, PA; Wilmington, DE; and Baltimore, MD.
posted by Jones Lang LaSalle NJ News Blog at 4:17 PM
Downtown Sees Challenge of Change By Barbara Jarvie
NEW YORK CITY-Smaller companies, attracted by incentives, are contributing to the diversification of Lower Manhattan. The median private sector firm here occupies slightly more than 10,000 sf of space and employs 27 workers.
"Lower Manhattan showed strong signs of a sustained recovery last year," says Eric Deutsch, president of the Alliance for Downtown New York. The firm released its third annual State of Lower Manhattan report which covers a range of sectors including commercial, retail, residential, transportation and tourism. "Lower Manhattan has made tremendous progress, although significant challenges lie ahead."
He notes that the Downtown office market saw the largest decrease in vacancy rate of any of the eight CBDs in the country that have more than 40 million sf of commercial space. "Smaller companies are relocating to Lower Manhattan to take advantage of the area’s lower rents compared to other sections of the city," says Deutsch. Numerous firms outside of Downtown’s traditional finance and insurance sectors represent sectors as non-profit, media, law, education, health, and other professional services that are moving to the area.
Companies taking space Downtown fueled a drop in the vacancy rate to 10.6% in the fourth quarter of 2005 from 13.7% in the fourth quarter of 2004. Total absorption reached 1.1 million at the end of 2005, which is the first time this figure has been positive since 2000.
Accessibility is already a major advantage for Downtown as a business center, and these improvements will only increase that competitive edge, the report points out. More than $10 billion in public and private investment is currently being invested in infrastructure projects including the Santiago Calatrava-designed PATH Station and the Fulton Street Transit Center. "Lower Manhattan experienced an influx of mid- and high-end retail in 2005," says Deutsch. "From new businesses such as BMW and Hickey Freeman, to expansion of district stalwarts Century 21 and J&R Music and Computer World, the Downtown retail market is not only growing, it’s surging past other areas of the city."
Residential development has continued as well . As of year-end 2005, there were 20,617 residential units in the area south of Chambers Street. An additional 29 developments are under construction, accounting for nearly 4,000 new units within the next few years. What’s more, with another 4,000 units in the planning stages.
NBA Star Proposes Condo/Retail Project By Eric Peterson
NEWARK-Miami Heat basketball star Shaquille O’Neal wants to develop a condo/retail project in his home town. Called One River View at Rector, the project would rise on a site currently occupied by Science High School, a so-called magnet school operated by the local board of education.
According to a published report, 36-54 Rector Place LLC, a company owned by O’Neal, has an offer on the table to buy the building and its site for $2.75 million and demolish the building to make way for the 24-story luxury condo/retail project. The city council has scheduled a meeting for today during which the body is expected to vote on whether to accept the offer. City officials could not be reached for comment.
The building itself is a remnant of the old Ballantine & Sons brewery. Built in 1860, the 146-year-old asset was formerly known as Malt House Number 3. Years after the brewery closed, the building was converted into a school, housing Science High School for the past 23 years. The latter is slated to move into a brand new building within the Newark Science Park in time for the 2006-2007 school year.
School officials had wanted to open up a new history-focused magnet school in the former malt house. But the board of education has been renting it from the city for just $1 per year, and the pending sale is apparently about ratables. According to a statement released by city administrator Richard Monteilh, the site isn’t generating any tax revenues and the condo project "is in line with our efforts to return vacant land and abandoned properties to the tax rolls."
Between its uses as a malt house and as Science High School, the building was utilized for a number of years as a college building, initially by a predecessor institution to Newark-Rutgers and later by Essex County College. It’s listed on the New Jersey Register of Historic Places, so any sale would require state approval.
Distributor Renews for 223,000 SF By Eric Peterson
JERSEY CITY-East Coast Logistics has renewed its lease for 223,000 sf of W/D space at 202 Port Jersey Blvd. The Hillside, NJ-based packaged goods distributor re-signed at the location "after conducting a statewide search for a different building," says William Waxman, senior vice president of CB Richard Ellis.
Waxman, along with CBRE colleagues Nick Nitti and Matthew Corpuel, both vice presidents, and senior associate Carrie Brown, represented East Coast Logistics, a distributor of food and beverage products. CBRE also represented the owner of the building, Rreef. Terms of the signing were not disclosed.
"The location, with proximity to the Ports of Newark and Elizabeth, as well as to New York City, proved to be a major deciding factor," Waxman says. "Renewal turned out to be the best option for the tenant."
Celator Pharmaceuticals 303 B College Road East Princeton 08540 609-243-0123; fax, 609-243-0202. Andrew Janoff PhD, CEO and chairman Home page: www.celatorpharma.com
The headquarters of Celator Pharmaceuticals, a privately held biopharmaceutical company focusing on cancer therapies, moved from 1,800 square feet at 1 Airport Place to 13,000 square feet at College Road East; at the same time, the company's research facility in Vancouver moved from 5,000 to 14,000 square feet. According to CEO Andrew Janoff, growth in several key areas was fueled by the $40 million round of financing completed last year.
Janoff reports significant progress "on all fronts." Celator has completed a Phase 1 study for its lead product, CPX-1, which will be developed for colorectal cancer, and Celator will be announcing results in June. Phase 2 studies are expected to open later this year.
The center of Celator's strategy is its CombiPlex technology platform, for which a patent application is currently pending in the United States and Europe. The technology represents a new direction in developing drug cocktails to fight different cancers. Up until now, the standard for cocktails has been to include each component at its maximum tolerated dose.
Celator holds, however, that chemotherapeutic agents can act synergistically at certain ideal ratios among the component drugs, and its technology has shown significant success in identifying the optimal drug ratios and then locking them in drug carriers so that the ratios can be maintained in patients.
Confident that this approach could represent a significant advance in patient care for many forms of cancer, Janoff expects Celator's staff in Princeton to grow this year from 17 to 22. The company has an additional 29 people in Vancouver.
"The funding represented conclusions by investors that we have a technology that is likely to change the standard of care in treating cancer," says Janoff, adding that early stage trials are showing some promise for this ratiometric approach. "If we're right," he continues, "we have an unlimited pipeline." Initially, the company is targeting new combination therapies involving chemotherapy agents already approved and widely used to treat cancer. This approach positions Celator to pursue promising product opportunities with reduced clinical risk.
Among the investors in the $40,000 funding round were Domain Associates, venture capitalist at Palmer Square, and the Garden State Life Sciences Venture Fund, a fund managed by Quaker Bioventures in which the New Jersey Economic Development Authority is the sole limited partner. This round of funding was touted as one of the largest venture capital investments in biotechnology in the North America for the year (U.S. 1, May 18, 2005). Celator began in 2000 as a spinoff of the British Columbia Cancer Agency with a laboratory in Vancouver and moved to Princeton in 2003. Janoff has been CEO since 2002.
Janoff had been vice president of research and development at Elan Corporation and, prior to that, vice president and a scientific founder of the Liposome Company. He majored in biology at American University, Class of 1971, and has an M.S. and Ph.D. in biophysics from Michigan State University.
posted by Jones Lang LaSalle NJ News Blog at 12:41 PM
Old theater on selling block again Businessman lists Montclair cinema he doesn't own yet Thursday, June 01, 2006 BY PHILIP READ Star-Ledger Staff
Montclair's historic Wellmont Theater is being hawked on such places as cinematreasures.com, an online forum for movie-house afi cionados, and prospective buyers are getting tours of the circa 1922 venue.
Yet developer Steven Plofker -- the man behind the sales pitch -- hasn't even closed on his purchase of the landmark movie palace from Roberts Theaters' Gary E. Heckel. "It's been surprisingly robust," Plofker said yesterday of inquiries about the theater. "Kansas City. Texas. Boston. Tennessee."
Less than three weeks ago and fresh from signing a sales contract, a flashlight-toting Plofker toured the dark recesses of the Seymour Street theater, saying he might convert the grand stage area hid den behind the theater's three screens into a restaurant or bar and find someone to either lease or purchase the movie operation.
But yesterday, with the closing of his own purchase of the Wellmont described as "imminent," Plofker said he wasn't ruling anything out. "I forever remain open to all the possibilities," he said.
So far, Plofker said, two offers have come in. "Most of the interest is for the current space, but not all," he said. He's been approached by a classic film operator, a feature film operator and others, he said. "One or two have mentioned live theater."
How it will pan out after Plofker closes on the theater, for a purported purchase price of just under $1 million, is yet to be seen. "We're just bombarded with them (inquiries), and we'll just sort through it," he said.
Two years ago, Plofker, who is the husband of cosmetics diva Bobbi Brown, was at the center of a development storm when he purchased Montclair's historic Marl boro Inn, setting in motion a legal battle and neighborhood fight to preserve the hostelry.
In the end, the inn was demolished in favor of a 10-house subdivi sion, whose $1.7 million homes now stand shoulder to shoulder in a "new urbanism" style. The battle with preservationists helped coin the term "Plofkerville."
Asked whether there were any prospective buyers showing interest in restoring the theater to a one-screen venue, Plofker said there were. "It's in someone's mind, but I don't know, it's hard to gauge," he said. "A 2,000-seat theater with zero parking spaces could be problematic."
Chatham-based Clearview Cinemas, which runs Claridge Cinemas just up Bloomfield Avenue in a res taurant-rich shopping strip dubbed "The Montclair Mile," purportedly made an inquiry about the Wellmont screens. But it apparently ended there.
"Clearview is aware of the Wellmont project and is not interested at this time," said Beth Simpson, a Clearview spokeswoman.
Just a week ago, Plofker's associate, David Genova, posted a write-up on cinematreasures.com, a Web site with preservation alerts and chat boards on old movie houses. "The historic Wellmont theatre, located in the heart of downtown Montclair, is up for sale or net lease!" reads the entry.
Yesterday, Jim Peskin, executive director of the newly formed nonprofit Montclair Arts Council, said Plofker approached him and the Montclair Economic Development Corp. for advice on what might be economically feasible uses for the Wellmont.
"We have a lot of groups that don't have permanent homes," said Peskin, noting that the concert se ries called Outpost in the Burbs could use a venue larger than its present space in a church. "The New Jersey Ballet rents different spaces. ... We don't know whether economically it would work. But we're exploring the possibilities."
The Wellmont had been strug gling.
A year ago, Heckel said, he stopped showing films in the larger, 500-seat theater in the old balcony. The heating simply cost too much, he said.
As May approached, he decided to close the theater for a month, not just for "renovations" as the sign in the ticket booth declared, but because of the slowness of the season. "This time of the year is really crummy," he said.
Philip Read covers West Essex. He may be reached at pread@star ledger.com or (973) 392-1851.
After a two-year hiatus, Pfizer has resumed direct-to-consumer advertising for Celebrex, the Cox-2 painkiller that came under scrutiny after the withdrawal of Vioxx, its chemical cousin. Pfizer's ads in a handful of national magazines -- the equivalent of a toe in the water for the world's largest drug company -- represents an attempted comeback, of sorts, for Celebrex. The new Celebrex print ads fea ture stern warnings about possible cardiovascular risks and potential stomach problems. The drug has the Food and Drug Administration's toughest caution on its label, a so-called black-box warning about heart risks.
Pfizer hopes this year to boost sales of the drug to $2 billion, up from $1.7 billion in 2005. The company wants to squeeze revenue from its older product as it launches several new potential blockbusters, such as diabetes treatment Exubera, cancer medicine Sutent and twice-a-day smoking cessation pill Chantix.
Celebrex is the only Cox-2 drug on the market, and has remained for sale since Merck pulled Vioxx in 2004 after it was linked to heart at tacks and strokes. Merck faces about 11,500 lawsuits over Vioxx in federal and state courts.
The heightened concerns about Vioxx figured, in part, in Pfizer withdrawing another Cox-2 drug, Bextra, after it was linked with a rare skin disorder.
Still, Wall Street analysts say Vioxx and Bextra cast a long shadow over Celebrex.
"There has been considerable discussion about the cardiovascular safety profile of Cox-2 inhibitors in the medical community," SunTrust's Robert Hazlett said in a research report last month. The removal of Vioxx and Bextra "creates additional potential risks to Pfizer and Celebrex" because they're all in the same drug class, he wrote.
Barr interested in Croatian firm despite its difficulties with FDA Thursday, June 01, 2006
Barr Pharmaceuticals is reportedly willing to pay $2.1 billion for Pliva, a Croatian maker of generic drugs.
That translates into a lot of kuna, the Croatian currency. But what exactly would Barr get in re turn?
For starters, the Woodcliff Lake- based generic drugmaker would get a foothold in Europe; right now, most of its business comes from the United States. Barr would also have total control over a deal with Pliva to develop a version of Amgen's biologic drug Neupo gen, which is used to reduce infec tions stemming from chemotherapy.
But there's more to this poten tial deal, and it's not an asset.
On April 28, Pliva received a warning letter from the Food and Drug Administration chastising the company for "significant devia tions" from good manufacturing practices at its facility in Zagreb, the Croatian capital. The problems involve various quality-control is sues -- leaking pipes, instruments not calibrated properly and incomplete records of laboratory samples, among other things.
The warning mentioned these deviations were similar to problems uncovered during previous FDA plant inspections, which prompted the agency to issue enforcement reports in August 2002 and again this past February. As a result, the FDA wrote to Pliva that until FDA inspectors can confirm the problems have been corrected, the agency will "recommend disapproval of any new applications listing your firm as the manufacturer of finished pharmaceutical drug products."
In other words, the FDA may choose not to approve new drugs for which Pliva seeks regulatory approval. The FDA also wrote that it may deny entry of Pliva products into the United States. Currently, the company sells more than two dozen medicines here, including versions of Prozac, the naproxen pain reliever and cy closporine, an immunosuppressant, according to the company's Web site.
A Barr spokeswoman didn't re turn a telephone call seeking comment.
In a statement, Pliva, which employs between 400 and 500 people in the United States, mostly at its East Hanover offices, said it is tak ing "corrective action," but doesn't expect the manufacturing issues to have a material impact on its finances.
-- Ed Silverman
posted by Jones Lang LaSalle NJ News Blog at 12:38 PM
Newark light rail gains steam Line will get in gear this summer Thursday, June 01, 2006 BY RUDY LARINI Star-Ledger Staff
Newark's light-rail city subway extension is almost ready to roll.
With equipment testing and crew training under way, the first passengers should be riding along the one-mile light-rail line from Newark Penn Station to NJ Transit's Broad Street Station by early summer, said Dan Stessel, a spokesman for NJ Transit, which will operate the line. He could not pinpoint the start of service any more precisely.
"We won't be ready to set a date until we get a little further along on the testing and training phase of that segment," he said.
The $207.7 million light-rail extension of Newark's city subway will enable passengers on NJ Transit's Montclair-Boonton and Morris & Essex rail lines to reach Newark Penn Station in 10 minutes or less without walking or taking a bus.
Combined with the renovation of the Broad Street Station and the widening of Route 21, the new line is expected to improve commuting to downtown Newark and its businesses and educational, recreational and cultural facilities.
Stessel said the line expects to attract 2,000 daily riders by the summer of 2007, with 3,550 riders a day by 2010. The existing subway line, which stretches through Newark from Penn Station to Branch Brook Park and two stations at Franklin Street in Belleville and Grove Street in Bloomfield, carries 18,450 passengers a day.
The new line has stations at the New Jersey Performing Arts Center and Bears & Eagles Stadium. There also is a station along Broad Street at Washington Park, close to the Newark Public Library and the Newark Museum, and another at Atlantic Street in the center of a growing business district.
Lawrence Goldman, president and chief executive of NJPAC, said the new line is expected to have a positive impact on the arts center.
"We're an urban arts center ... and this enhances our urbanity -- to have a mass transit stop right outside," he said. "It will make it easy to get here from all parts of New Jersey and New York."
Though the arts center is only a four-block walk from Penn Station, Goldman said the light-rail line will be especially valuable in inclement weather.
"Those cold January nights, it would be nice not to have to walk outside and to arrive right at the arts center's doorstep," he said.
Goldman said he believes the new light-rail station also will facilitate NJPAC's plan to find a private development partner to build 250 apartments, 30,000 square feet of retail space and a 700-car parking garage on property directly across Center Street from the arts center.
"I believe the light rail will make the arts center's site very desirable for developers and residents who want an urban lifestyle," he said.
He cited the example of growth near subway stations in the outer boroughs of New York City. "Everywhere there's a subway station, development happens around it," he said.
Jim Cerny, assistant general manager of the Newark Bears Atlantic League baseball team, also said the light rail would make it easier for patrons to attend games.
"We're excited to have the light rail right in front of the stadium," he said, noting the new station is right outside Gate C. "It could not be any better for us. We're very, very excited."
Five new light-rail cars were added to the existing subway fleet of 16 cars for the new line. Daily service on the extension will be offered from 6:04 a.m. to 12:13 a.m. weekdays and from 6:21 a.m. to 12:56 a.m. on weekends. On weekdays, trains will run every 10 minutes during peak periods and every 15 minutes during off-peak. Service will be every 30 minutes on weekends, timed to coincide with trains arriving at Broad Street from points west.
Stessel said the light-rail schedule also could be adjusted to ac commodate patrons of special events at NJPAC, the stadium or other facilities.
"If there's a need for additional service because of a particular event, we're fully prepared to adjust service accordingly," he said.
Initially, commuters who wish to ride both the new line and the existing city subway will have to change trains at Penn Station, though the system is designed to allow a train to continue through both lines.
"That's something we'll look at depending on what the usage pat terns are," he said.
The fare on the new line will be $1.25, the same as the existing subway, with $45 monthly passes allowing unlimited travel. NJ Transit customers with rail or bus passes worth more than $45 will be able to use the new line at no additional cost.
Cars along the extension will travel from Penn Station through a tunnel under Mulberry Street be fore reaching street level at McCarter Highway and Center Street.
The new line crosses Broad Street at two locations -- near the stadium on the way to the Broad Street Station and at Lombardy Street on the way back to Penn Station. There also are grade-level crossings on several smaller streets.
Stessel said NJ Transit engineers, over the course of several years of planning, used extensive computer simulations in working with city engineers to coordinate traffic signalization at the intersec tions of light-rail tracks and city streets.
The light-rail trains are driven by a motorman and powered by overhead catenary lines that Stes sel said have "a low profile."
"They have a very low visible impact on the city," he said.
NJ Transit also operates the Hudson-Bergen light-rail line from Bayonne to North Bergen in Hud son County and the 34-mile River Line between Camden and Tren ton in southern New Jersey.
There also are long-range plans for another light-rail line from Penn Station to Newark Liberty International Airport.
Rudy Larini may be reached at rlarini@starledger.com or (973) 392-4253.
Just listed: A 4-year degree in real estate Monmouth U. calls it the hot new major Thursday, June 01, 2006 BY KELLY HEYBOER Star-Ledger Staff
Julius Kislak learned the real estate business the old-fashioned way: He sold his father's house in Hoboken in 1906, then sold a few more and kept selling until he built one of the largest real estate businesses in the state.
But Kislak, who trained a generation of employees, would have appreciated the idea of a four-year college major devoted solely to real estate, his son Jay said.
"He was also a teacher. He was a trainer of men," said the younger Kislak, chairman of the board of the family's company, J.I. Kislak. "This is the kind of thing he would have loved."
The Kislak family will mark the 100th anniversary of the company's founding by donating $2 million to Monmouth University to help start New Jersey's first undergraduate major in real estate. The gift, due to be announced today on the West Long Branch campus, will be the second-largest in the private school's history.
With the property market booming, the university is banking that real estate will be the next hot college major. The idea is to take what has been regarded as a trade and make it a legitimate scholarly pursuit.
"The roof over your head, the land under your bed ... it's all related to real estate. Over half the wealth in the country is real estate. And, I think, in New Jersey, that's abundantly clear," said Donald Moliver, director of Monmouth University's Real Estate Institute. The institute opened in 1992.
Though real estate majors are still rare, the number of colleges and universities offering degrees in the field has doubled to about 65 over the last decade. DePaul University in Chicago, Portland State University in Oregon and Florida International University in Miami have all started undergraduate majors in recent years.
Monmouth University plans to start its major in the fall of 2007. Students will take classes on real estate law, eminent domain, finance, development, construction, affordable housing and other topics.
Today's teenagers have grown up in the era of McMansions, house flipping, Donald Trump and round-the-clock home-renovation shows on cable's HGTV. So school officials hope majoring in real estate will seem like an exciting career choice.
"It's such a unique major in this area, we believe quite frankly it is going to be, 'Build it and they will come,'" Moliver said.
The school has been offering graduate courses and continuing-education courses for real estate professionals for years. Campus officials are unsure how many budding real estate moguls will be attracted to the new undergraduate degree program.
Monmouth University, which currently charges $22,268 a year in tuition, plans to advertise the new major and offer scholarships to interested students.
In the future, the undergraduate degree may include a course to help graduates get their real estate licenses. But the major is not designed to train future Realtors. Graduates probably will end up as developers, lawyers or executives in corporations in the real estate field, school officials said.
The idea appealed to the Kislaks, who have been in the real estate business for four generations. Last year, the family began looking for a way to mark the 100th anniversary of the year Julius Kislak started the business in Hoboken.
The small house-selling business grew fast and eventually included commercial properties, multifamily units, a mortgage company and other divisions.
J.I. Kislak Inc., based in Miami Lakes, Fla., is the parent company. But it still has Jersey ties: The Kislak Company, the family-run division specializing in multifamily and retail sales, is based in Woodbridge.
Two members of the Kislak family and a member of the family's charitable foundation toured Monmouth University last fall and began discussing a donation. The Kislaks considered donating money to Rutgers, the state's largest university, but were attracted to Monmouth's well-established Real Estate Institute, family members said.
Monmouth University President Paul Gaffney flew to Florida in March to meet Jay Kislak and present a business plan for the new major. Gaffney, a retired Navy vice admiral, and Kislak, a World War II naval aviator, hit it off.
The university was eager to expand its offerings in real estate, partly because the field intersects with many other areas, including the university's Urban Coast Institute, the president said.
"We think it's the hot area," Gaffney said. "This is an area of distinction for us." Kislak said his father, who died in 1979, was a Ukrainian immigrant who dropped out of high school and would have loved to see his name on the side of a university real estate institute. One hundred years ago, the elder Kislak was walking the streets of Hoboken, knocking on doors, trying to find houses to sell.
"This is in his memory, in his honor," his son said.
Kelly Heyboer covers higher education. She may be reached at kheyboer@starledger.com or (973) 392-5929.
LeFraks Envision Even Bigger Skyline Across Hudson By CHARLES V. BAGLI
Standing atop a condominium tower under construction at the Newport complex in Jersey City, Richard LeFrak looked south at a forest of green-glass commercial towers and brick residential buildings that seem to leap from the waterfront. His family and their partner built them, 20 in all.
Although the LeFraks cannot lay claim to the tallest tower (the 800-foot Goldman Sachs building at Paulus Hook), they have built more than a third of the high-rise skyline that has grown up along Jersey City's once dilapidated waterfront. And today, exactly 20 years after his father, Sam, embarked on a seemingly quixotic bid to transform these rusty old railroad yards into Newport, Mr. LeFrak is announcing plans for another hotel and four more apartment towers.
The announcement comes on the 20th anniversary of the start of Newport and calls attention to the part that the LeFraks have played in the current Jersey City housing boom. The new plans represent a $750 million investment, on top of the nearly $2.5 billion that the LeFraks say they have already plowed into Newport.
Mr. LeFrak, 60, said the family is making good on a promise by his father and Melvin Simon, the shopping center developer, to build a community where dilapidated piers, warehouses and railroad tracks stood.
"We're celebrating that we got this far," said Mr. LeFrak, who was involved with Newport from the beginning and has now been joined by his sons, Jamie and Harry. "We're celebrating that the vision of my father and Mel Simon is pretty well complete."
The scale of the undertaking is hard to imagine. At 600 acres, Newport is twice as big as Co-op City in the Bronx. There are 11 residential buildings containing 4,135 apartments, eight office buildings with 5.5 million square feet of office space, a 187-room hotel, a marina, a 1.2-million-square-foot mall and many other buildings and stores. Across the river from Chelsea, the complex stretches the equivalent of about 14 Manhattan blocks. Samuel J. LeFrak, who died in 2003 at 85 and built more housing in New York City during his life than any other private developer, saw the possibilities in Jersey City when most builders turned up their noses. "Sam was bigger than life," said Bob Cotter, director of planning in Jersey City. "His dream was to build this city on the left bank of the Hudson River. He came over and did it. The waterfront has given Jersey City a panache that it never had."
But some urban planners, neighborhood advocates and residents have complained that Newport has a suburban sensibility. Many of the buildings stand alone, with little connection to one another, or to the older, grittier sections of Jersey City to the west, they say. There is a public esplanade along the Hudson River, with sweeping views of Manhattan, but it is bordered by Newport buildings, giving it the impression of a private enclave.
"I love living in a place that takes your breath away," said Monica Coe, an architect who has lived at Newport for 10 years. "At night you see the sparkling lights of Manhattan, rather than the brick walls you'd get in Manhattan. But it's a little like living in a feudal holding." Dan Falcon, a 15-year resident, said: "Newport has been malled off from the city. We wanted the city to have access to the waterfront."
Mr. LeFrak does not dismiss the criticisms. "It's a valid point," he said. "We're trying to address that now that we have some density."
The company is filling in some of the empty space between buildings and adding street-front stores, to create street life, and small parks, if not the larger park-on-a-pier that some residents wanted. On a recent morning, office workers and women pushing baby strollers could be seen on the streets.
The LeFraks are known for a kind of efficient, if unimaginative, boxy building that provides the maximum space for the rent. But the buildings in the next round are more interesting, with one, the Ellipse, a sleek, elliptical residential tower designed by the well-known Arquitectonica of Miami.
In the late 1970's, the Jersey City waterfront was a web of train terminals owned by bankrupt railroads. Newport began not with Samuel LeFrak but with Mr. Simon and another mall developer who wanted to build a shopping center anchored with a Stern's department store. Mr. Simon's bankers urged him to find a partner to build housing. He put in a cold call to Sam LeFrak, persuading him to travel from his office in Queens. The developer then called his son. "He said, 'Richard, you'd better take a look at this,' " Mr. LeFrak recalled. "I've been dreaming about something like this my whole life."
Sam LeFrak, in characteristic fashion, vowed to undertake "probably the largest job that has ever been built since the pyramids" and create the "experimental prototype city of tomorrow." Mr. Simon built the mall and the first office building, while the LeFraks built several apartment towers. "He built all the other buildings with cash," Mr. Simon said. "We couldn't afford to borrow the money."
Progress was slow and a devastating recession in the early 1990's sent the nascent "Jersey gold coast" into a tailspin, and the LeFraks say they had huge losses in the first 15 years.
But since 2000, they have built seven office buildings, attracting financial tenants from Manhattan like J. P. Morgan Chase, Knight Securities and Insurance Services Office with cheaper rents and tax breaks, surprising brokers who doubted that the New Jersey waterfront would ever attract office tenants.
The LeFraks have the option of building more commercial space, but the vacancy rate is 14.1 percent, according to the brokers Cushman & Wakefield. And new housing is what's hot. K. Hovnanian and Equity Residential recently bought a commercial site on the waterfront, where they plan to build a 900-unit apartment complex.
Even Donald J. Trump has found Jersey City, lending his name to a $415 million project to build two residential towers, one 50 stories and the other 55 stories.
Mr. Cotter said there are 7,000 apartments planned or under construction within a mile of City Hall, two or three times the number five years ago, fueled by the soaring sales prices and rents across the Hudson River.
"It's not Manhattan," Mr. LeFrak said on a recent walking tour of Newport. "But it's not bad. And it just might," he paused, raising a finger, "might, be better than Brooklyn."
posted by Jones Lang LaSalle NJ News Blog at 12:34 PM
Law firm signs first lease for NYT building by Julie Satow May 31, 2006
Seyfarth Shaw will lease 100,000 square feet in the 620 Eighth Ave. building, where asking rents are $80 to $100 a square foot.
The law firm Seyfarth Shaw has signed the first lease at the New York Times Co. building under construction at 620 Eighth Ave., at 41st street.
The 17-year lease is for 100,000 square feet on floors 31 through 33. The asking rent in the building is $80 to $100 a square foot.
CB Richard Ellis began marketing the building, designed by Pritzker-Prize winning architect Renzo Piano, last year. It is the first new Class A office tower to be constructed on Eighth Ave. in several years.
We have a number of other leases out, but Seyfarth Shaw is the first to cross the finish line," said Forest City Ratner Cos. President Bruce Ratner, in a statement.
Forest City Ratner, which owns floors 29 through 52 with its financial partner ING Real Estate, expects it will be open for occupancy by the second quarter of 2007. The New York Times owns floors 2 though 28.
The new lease nearly doubles the space that Sayfarth Shaw now occupies on non-contiguous floors at 1270 Sixth Ave. The 80 lawyers who occupy the Sixth Ave. office will be relocated to the New York Times building.
"We have grown substantially in the past year," said Lorie Almon, a co-managing partner at Sayfarth Shaw. "Our new home complements our commitment to our long-term investment in New York." In the past year, the firm hired 35 new attorneys.
CB Richard Ellis represented both the building owner and the tenant on the transaction.
posted by Jones Lang LaSalle NJ News Blog at 12:34 PM
