Monday, October 29, 2007

Jones Lang LaSalle

Last updated: October 23, 2007 11:03am
Hop Industries Buys 76,600-SF Building
By Eric Peterson
LYNDHURST, NJ-Hop Industries, a supplier of plastic film, sheeting and related products, has acquired the 76,600-sf building it had initially leased as part of a relocation from Garfield. The single-story building, consisting of warehouse, manufacturing and office space, is located at 1251 Valley Brook Ave.

The identity of the seller was not disclosed; the sale price was $8.8 million, or about $114 per sf. The building had at one time been fully occupied by a regional division of YKK USA Inc., which itself has relocated within the Northern New Jersey region.

And the building’s acquisition by Hop Industries was completed with the help of $6.8 million in permanent-debt financing arranged by James Gunning and Donna Falzarano of CB Richard Ellis Debt & Equity Finance, Saddle Brook. The funding was provided by Principal Real Estate Investors, according to Gunning.

“Hop Industries will greatly benefit from this new location,” Gunning says. “It’s convenient to New York City, with access to the ports, as well as routes 3, 17 and 21 and the New Jersey Turnpike.

Copyright © 2007 ALM Properties, Inc. All rights reserved. Reproduction in whole or in part without permission is prohibited.
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Jones Lang LaSalle

Last updated: October 25, 2007 08:55am
Jones Lang LaSalle Acquires Klatskin
By Eric Peterson
HASBROUCK HEIGHTS, NJ-Jones Lang LaSalle made Charles Klatskin an offer he couldn’t refuse, and as a result his organization will become part of the larger JLL universe. JLL will acquire the assets of Klatskin Associates LLC and Klatskin Associates Management Co., which combined form the New Jersey operations of Lee & Klatskin Associates, based here. Both sides declined to disclose the terms of the deal.

“The combination of our industrial expertise and local knowledge with Jones Lang LaSalle’s depth of services will provide our clients with the ultimate real estate services team,” says Klatskin, a well-known figure in New Jersey commercial real estate circles. “And I am going to grow the industrial business for JLL.”

“This addition advances several of our strategic goals,” says Peter Riguardi, president of JLL’s tri-state region. “Those goals are commanding a major presence in key market, expanding our national industrial brokerage business and continually improving our service capabilities. The combination of our two firms adds an important piece to our national industrial services platform.”

Klatskin will continue to play what company officials term, “a key advisory role” for the New Jersey team. His firm’s other principals--Robert Kossar, David Knee, Charles Fern, Joel Lubin and Anthony Scaro--will join JLL as SVPs. An additional 20 Klatskin brokers will move over to JLL as well, boosting the firm’s New Jersey staff to more than 300.

Klatskin's main office here will become JLL’s third office in the state, the main office is in Parsippany. Staffers currently based in Klatskin’s Edison office will move into JLL’s existing office in Woodbridge by the first of the year.

Klatskin founded the firm as the Charles Klatskin Co. in 1966. In 2001, he hooked up with the Philadelphia-based Binswanger to form Binswanger Klatskin, and in 2005 moved over to an alliance with the California-based Lee & Associates to form Lee & Klatskin Associates. The deal will not affect Klatskin’s holdings in Forsgate Industrial Partners, an industrial development company he founded in 1965 that’s currently headed by his son, Alex.

For JLL, the deal follows a series of other recent acquisitions, including the Los Angeles-based Zietsman Realty and the North Carolina-based Corporate Realty Advisors earlier this year, and Spaulding & Slye in 2006.

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Jones Lang LaSalle

Last updated: October 26, 2007 12:00pm
Three Apartment Complexes Trade for $8M
By Eric Peterson
(Read more on the multifamily market.)

LIVINGSTON, NJ-In three separate transactions, apartment complexes totaling more than 100 units in three counties have been sold for a combined $8.1 million. The deals were brokered by Gebroe-Hammer Associates, based here, whose managing director says, “the sales exemplify the strength of the multifamily market in Northern New Jersey.”

In Palisades Park, sales associate Elliot Schechter, VP David Jarvis and EVP David Oropeza collaborated on the sale of 10 Henry Ave., a four-story mid-rise that was 95% occupied at the time of sale. The buyer, identified only as a “long-time Gebroe-Hammer client,” is said to own several buildings in the area. The buyer, another long-time client, sold the property as part of a 1031 exchange, according to Jarvis.

“Bergen County is a very attractive region for investors,” Jarvis says. “Any time a property becomes available, buyers act quickly and decisively to secure a winning bid.”

In East Orange, meanwhile, Oropeza negotiated the sale of 73 Carnegie Ave., an 18-unit, four-story building that traded for $1 million. The property had just one vacancy at the time of sale. The buyer was described as, “a first-time buyer based in New Jersey.” The seller was Golden Sun Realty of Paterson, NJ.

The third transaction came in Union City, where G-H VP Scott Callahan brokered the sale of Skyview Apartments at 1300 Palisade Ave., a five-story, 43-unit building. The buyer was described as, “a New York-based investor who is purchasing for the first time in Union City,” Callahan says. “The seller is a frequent Gebroe-Hammer client with a strong portfolio in both New Jersey and New York.”

Copyright © 2007 ALM Properties, Inc. All rights reserved. Reproduction in whole or in part without permission is prohibited.
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Jones Lang LaSalle

Last updated: October 23, 2007 03:13pm
Trucking Firm Leases 141,000 SF
By Eric Peterson
(Read more on the industrial market.)

SECAUCUS, NJ-Locally based Hartz Mountain Industries has signed Cous Transport Systems Inc. to a lease for 140,737 sf of industrial space at the company’s 77 Metro Way building, also here. The asset is located within Hartz Mountain’s Harmon Cove Business Park.

Terms of the lease were not disclosed. The building’s remaining space is currently listed on Hartz’s website with an asking rent “upon request,” and for a minimum term of five years. The remainder of the 384,543-sf building is still on the market, an availability that totals just more than 243,800 sf.

“The Northern New Jersey industrial market has been a consistent performer,” says Hartz Mountain president and COO Emanuel Stern. “At our Harmon Cove industrial properties, we continue to see high demand, partially due to the opening of Exit 15X on the New Jersey Turnpike, which essentially made Harmon Cove 15 minutes closer to the Ports of Newark and Elizabeth, as well as Newark Liberty International Airport.”

“We are looking forward to a long professional relationship with Hartz Mountain Industries,” says Su Lee, president of Cous Transport Systems. His company, a local trucking and motor freight operation, is currently based in Ridgewood.

The building at 77 Metro Way officially hit the market at the beginning of this year when Hartz held a broker open house for the then completely vacant building. The asset has had various occupants over the years, most recently an apparel distributor. Located near both Route 3 and the New Jersey Turnpike, and mass transit access via the Secaucus Junction train station, the building’s features include 27-foot ceiling heights.

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Jones Lang LaSalle

Last updated: October 24, 2007 10:09am
Bank Opens New 25,000-SF HQ
By Eric Peterson
CAMDEN, NJ-Susquehanna Patriot Bank has opened its new 25,000-sf headquarters at Steiner & Associates’ Ferry Terminal Building on this city’s waterfront, moving here from nearby Marlton. The move marks a couple of milestones: Susquehanna Patriot Bank is the first financial institution to be headquartered in Camden in more than two decades, and the recently completed 100,000-sf building is the first totally privately financed office building in Camden in at least 40 years.

“We serve customers and communities on both sides of the Delaware River,” says Joseph Lizza, president and CEO of Susquehanna Patriot Bank, which has 15 branches in South Jersey and another 22 in Pennsylvania, and approximately $2.1 billion in assets. “So this move places us in a very central, convenient location.”

The new four-story Ferry Terminal Building is an initial component of the Columbus, OH-based Steiner’s Cooper’s Crossing mixed-use waterfront development. The building itself includes three levels of office space, a restaurant and additional retail stores. At full build-out, Cooper’s Crossing will cover 30 acres and has a projected price tag in the $200-million range.

Copyright © 2007 ALM Properties, Inc. All rights reserved. Reproduction in whole or in part without permission is prohibited.
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Jones Lang LaSalle

Last updated: October 25, 2007 12:19pm
$6M Mortgage Set for 27-Unit Residential
By Eric Peterson
(Read more on the multifamily market.)

LAKEWOOD, NJ - A $6.4-million mortgage is set for a community of 27 attached homes in this Ocean County city. The loan, which will fund the project’s development, was secured through A-Z Financing, a Brooklyn, NY-based broker. The deal was facilitated by the Community Preservation Corp., the first made through the firm’s Trenton, NJ office, which opened earlier this year.

“This project is an example of why we opened the Trenton office, which is to provide more opportunities to build personal connections with borrowers in the central and southern portions of the state,” says Robert Riggs, CPC VP and regional director in Trenton. His firm, a not-for-profit mortgage lender, has its main New Jersey office in Jersey City.

“Lakewood is a town that is developing rapidly,” Riggs says. “This is a market-rate project that meets the needs for moderately-priced housing for large families in Lakewood.”

The developer of the project was described only as, “a local businessman.” Permits for work at the site have been filed and foundation work is expected to be finished before winter.

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Jones Lang LaSalle

Last updated: October 26, 2007 09:35am
Two Universities Start Work on $150M Tower
By Eric Peterson
NEW BRUNSWICK, NJ-Construction has officially started for a $150-million, 18-story medical research tower Downtown. Among other things, the building will house the Stem Cell Institute of New Jersey, which will occupy 160,000 sf across five full floors.

“The Institute will serve as the nexus of cutting-edge scientific breakthroughs that will improve and save lives of millions of our fellow citizens,” says Gov. Jon Corzine. “As we build this institute, we are building on a longstanding commitment to ensure that New Jersey is a world leader in the stem cell revolution.”

The Institute is a joint venture between Rutgers University and the University of Medicine & Dentistry of New Jersey-Robert Wood Johnson Medical School. The building will rise on a former parking lot next to Robert Wood Johnson University Hospital, near the Cancer Institute of New Jersey. Completion is slated for early 2011.

State, university and hospital officials have also announced that the facility will include the Christopher Reeve Pavilion, named for the late actor, a Princeton native, who became an activist for stem cell research following his paralyzing horse riding accident in 1995. The Stem Cell Institute itself will include a combination of research, clinical study and outpatient treatment facilities.

The money for the building is coming from state funds. A year ago, Corzine signed into law a bill providing $270 million to build a variety of research facilities. In June, almost $9.2 million in predevelopment funding was approved for the Stem Cell Institute of New Jersey, the initial allocation from that $270 million. And in July, Corzine signed the New Jersey Stem Cell Research Bond Act, a $450-million bond referendum that will provide research grants to eligible institutions over a 10-year period. The act will be on the agenda for the state’s voters in next month’s elections.

Copyright © 2007 ALM Properties, Inc. All rights reserved. Reproduction in whole or in part without permission is prohibited.
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Jones Lang LaSalle

Last updated: October 19, 2007 03:52pm
The Post-Bankruptcy Tug of War
By Joe Cavaluzzi
Joe Cavaluzzi is a regular contributor to Real Estate New Jersey.

What happens when your project gets mixed up in a bankruptcy? Some of the state’s top bankruptcy and real estate lawyers and bank workout specialists addressed that question during the recent RealShare New Jersey session moderated by George Jacobs, president of Jacobs Enterprises Inc.

The conclusion was that it depends on what the development partners have done to prepare for it in setting up their partnership and what the lenders have done in structuring the financing. In that regard, the Kara Homes bankruptcy was an irresistible sideline to the conversation.

Four panelists with extensive bankruptcy experience each took a position for the purpose of the discussion, with Ken Orchard, a workout specialists from NorthFork Bank, assuming the role of the bank trying to get its money back. “In deals with various partners, we start by underwriting the deal to the weakest link. Banks need to do a better job of focusing upfront on the lending process because time has never improved the situation once a company enters bankruptcy,” said Orchard, one of 14 bank creditors in the room during Kara Homes’ bankruptcy negotiations.

“I focus on the sponsorship,” he said. “Our first preference is to not wind up in court. Are we interested in seeing the developer proceed with the project? Yes, but we’re most interested in getting our money back.”

Attorney David Bruck of Greenbaum, Rowe, Smith & Davis represented the interests of the debtor. He was one of 20 lawyers in the room for Kara’s bankruptcy discussions. Unlike the other 19, who represented creditors in the case, Bruck was sitting at Kara Homes’ table.

Kara Homes had joint venture interests with its partners on individual developments, and all of the partners had an interest in the land-owning entity as well. But the partnership and its borrowing structure had likely not been well thought-out in advance and had not addressed what would happen if the project ran into trouble. That leaves the debtor to assume the contracts with the other partners or reject the contracts. But Bruck said the latter might be an unfavorable choice because the debtor may want to sell the contracts. “There should be someplace in the lending agreement that defines how to pass on the managerial rights of the debtor,” he said. “Without that, the creditors’ committee has the right to take over the project, and the partners may not want that.”

Andrew Sherman, a bankruptcy attorney with Sills Cummins Epstein & Gross, said most partnerships don’t address the possibility of bankruptcy when setting up a deal. Structuring it as an LLC or other type of partnership may work better than a simple partnership agreement. In the RealShare New Jersey discussion, Sherman represented the interests of a partner to a development company that has declared bankruptcy.

“From a lawyer’s perspective, you can avoid bankruptcy by planning for it when the partnership is drawn up,” Sherman said. “Or, when everything starts to fall out of bed, you can start getting into the partnership documents and figure out what’s going to happen when things start to get worse.

“Once you get into bankruptcy court, all of the provisions you put in may not matter because the judge is going to say his goal is to preserve value to those who are secured lenders or those who are the loudest,” Sherman explained. “Usually, the loudest wins.” Richard Hauer, a bankruptcy partner with the real estate accounting and advisory firm Schonbraun McCann Group, assumed the role of mediator for the purpose of the panel discussion. He, too, was concerned with preserving value.

“My role is to try to extract value out of the situation, to bring a level of reasonableness to all of those contracts,” Hauer said. “I’m there to avoid a liquidation because in many situations that’s not going to be in the best interest of my client. It probably is in everybody’s best interests to keep the deal together and not turn management of the project over to an outside entity.”

One thing all of the panelists agreed on is that time is on the side of the borrower. “The debtor views time as an ally,” Bruck said. “People get tired, but the other side of this is that the market is different. So, we hope to get out as quickly as possible. The market was substantially different when Kara got out [settling its bankruptcy in early October of this year] than when it filed for bankruptcy two years ago.”

Deal fatigue sets in over time, according to Orchard. Creditors wear down. Their attention turns to other interests. “The borrower doesn’t get deal fatigue, it’s everybody else,” he said.

RealShare New Jersey, held in the Glenpointe Marriott in Teaneck, was produced by Real Estate Media, which publishes Real Estate New Jersey and GlobeSt.com.

Copyright © 2007 ALM Properties, Inc. All rights reserved. Reproduction in whole or in part without permission is prohibited.
For reprint information call 410-571-5893 or e-mail afaulkner@remedianetwork.com.
Jones Lang LaSalle

Last updated: October 26, 2007 12:08pm
Regus Leases 21,000 SF at Mack-Cali Asset
By Eric Peterson
PARAMUS, NJ-The Regus Group, a Dallas-based provider of furnished offices, has leased 21,000 sf at Mack-Cali Realty’s Mack-Cali Centre III at 140 E. Ridgewood Ave. here. On the building’s fourth floor, the company will open a business center consisting of 86 offices, 147 workstations, one boardroom, one videoconferencing studio and one meeting room.

The term of the lease is 138 months, with CB Richard Ellis representing Regus in the transaction. Further details were not released; an availability in the 240,000-sf building is currently listed with an asking price of $26 to $28 per sf.

“We selected Paramus for our new location because of the strong growth trends that the Northern New Jersey office market continues to experience,” says Michael Berretta, VP-business development for Regus. “We have experienced increased demand from clients in this area, and our new Paramus center will allow us to offer an alternative to our Saddle Brook business, which has been a strong performer.”

The new business center is Regus’ seventh deal with the Edison, NJ-based Mack-Cali, and its 22nd center overall in New Jersey. The company’s worldwide reach is now 950 locations in 70 countries.

Copyright © 2007 ALM Properties, Inc. All rights reserved. Reproduction in whole or in part without permission is prohibited.
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Jones Lang LaSalle

Last updated: October 29, 2007 03:45am
Kohl’s and Sam’s Club Sign Leases for Center
By Brianne Harrison
LINDEN, NJ-Kohl’s and Sam’s Club have signed leases to anchor Linpark Square, a 280,000-sf retail complex currently under construction here. Garden Commercial Properties, the Short Hills-based developer of the site, oversaw the lease signing.

Sam’s Club will occupy nearly 140,000 sf of space, and Kohl’s has reserved slightly more than 100,000 sf. Another 25,000 sf remains available for future tenants. “Linpark Square combines all the geographical and demographical elements that retailers seek in a commercial complex,” says Mario Dudzinski, VP of real estate for Garden. “Its location along the Route 1 and 9 corridor will ensure an abundance of drive-by traffic, while the surrounding communities provide an established customer base.”

When complete, Linpark Square will consist of five free-standing retail buildings. The complex is at the intersection of Routes 1 and 9 and Park Ave. Garden Commercial expects the project to be complete in 2008.

Copyright © 2007 ALM Properties, Inc. All rights reserved. Reproduction in whole or in part without permission is prohibited.
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Jones Lang LaSalle

Last updated: October 29, 2007 10:58am
$20M Loan Completes Building Improvements
By Eric Peterson
(Read more on the debt and equity markets.)

PARSIPPANY, NJ-UBS Global Asset Management has picked up a $20-million first mortgage secured by its ownership share in 9 Entin Rd., a 197,000-sf, three-story office building on 15 acres here. As reported by GlobeSt.com, UBS, on behalf of one of its value-added funds, teamed up with Lincoln Property Co. just more than a year ago to buy the asset from Hartz Mountain Industries for $26.8 million, or about $136 per sf.

The 36-month, fixed-rate loan was provided by ING Investment Management in a transaction arranged by Dana Brome and Susan Larkin of the Hartford office of Holliday Fenoglio Fowler. HFF will also service the loan.

“The borrower purchased 9 Entin Rd. in June 2006 and took the opportunity to raise occupancy by reconfiguring the access road, which originally was only accessible from the southbound side of I-287,” Brome says. “After reconfiguring the roadway connecting Entin Rd. to the adjacent Macl-Cali Business Campus, tenancy rose from 47% to 74%, and is continuing to rise.”

The latest tenant signing came just last month when DuPont subsidiary Belco took 23,000 sf. And earlier this year, Daiichi Sankyo signed a lease for 32,000 sf, joining AIU Insurance and Emerson Radio Corp. on the tenant roster. Besides the roadway reconfiguration, 9 Entin Rd. has also gotten common area upgrades since it was acquired.

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Jones Lang LaSalle

Meadowlands Redevelopment Difficulties Continue
By Brianne Harrison
LYNDHURST, NJ-In a letter sent to EnCap October 5, the State Environmental Infrastructure Trust informed the developer that it could no longer draw from the nearly $300 million in publicly supported low-interest loans that were issued to cover the costs of the Meadowlands project. EnCap was also instructed to withdraw three pending applications for almost $3.5 million in withdrawals from the loan pool.

This is the latest setback for the once-promising project, which sought to place luxury housing, hotels and golf courses on land that was formerly used as landfills. According to Christopher Gale, an official with the New Jersey Meadowlands Commission, EnCap was chosen to remediate and redevelop the site because “it was judged at the time that they had unique experience from their landfills-to-golf project in Houston.” The project he refers to is the successful Wildcat Golf Club, an $18-million two-course club on the site of a former landfill.

EnCap began remediating the site in 2004. Work ground to a halt earlier this year, however, as costs began spiraling out of control and the Department of Environmental Protection slapped EnCap with a $1-million fine for failing to control methane emissions from the site. EnCap requested permission to replace the contractor responsible for cleaning up the site, Mactec Development Corporation, but the request was rejected by state officials. Mactec has since left the site and has filed claims seeking $25 million in back payments from EnCap.

In an effort to cover the rising costs of the project, EnCap attempted to raise almost $400 million by issuing bonds backed by future property tax breaks the company expected to receive from North Arlington and Rutherford. The state rejected the proposal.

In light of EnCap’s continuing financial difficulties, the Meadowlands Commission issued two letters, on September 10 and October 5, threatening to terminate EnCap’s development agreement on November 20 unless the company resumes work on the site and pays a $16 million security guarantee. According to the Meadowlands Commission, EnCap has not yet responded to the letters.

The day after the first letter from the Meadowlands Commission was issued, the DEP issued an Administrative Order and Notice of Civil Administrative Penalty Assessment, listing many violations of state environmental protection laws at the Meadowlands site. These violations include:

  • Failure to properly fence the project area, with the result that waste continues to be illegally dumped at the site
  • Placing dredged material that did not meet requirements as cap material
  • Failure to place necessary decontamination equipment at the site, resulting in contaminated soil being tracked out of the site and onto nearby roadways
  • Failure to confine the excavation to a size consistent with the number of pieces of digging equipment and trucks at the site
  • Excavating waste without properly disposing of it
  • Failure to control surface water run-off
  • Allowing fill material to erode into a nearby creek
  • Failure to maintain or acquire certain necessary permits

EnCap was given seven days to acquire the necessary permits and to address many of the violations. In addition, the DEP issued a $3.3 million demand for payment to cover the cost to the state of disposing of dredged fill dirt from the site. In 2004, EnCap promised to arrange for the disposal of the fill dirt. According to the DEP, EnCap is currently appealing the fines and the AONOCAPA.

According to both the Meadowlands Commission and the DEP, it has not yet been determined what will become of the project if EnCap’s development agreement is revoked. Repeated calls and e-mails to EnCap seeking comment were unanswered.

Copyright © 2007 ALM Properties, Inc. All rights reserved. Reproduction in whole or in part without permission is prohibited.
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Jones Lang LaSalle

122-Room Courtyard Under Construction
By Eric Peterson
WAYNE, NJ-Jos. L. Muscarelle Inc. has received its approvals to build a new Courtyard by Marriott hotel at the confluence of I-80 and routes 23 and 46 here. The three-story hostelry will contain a total of 122 guest rooms once it's completed, in about a year. Cost of the project has not been released.

“This has been a long process,” says Joseph Muscarelle, CEO of the Maywood, NJ-based development company. “But we’re looking forward to completing the project. We feel as though it will do very well in this location. There are lots of residents and businesses that will benefit from the services the hotel has to offer.”

The new hotel is the third for Muscarelle, and second in New Jersey. The other Garden State property is a 154-key Courtyard by Marriott that’s currently under construction in Paramus. And Muscarelle has a partnership interest in the 619-room Westin Hotel that’s part of Pittsburgh’s Liberty Center mixed-use development.

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Monday, July 17, 2006

Jones Lang LaSalle
New Jersey adding jobs at healthy pace
By JEANNE RIDGWAY
Courier-Post Staff

April and May were good months for private-sector employment in New Jersey. The state added 12,300 new jobs, the best gain this year.The spike offsets a small job loss during 2006's first quarter, according to the New Jersey Department of Labor and Workforce Development. Overall, New Jersey added a net 11,900 private-sector jobs since the start of the year.


"The state is doing better than we have done during the last two years, and better than the rest of the country," said Philip Kirschner, New Jersey Business & Industry Association president.
"If we can get to four straight months of growth, that's a solid trend and that is something that the state should be able to crow about," Kirschner said.

Protocall Staffing in Cherry Hill is making 33 percent more in sales this year filling orders for temporary industrial workers. Overall, "our industry expects to increase our sales figures by 9.1 percent," said Roy Fazio, Protocall's vice president. The company is also helping many companies find full-time workers, especially in the office/administrative field. "We are up 12 to 13 percent in fees for direct hire," Fazio said. "The higher the skill level, the greater the need to fill it." Higher-paying jobs in The Burlington-Camden-Gloucester county region is outpacing the state in generating jobs, according to the Federal Reserve Bank of Philadelphia.

In May, the figures were 1.5 percent for the tri-county region, compared with 1 percent for the rest of the state. The tri-county area is also generating higher-paying jobs.

"Professional and business services are picking up strongly," said Tim Schiller, senior economic analyst for the Fed.

"There is also a lot of construction of office buildings, and that's another view of it," he said.
On the negative side, residential building is slacking off and consumer reaction to higher fuel prices is still waiting to be felt, Schiller said.

Overall, "I think what we are going to see is slower growth in the year's second half, both locally and nationally. It looks like an orderly transition to a more subdued pace," Schiller said.

The New Jersey Business and Industry Association expects fuel prices to eventually dampen consumer confidence and business buying. For now, people are spending.

"The ability of the consumers to adjust is remarkable. If you want to drive your car or buy certain products, you just hold your breath and do it," Kirschner said. Consumers' ability to adapt is also reflected in the travel industry this summer.

"I don't think that the price of gasoline has affected the vacation level too much," said Stephanie Mensch, public affairs manager for AAA South Jersey. "It's the everyday travel that is hitting us in the pocketbook," she said. Closer to home consumers continue to travel, but they are staying closer to home, Mensch noted. "This is New Jersey, and people go to the shore," she said. On June 21, a driver in South Jersey paid $2.87 for a gallon of gasoline. This compares with $2.06 a gallon sold on the same date last year.

In residential real estate, the resale of preowned houses in South Jersey picked up during the first quarter of 2006, with 52,500 units sold, compared with 49,600 units during the final quarter in 2005. Buyer affordability continues to slip statewide, though, with a $84,672 annual family income needed to buy the median-priced home priced at $356,700. The state median income is $80,613.
For buyers in South Jersey, resale prices are much lower than the state as a whole. Also, prices are not rising at the giddy pace they once were. During the year's first quarter, the median price for a resale home was $226,100, an increase of just $100 over the final quarter of 2005.

Nationwide, demand for commercial real estate space remains healthy. The sector is not without concerns, however, including energy costs, rising interest rates and slower-than-expected job growth, according to the National Association of Realtors.

Bill Glazer, Keystone Property Group president, believes in the possibilities for commercial real estate profit in South Jersey. Keystone, of Conshohocken, Pa., purchased the Barrington Industrial Park in February, which is now 95 percent occupied, up from 30 percent. Keystone is also redeveloping 112 W. Park Drive, a 115,000-square-foot office building in East Gate, Mount Laurel.
"That will be a best-in-class asset. We are looking among the best national tenants to fill it, a company that would be a household name because that is the caliber of the building we are building," Glazer said.

"Rental rates are just starting to tighten now. Since 9/11, the market has been soft. It's taken many years to backfill that excess supply, and now it's beginning to impact on the rates," Glazer said.
Signals are "go" for more development in Atlantic City, where economic growth is resonating within the entire South Jersey economy.

By itself, the casino industry has brought aggressive development to the shore. Now the region sees new opportunities to enhance the total experience for visitors through other types of development, such as retail, golfing and fine dining.

Ripple effect
"The casino industry has an enormous ripple effect on the whole economy, including housing and malls," said Milton Leontiades, former dean of the Rutgers School of Business.
More expansion is anticipated as serious money is placed on new land tracts in Atlantic City, Leontiades said.

"Recent acquisitions by Morgan Stanley and MGM promise added impetus to a growing economy at the shore," he said. "It's a money pump for the state and particularly for that region."
Reach Jeanne Ridgway at (856) 486-2479 or jridgway@courierpostonline.com

Published: June 23. 2006 3:10AM

Jones Lang LaSalle
NYC Firm Heads to Princeton
Yvonne Darling
NJBIZ Staff

6/23/2006 - IncreMental Advantage, a national research and conference planning firm formerly branded as The Wall Street Transcript, has relocated to Princeton. The company had been based in New York City. "We believe that Princeton will provide us with a very high-caliber talent pool. As a research-centric business, access to a highly educated labor market is of critical importance," David Wanetick, the company’s managing director said. The Princeton office opened on June 1 and will be fully staffed by mid-July, according to the company.
Jones Lang LaSalle
HQ Global leases at 5 Penn Plaza
Published on June 26, 2006

Plans to build a new train hub west of Pennsylvania Station promise to transform the area around the West 34th Street transportation hub, and nearby office buildings are already attracting tenants and drawing higher asking rents.

HQ Global Workplaces, which rents office suites and provides support services for small businesses, is opening a 27,877-square-foot office in the neighborhood. The new digs are at 5 Penn Plaza, on Eighth Avenue between West 33rd and West 34th streets, where the asking rent was increased several weeks ago by $4 to $38 a square foot.

Dallas-based HQ Global Workplaces "has had so much growth that it wanted to open another office," says Peter Turchin, a senior vice president at CB Richard Ellis, which represented both the landlord and the tenant on the deal. HQ decided on Penn Plaza in part because of its proximity to transportation, including the Long Island Rail Road, New Jersey Transit and a handful of subway lines.

The new office space, which occupies the entire 23rd floor, has not been built; HQ Global Workplaces is scheduled to take occupancy in about five months. The company, which has more than 750 locations globally, has 14 sites in Manhattan, including space at 1 Penn Plaza and 11 Penn Plaza.

So far this year, 80,000 square feet have been leased at 5 Penn Plaza by Sirius Radio, Allied Advertising and other tenants. All of the space was put on the market when CNN moved to the Time Warner Center more than a year ago. The building's penthouse and two floors in its base are available.

State officials are moving forward with plans to build a new Moynihan Station transit hub on the site of the James A. Farley Post Office, which is west of Eighth Avenue. In addition, developer Steven Roth of Vornado Realty Trust is circulating a $7 billion proposal to move Madison Square Garden to Ninth Avenue as part of the renovation.

--Julie Satow

Jones Lang LaSalle
UBS swings into more space on Park

Investment Banking Giant UBS is taking over 45,500 square feet, or the entire seventh floor, at 101 Park Ave., between East 40th and East 41st streets. UBS, which already occupies 97,400 square feet on five floors in the building, signed a sublease with law firm Morgan Lewis & Bockius.


The lease runs through September 2014. The asking rent in the building is $50 a square foot.

Morgan Lewis was using the seventh floor as a swing space for its employees while it renovated the 175,400 square feet it occupies on nine floors in the building. The renovations, which took nearly two years, were completed in March.

"Morgan Lewis had an ingenious idea to move groups of people downstairs while their offices were being renovated so it wouldn't be so disruptive," says Barbara Winter, senior vice president at Jones Lang LaSalle, which represented the law firm. Cushman & Wakefield Inc. represented UBS.

Sun Microsystems, HJ Kalikow and Booz Allen Hamilton are among the other tenants at 101 Park.

Jones Lang LaSalle
Bradley Pharma swings to loss on R&D charge

June 23, 2006
The specialty drug firm said its quarterly loss was due to a hefty research and development charge and a share-based compensation expense.

(AP) — Bradley Pharmaceuticals Inc., a specialty pharmaceutical firm, said Friday it swung to a quarterly loss due to a hefty research and development charge and share-based compensation expenses.

The Fairfield, N.J., firm lost $352,642, or 2 cents per share, in the first quarter, compared with a profit of $2.2 million, or 13 cents per share, during the same period last year.

Results included a non-refundable charge of $2.9 million, or 18 cents per share, related to a collaboration and license agreement with MediGene AG and a share-based compensation expense of $927,000, or 5 cents per share.

Quarterly revenue climbed 5% to $34.8 million, primarily on higher sales in its Doak Dermalogics division. The unit's sales rose 7% to $29.4 million.

On average, analysts polled by Thomson Financial were looking for earnings of 18 cents per share on sales of $36.5 million.

Bradley shares dropped 8.8%, to $11.86 on the New York Stock Exchange. Over the past year, the stock has traded between $9.15 and $15.09.
Jones Lang LaSalle

GlobeSt.com Commercial Real Estate News and Property Resource
Last updated: June 23, 2006 11:18am
Mack-Cali Declares Cash Dividend
By Eric Peterson


CRANFORD, NJ-The board of directors of Mack-Cali Realty Corp. has declared a quarterly cash dividend of $0.63 per common share, indicating an annual rate of $2.52 per common share. The dividend is for the period of April 1, 2006 though June 30, 2006, and will be paid on July 17 to shareholders of record as of July 6.


The REIT’s board has also declared a cash dividend on its 8% Series C cumulative redeemable perpetual preferred stock ($25 liquidation value per depositary share, each representing 1/100th of a share of preferred stock), equal to $0.50 per depositary share for the period April 15, 2006 through July 14, 2006. The dividend will similarly be paid on July 17 to shareholders of record as of July 6.

Mack-Cali’s holdings now total 304 properties, mostly in the Northeast, adding up to approximately 34.3 million sf. That total was boosted, of course, by the REIT’s recent acquisition of a substantial portion of the Gale Co.’s office holdings.

Copyright © 2006 ALM Properties, Inc. All rights reserved. Reproduction in whole or in part without permission is prohibited.

Jones Lang LaSalle

GlobeSt.com Commercial Real Estate News and Property Resource
Last updated: June 23, 2006 11:23am
Electronic Security Firm Takes 32,000 SF
By Eric Peterson


FAIR LAWN, NJ - Henry Bros. Electronics Inc. has signed a long-term lease for 31,801 sf at 17-01 Pollitt Dr. here and will move its headquarters to the building from the company’s current location in Saddle Brook, NJ. The move will increase the company’s space by some 40%, according to company officials.

"We believe that this new facility will accommodate the growth of our operations and enable us to expand our customer base," says the company’s CEO, James Henry. "The new facility will combine our New York and New Jersey regional integration business with our corporate headquarters and two subsidiaries, Viscom Products and Airorlite Communications."

Henry Bros. Electronics is a turnkey provider of technology-based integrated electronic security systems and products. Besides its headquarters, the location will be used for assembly, testing and training, as well as warehouse space.

The single-story, 105,367-sf 17-01 Pollitt Dr. is a flex building owned by Kushner Properties of Florham Park, NJ. The lease was negotiated by Chris Marx of Studley representing Henry Bros., and by Ira Bloom, director of commercial real estate for Kushner and Dennis Gralla and Chris Tichio of Alexander Summer, exclusive brokers for the property. The new lease runs through October 2016, and Henry Bros. is expecting to move in during Q3 of this year.

Henry Bros. joins a tenant roster that include US Technologies, Semperit, Kyodo and Vyteris Inc. As reported by GlobeSt.com, the latter signed a 26,255-sf lease with Kushner earlier this year.

Copyright © 2006 ALM Properties, Inc. All rights reserved. Reproduction in whole or in part without permission is prohibited.

Jones Lang LaSalle
GlobeSt.com Commercial Real Estate News and Property Resource
Last updated: June 23, 2006 01:31pm
Agfa-Gevaert Signs 88,000-SF Renewal
By Eric Peterson


RIDGEFIELD PARK, NJ-Agfa-Gevaert Group has renewed its lease for a total of 88,147 sf of office space at 100 Challenger Rd. here. The Hartz Mountain Industries-owned building is within that company’s Overpeck Centre, a multi-building corporate campus.

The signing also marks two decades of Agfa’s occupancy of the building. Terms of the lease were not disclosed.

"Lease renewals are becoming the sign of a tightening market," says Emanuel Stern, president and COO of the Secaucus, NJ-based Hartz. "New activity in the Northern New Jersey marketplace has been moderately strong, and as a result of the improving occupancy, existing tenants in the market are left with few local options. Ultimately, we may see this becoming a more dominant force that will continue to drive leasing rates."

The building at 100 Challenger Rd. is virtually leased up, and Hartz is focusing on the 61,000 sf that remains available at the neighboring building at 65 Challenger Rd. The latter, at 167,000 sf, is similarly sized as 100 Challenger Rd. The 60-acre Overpeck Centre, meanwhile, has a build-out capability of about one million sf, and current major tenants besides Agfa-Gevaert include Summit Bank, Daewoo, Samsung and Degussa. A Hilton Garden hotel is slated to open within the campus in the spring of 2007.

The Agfa-Gevaert Group develops, produces and distributes a range of analog and digital imaging systems and IT solutions, primarily for the printing industry and the health care sector. Its business groups are Agfa Graphics, Agfa HealthCare and Agfa Specialty Products, and its parent company is based in Mortsel, Belgium.

Copyright © 2006 ALM Properties, Inc. All rights reserved. Reproduction in whole or in part without permission is prohibited.
Jones Lang LaSalle

Ex-Superfund site in Mt. Olive may get Target
Former landfill location eyed for shopping complex
BY ZENAIDA MENDEZ
DAILY RECORD


MOUNT OLIVE -- A Superfund site taken off the federal Environmental Protection Agency's National Priorities List two years ago may become the home of 400,000-square-foot shopping complex, including a Target store.

Township council President Robert Greenbaum said that Target Corp. has expressed interest in building a store at the 102-acre Combe Fill North site on Gold Mine Road.

Greenbaum said that he and council Vice President Steven Rattner have been in negotiations with attorney Glenn C. Geiger, who is representing Target, for a year, and, at its public meeting next week, the council will consider a resolution outlining the proposal's terms and conditions.

"It's very complicated,"Greenbaum said Wednesday. "They need to do a significant amount of due diligence in terms of 'What's in the landfill?, What are the risks associated with building on a landfill?' There are a lot of contingencies involved."

Ex-garbage dump
Combe Fill North landfill occupies 65 acres of a 102-acre property on Gold Mine Road. That land is predominantly surrounded by commercial properties. The site operated as a sanitary municipal landfill from 1966 to 1978, accepting municipal and industrial waste and small amounts of dry sewage sludge. Combe Fill Corporation purchased the landfill in 1978. The following year, groundwater contamination was found beneath the site. The landfill was closed in 1981. It was declared a Superfund site in 1982. In 1991, the state Department of Environmental Protection completed remedial work, including installation of a clay cap, landfill gas venting system, and perimeter fencing.

Should Target Corp. acquire the property and build, it would need approvals from the township and the state.

Greenbaum said that it is a viable option for a site that currently is not on the tax roll but, if developed by Target, could infuse a significant amount of money into the municipality.

"This would result immediately -- once all of the contingencies have been met and there is building approval from the planning board -- in between $750,000 to one million in back taxes owed to the township," Greenbaum said.

There also is an environmental tax lien on the property by the state, which is seeking to recoup past clean-up costs, Greenbaum said.

The municipality will hold a sale of the tax certificate, and Target is expected to be the high bidder, Greenbaum said. Once sold, the new owner will pay property taxes from then onward, Greenbaum added.

Geiger referred questions to Target Corp.'s public relations department. That department did not respond Wednesday.

According to its Web site, Target operates more than 1,300 stores, including 34 stores in New Jersey. There are two Target stores in Morris County: East Hanover, on Route 10, and Rockaway Township on Mount Hope Avenue.

Mayor Richard De La Roche said that he would welcome Target to Mount Olive if the environmental and legal issues can be resolved.

"All these things can be worked out, but it's early in the process" to say definitively, he said.
"This would seem to be a good use for it," De La Roche said, regarding the Combe Fill North property. "We always are looking to bring in commercial enterprises."

In February, 2005, Target Corp. presented a concept plan which proposed construction of a single-level, 127,000 square foot store in Sutton Plaza, on Route 206, to the township planning board. That building would've replaced the 55,000 square foot building which formerly housed Ames.

Target Corp. never submitted a site plan to the planning board for approval.

Flanders resident Don Markey, who opposed construction of Target in Sutton Plaza, said that building the store on the Combe Fill site, near the ITC shopping center, is more suitable.
"Our whole goal in Mount Olive is to get more ratables to offset taxes but not ruin the ambiance of the community,"he explained.

"There is a need here (for retail such as Target), but they have to be put in the proper place," he added. "What better than a large corporation coming in, taking unusable land, and turning it back into usable space that benefits the community?"

Jones Lang LaSalle

City Eyes 15-Block Redevelopment
By Eric Peterson


HOBOKEN, NJ-The city council here this week is expected to designate a 15-block area as "an area in need of redevelopment." Located in the southwestern part of this Hudson County community, it would be the latest of a series of such designations that have helped reshape the city in recent years.

The proposed redevelopment zone, which totals some 13 acres, is bordered by Paterson Avenue and Observer Highway along its northern edge. Neighboring Jersey City provides the other two boundaries for the tract. According to Mayor David Roberts, once a redevelopment declaration is made, city officials will be looking to have several private developers redo the tract with a series of smaller projects rather than turning the whole thing over to a single entity.

The city is also looking for mixed uses to come out of this, Roberts says, with a variety of commercial and residential uses on the agenda. The redevelopment would also include significant streetscape improvements, according to Roberts, as well as an open space component for recreational purposes.

The area as it currently stands contains more than 30 individual properties, including a variety of commercial and industrial buildings. It also includes both surface and structured parking, a handful of residences and a holding area for police equipment.

The pending designation coupled with the number of individual properties involved in the zone comes against a backdrop of a pending vote in the state legislature on the issue of eminent domain and the ability of communities to utilize it. That legislation, if passed, would reduce communities’ ability to initiate eminent domain proceedings. But Roberts says the pending redevelopment would not involve "hostile takeover." City officials also say that their plans comply with the pending legislation based on the principle that the ongoing redevelopment of the tract would involve a number of developers rather than just one.

City officials have not released a timeline for the redevelopment, pending the outcome of the expected city council vote.

Copyright © 2006 ALM Properties, Inc. All rights reserved. Reproduction in whole or in part without permission is prohibited.

Jones Lang LaSalle
Land Prices Increasingly Drive
Housing Markets, Fed Study Says
By CAMPION WALSH
June 21, 2006


WASHINGTON -- Housing prices in big U.S. cities have increasingly reflected underlying land value rather than building value since the mid-1980s, and that trend is likely to continue, according to a Federal Reserve study released Tuesday.

In the 46 biggest metro housing markets, land's share of property prices increased on average to 51% in 2004 from 32% in 1984, according to the study authored by Michael Palumbo, chief economist in the Fed's flow of funds section, and Morris Davis, a former Fed economist now at the University of Wisconsin.

The increase was especially sharp during the 1998-2004 housing boom, when land's share of property values gained 11 percentage points, the study said.

"With residential land having appreciated so significantly over the past 20 years around the country, the future course of land prices is expected to play an even more important role in governing home prices -- in terms of average appreciation rates and volatility -- in the next two decades," according to the study.

The report concludes that land's increased share of property values "could mean faster home-price appreciation, on average, and possibly larger swings in home prices."

Even if land appreciation returns to the slower pace seen before the 1998-2004 boom, cumulative gains in land value mean that house prices might rise more quickly on average than they did before the boom, it said.

Regionally, relatively expensive housing markets have seen somewhat bigger increases in land's share of prices in the 1998-2004 period, but the current housing boom has been marked by rapid appreciation of residential land "just about everywhere," according to the report.

The Fed study also found that at some point since 1984 most large U.S. cities have gone through one pronounced price cycle in which residential land lost value for several years, usually after several years of rapid appreciation.

"In real terms, land prices have generally taken several years to go from peak to trough, and the subsequent recovery from these price declines has generally occurred at a more gradual pace," the study said.

Write to Campion Walsh at campion.walsh@dowjones.com

Jones Lang LaSalle
PLOTS & PLOYS
Yachts and Models
June 21, 2006; Page B4


The search goes on for new lures to sell slow-moving luxury condos. In Florida, Miami-based Fortune International and Shefaor Development are throwing in a 60-foot yacht for condo buyers to lounge in while their unit is being built. To qualify, buyers must buy one of the units priced over $1 million. For an additional $300,000, they can have use of the yacht for 60 days a year every year they own the condo. "We're not only selling real estate, we're selling a whole lifestyle," Shefaor co-principal Gilbert Benhamou says of the 232-unit ArTech development midway between Miami and Fort Lauderdale in Aventura.

To give buyers a feel of their new condo, the interior of the yachts will be outfitted like their landlocked new home, including a similar kitchen. Those paying for continued use of the boat will share it with five other condo buyers and receive fractional ownership. Developers hope the $1.8 million yachts will help them sell out a project they say is 80% sold.

Meanwhile, in New York, fashion models are moving from the catwalk to the condo sales office in a bid to stimulate sales. In the two months since founding ID Model Management, Paolo Zampolli says six models have earned their brokers' licenses and seven others have signed up for licensing courses. Models have sold two apartments in the Cipriani Club Residences at 55 Wall Street to two Italian financiers, says Mr. Zampolli, expressing confidence his models' looks and ambition will help him best Manhattan's more seasoned brokers.

Warning Sign?
Will the robust commercial construction market follow home building down the path of slower growth? So far, construction of hotels, malls and hospitals is picking up the slack for the dropoff in growth among single-family homes.

But there may be a blip on the horizon. A novel indicator of construction activity six to nine months in the future is showing softness for the first time in 20 months. The Architecture Billings Index, published by the American Institute of Architects, measures revenue at 300 architecture firms around the country; most do commercial rather than residential work. The index is meant to be a rough leading indicator of future construction spending. The idea is that hiring an architect is the first step to actual construction. The index was 49.6 in May, down from 54.2 in April. A score above 50 indicates revenue growth. A figure below 50 indicates contraction.
Possible causes for the slowdown include high material prices, rising interest rates and most importantly, an overall slowdown in the economy, says Kermit Baker, chief economist for the American Institute of Architects and author of the survey. Another possible explanation: Most of the revenue drops were among smaller firms in the survey, who tend to focus on residential projects. Some economists argue the Architecture Billings Index takes too small a look at the construction market to be a meaningful predictor.

Pricey Property
Office-building and apartment values jumped in the first quarter as strong leasing activity helped rents climb and vacancies fall. But investors are still paying a steep premium for properties in both sectors.

The average value of an office building in the U.S. was up 4.3% in the first quarter to $162.51 a square foot from the fourth quarter, according to the survey of the top 50 U.S. office markets by Reis Inc., a New York-based commercial real-estate research firm. Buildings that sold in the first quarter went for an average $210.94 a square foot, a 29.8% premium over the average value.
Some of the discrepancy between underlying values of properties and the prices being paid for them is because higher-quality buildings are trading more often, but much of the disparity is due to the flood of money looking for returns in the commercial real-estate market, says Reis Chief Executive Lloyd Lynford.

Apartments' average value posted a 3.2% gain to $84,940 per unit. Those sold in the first quarter went for $104,677 per unit, a 23.2% premium over the value. The reasons for the disparity are similar to those in the office sector.

---- Kemba J. Dunham, Christine Haughney, Alex Frangos and Ryan Chittum

Jones Lang LaSalle
Foundation Crack
By MICHAEL CORKERY
June 20, 2006; Page C1

Here's some troubling news from the home front. As the housing market cools, KB Home, the giant Los Angeles builder, says it has laid off some 7% of its workers. KB had been expecting the housing market to grow another 20% to 30% through next year, says CEO Bruce Karatz. When that didn't materialize, it started letting go of workers in places like Nevada and Arizona.
With each passing day, it seems, a key piece of the economy's foundation gets a little more wobbly.

The housing boom provided important fuel for the job market the past few years. The real-estate sector has been associated with roughly 20% of the four million payroll jobs created in the U.S. economy in the past two years, according to Moody's Economy.com, a research firm. That includes positions ranging from residential-construction jobs and real-estate agents to title insurers and workers at Home Depot.

If that source of growth disappears, it might not cripple the economy, but it will probably be felt.
Today, the Commerce Department gives a broader read on how much pain the home builders are facing. Economists expect the Commerce Department to report that builders started new projects at an annual rate of 1.88 million units in May. That would be up after starts tumbled to a 1.85 million-unit rate in April, but down 8% from a year ago.

"It's unlikely the home-building industry is going to be the savior of job growth, at least over the next six months," says Mr. Karatz. Lenders like Ameriquest and Washington Mutual also have announced layoffs.

KB Home is in better shape than many other builders. Its second-quarter net income rose 14%, though it said orders are dropping. According to the National Association of Home Builders index, optimism in the industry is at its lowest level in more than a decade.

The overall job market still looks pretty healthy. Jobless claims filed by workers, for instance, last week dropped to less than 300,000, generally a mark of a robust labor market. But if the economy is going to keep producing jobs, it looks increasingly like it will need some fresh new legs to stand on.

Write to Michael Corkery at michael.corkery@wsj.com
Jones Lang LaSalle
Trizec's Deal Was All About Timing
Acquisition of Office REIT Was Expected by Analysts, But in Months, Not Weeks
By JENNIFER S. FORSYTH
June 21, 2006; Page B7


After the string of sizable deals that have taken place among real-estate stocks over the past two years, market experts weren't shocked that a company as big as Chicago-based Trizec Properties Inc. could be acquired. What surprised them was the timing.

On June 5, Trizec Properties, a real-estate investment trust that specializes in U.S. office buildings, announced it and its sister company, Trizec Canada, had entered into an agreement to be sold to Brookfield Properties and the Blackstone Group, a private equity firm. The deal -- $4.8 billion in cash and the assumption of about $4.1 billion in debt -- shows there is almost no real-estate company too large to be bought. It also shows there are few deals too complex to pull off.

Yet the announcement still caught many investors off guard. "I think a lot of people weren't surprised to see Trizec listed among acquisition candidates, but I think a lot of people were surprised to see it take place this year," says Jay Rosenberg, co-portfolio manager of FAF Advisors. Says Peter Munk, chairman of both Trizec Properties and Trizec Canada: "That is the problem with expert opinion." Once Mr. Munk decided this was the perfect time to sell a big real-estate company, the deal was brokered in weeks.

But a number of decisions made by Trizec executives for the benefit of their own operations ended up smoothing the way for Brookfield and Blackstone to buy the company. "We created value by looking beyond the obvious and making strategic choices designed to increase Trizec's worth," says Tim Callahan, chief executive of Trizec Properties.

One perceived obstacle was the tax constraints for the Canadian shareholders. When Mr. Munk made the decision to convert his closely held TrizecHahn Corp. into a publicly traded U.S. REIT in 2002 and rename it Trizec Properties, company executives had to ensure that a majority of the owners were U.S. investors for it to be considered a domestically controlled REIT -- an Internal Revenue Service designation that has favorable tax consequences for foreign investors.
Trizec executives set up an intricate two-company system in which the foreign investors could own stock in a company to be traded on the Toronto Stock Exchange, called Trizec Canada. Trizec Canada, in turn, would hold 38% of Trizec Properties' stock, and Trizec Properties would be traded on the New York Stock Exchange. The structure allowed the Canadian investors to avoid paying a U.S. tax known as the Foreign Investment in Real Property Tax Act of 1980, if they held the shares until 2007. At that time, Canadian shareholders can convert their shares in Trizec Canada to Trizec Properties free of the FIRPTA taxes. That is why real estate experts expected things to get interesting for Trizec by 2008.


But tax issues turned out not to be headaches because Canadian investors could simply trade their Trizec Canada stock. And as long as the buyers were willing to buy both companies and live with the two-company structure through 2007, the deal could go forward. The Brookfield/Blackstone joint venture is buying Trizec Properties and Brookfield alone will buy Trizec Canada.

Another perceived obstacle: The Trizec portfolio couldn't easily be chopped up and sold off in pieces due to another tax rule related to Trizec's efforts to get permanent REIT status. For companies operating in the U.S. such as Trizec that had converted from a "C corporation" (which pays corporate taxes) to a REIT (which doesn't pay corporate taxes if it distributes its earnings to shareholders) there is a 10-year span during which its original assets can't be sold off for cash without paying steep taxes, according to Gil Menna, an attorney with Goodwin Procter who advised Brookfield.

Trizec wouldn't have been attractive to buyers if the new owners couldn't sell off weak properties. Blackstone often buys a portfolio in bulk, adds leverage, and then sells some buildings to investors in local markets. But Trizec Properties overcame that obstacle with the way it acquired 13 properties from Los Angeles-based Arden Realty Inc. as part of General Electric Co.'s $3.2 billion acquisition of Arden.

Trizec structured that purchase as a "reverse 1031 exchange," which refers to a part of the federal tax code. In a typical 1031 exchange, a property seller defers capital-gains taxes by putting the proceeds from a sale into a new property within 180 days. In a "reverse" 1031 exchange, the buyers identify the properties they will buy before they have sold any others, but still get the tax deferral.

By acquiring the Arden properties in this manner, Trizec freed itself to sell a number of properties that weren't in its core markets -- without taking a corporate tax hit, says Mr. Menna, who spoke about the transaction at a recent REIT conference. What was planned as a move to help Trizec's balance sheet also proved useful in the acquisition deal. It allows the buyers to sell some of the properties without tax worries.

J.P. Morgan and Morgan Stanley acted as financial advisers to Trizec Properties. Bear, Stearns & Co. and Merrill Lynch were among Brookfield's advisers.
Write to Jennifer S. Forsyth at jennifer.forsyth@wsj.com1
Jones Lang LaSalle
Morris population growth slowing
Census data show 3% rise since '00, but Florham Pk. up 23%
BY COLLEEN O'DEA
DAILY RECORD

At the midpoint between decennial censuses, new data released today show the Morris County region as a whole growing at a much smaller rate than it did in the previous decade.

The 2005 population estimates from the U.S. Census Bureau show that population in the typical town in Morris rose by about 3 percent since Census 2000, or less than a half percent a year. Between 1990 and 2000, population rose by more than twice that on average, or 1.1 percent a year. But that doesn't mean some places aren't growing.

Already, the bureau estimates, the population in four Morris communities has jumped more than 10 percent in five years. Florham Park has registered the largest increase, of nearly a quarter. Mount Arlington, Pequannock and Rockaway Township all have had double digits population increases.
Between 2004 and 2005, Mount Arlington, Pequannock and Denville saw their populations rise the most, the bureau believes.

"The fastest growers are towns with large condo/(apartment)-style housing -- senior or assisted living," said Christine Marion of the Morris County Planning Department. That's certainly been the case in Pequannock, which now has the county's largest continuing-care retirement community --Cedar Crest Village, with 1,500 units, Marion said. But there are also several municipalities that census officials believe have lost population, either between 2004 and 2005 or in the previous five years. Chatham, Lincoln Park, Mine Hill, Rockaway, Victory Gardens and Wharton all have smaller population counts in 2005 than they did in 2000, according to the estimates. And Butler, Madison, Mendham Township, Rockaway, Victory Gardens, Wharton, Hopatcong and Stanhope had fewer residents in 2005 than a year earlier.

In nearly all of those cases, the population losers are the smaller, older communities without land for growth and where residents tend to be older and have fewer children or have children who have moved away. "It's perhaps due to declining household size," Marion said.

These newest data still don't show a clear trend that can be attributable to the Highlands Water Protection and Planning Act limiting growth in much of Morris County and the rest of the Highlands region. That act was signed in August 2004.

Of Morris region towns in the Highlands, 16 grew faster between 2004 and 2005 than they had from 2000 to 2004, while 20 municipalities grew at a slower pace. Because of the complexities of the act and the fact that growth is limited in portions of only some municipalities, it's hard to draw any conclusions from those numbers.

Dante DiPirro, executive director of the New Jersey Highlands Council that is drafting a master plan to govern development in the region, said staff is still analyzing population data and hasn't come to any conclusions yet.

But Jeff Tittel, head of the New Jersey chapter of the Sierra Club, said the fact that there is still population growth shows the need for the plan. "Between the exemptions and the planning area and the grandfathering of projects, there's still a lot of growth happening."

Jones Lang LaSalle
CAST Expands West and East
Thomas Gaudio
NJBIZ Staff

6/21/2006 - Woodcliff Lake-based CAST today announced the opening of an office in San Jose, Calif., and that the company has hooked up with a distribution partner in Japan. The company, which develops and sells software that allows different functions on a circuit to communicate with each other, is working with PROTOtyping Japan Corp. in Kobe and Tokyo. The San Jose office will be led by Steve Lilly, the company's West Coast regional sales manager. Lilly has 30 years of experience in the semiconductor, manufacturing and electronic design industries.
Jones Lang LaSalle

BUILDING HOPE FOR AILING TIMES
By JANET WHITMAN


June 21, 2006 -- As the New York Times continues to struggle amid weak advertising demand, business is looking up in a surprising corner: real estate.

The Gray Lady's much-maligned splurge on a new Midtown headquarters is proving a winning bet, the Times' two top execs boasted yesterday at a conference sponsored by the Newspaper Association of America.

"I'm happy to report - I know this may come as a shock to most of you - the headquarters is actually turning out to be an attractive financial investment," said Len Forman, chief finanical officer of the Times.

The building, located on Eighth Avenue between 40th and 41st streets, is slated to open on time and under budget, he said. Also, with the real estate market heating up, the company now has an investment worth considerably more than the $600 million it plunked down for the first 28 floors of the 52-storey tower. "We'll be looking at ways to realize the gains once the building is completed," Forman said.

Executives added that a series of layoffs over the past 18 months has freed up at least four floors that the company plans to rent out. That would amount to more than 125,000 square feet for lease in a "very, very hot Midtown real-estate market," Forman said.

Times Chief Executive Janet Robinson said the property is so hot that About.com staffers will be staying in their less expensive downtown location, rather than moving into the new building.
The Times, which will get its name on the building, will own and operate the bottom floors, while developer Bruce Ratner will own the top floors.

Workers at the Gray Lady are slated to move into the new building in the spring of 2007. The old location on 43rd Street - home to the flagship paper since 1913 - was sold to Tishman Speyer Properties in 2004.

In New York Stock Exchange trading yesterday, shares fell 19 cents to $23.41.

Jones Lang LaSalle
MXD Wins $60M Land/Construction Loan
By Eric Peterson


JERSEY CITY-Mocco Enterprises has picked up a $60-million land/construction loan for the initial phase of its Liberty Harbor North mixed-use community currently under construction on this city’s lower waterfront. The financing covers initial construction of the project’s first phase, including 269 luxury condos comprised of townhouses, brownstones and an eight-story mid-rise, as well as an eight-story, 140-unit rental building.

As reported by GlobeSt.com, the first phase will also include a one-million-sf, 32-story office tower, the construction of which awaits the signing of an anchor tenant, another 400 residential units and 80,000 sf of retail. Estimated price tag for the full phase one has been put at $200 million.

"Liberty Harbor North has been more than 20 years in the making," says Peter Mocco of the New York City-based Mocco Enterprises, who assembled the 25-square-block site in 1984 and has spent most of the time since dealing with site remediation, legal issues and an extended permitting process. After Phase I, the larger plan calls for a 10- to 15-year build-out, carrying an estimated $2-billion price tag, that will add up to more than 6,000 residential units, plus what Mocco terms a "complementary" retail component and hotels. Master planned by architect Andres Duany, it will encompass a plan of what he terms "new urbanism," focused on dense mixed-use neighborhoods. The site is directly across a canal from Liberty State Park and the Liberty Science Center.

"Actually, we’re zoned for more," Mocco told GlobeSt.com last year, when detailed plans were unveiled. "The zoning permits more than 6,500 units, 1.2 million sf of commercial space and five million sf of office space. But sometimes your zoning permits you to build more than you can physically build. Sometimes the market doesn’t permit you to build the total envelope."

The loan was arranged by Mark Cohen, senior director in CBRE Melody’s New York office and Marty Klebanoff, managing director of NorthMarq Capital’s Parsippany, NJ office. The source of the funding was not disclosed. "Mark and Marty shared my vision and had the creativity and tenacity to accomplish my financing goal," adds Mocco.

Copyright © 2006 ALM Properties, Inc. All rights reserved. Reproduction in whole or in part without permission is prohibited.
Jones Lang LaSalle

Anchors Sign On for Heritage Square
By Eric Peterson

SOUTH BRUNSWICK, NJ-The anchor tenant lineup is set for Heritage Square, a 210,000-sf power center being developed by the Valley Forge, PA-based Pineville Properties. According to Jon Kushner, a principal of the Plymouth Meeting, PA-based Fameco, which has the leasing exclusive for the property, Target has signed on to occupy 120,000 sf. The other majors are Best Buy (30,000 sf), Staples (20,388 sf) and PetSmart (15,000 sf).


According to Kushner, Fameco’s leasing team is also currently negotiating final terms with Subway, Hair Cuttery, Dunkin Donuts and Chase Bank. The latter deal is for a pad site.
The development process for Heritage Square began in early 2004. "We identified the site for sale and then represented Pineville Properties in purchasing the site," says Kushner, who has been working the project with Fameco colleague Perry Garbois. The shopping center is currently under construction on Route 1 here and is slated for delivery in March 2007.

Jones Lang LaSalle
Pfizer cutting back on manufacturing operations (AP)

Pfizer Inc. said Tuesday it will phase out its manufacturing operations in Groton, Conn., by the end of 2008, eliminating about 300 jobs. The 50-acre site is also home to the Manhattan-based drugmaker's growing research and development operations. The Groton and New London campuses in Connecticut are Pfizer's largest research sites, employing nearly 6,000 people.

The move is part of Pfizer’s restructuring announced last year. The firm has a global work force of 106,000 and said it expects to save $4 billion by 2008 with all of the changes.
Pfizer said it will begin cutting its manufacturing operation next year and could use the site to expand research and development.

"R&D has grown significantly in Connecticut for more than a decade," said Toni Hoover, site director of Pfizer's Groton/New London laboratories. "The Groton R&D site is at capacity and the manufacturing change announced today provides space for potential expansion."
The Groton complex makes active ingredients for a number of pharmaceuticals and animal-health products and the company expects to transfer those jobs to other plants.

Pfizer officials said workers affected by the closure will be offered severance, job placement assistance and other benefits. They can also apply for other openings in Groton and New London and at other Pfizer locations.

©Copyright 2006 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Jones Lang LaSalle
Manhattan retail rents expected to jump 5.5%
by Julie Satow
June 20, 2006

Asking rents for retail space in Manhattan will jump to $109.25 a square foot this year, driven by the economy and tourism according to a new study. The asking rents for retail space in Manhattan will jump by 5.5% to $109.25 a square foot this year, driven by a solid economy, booming tourism industry and a strong housing market, according to a new study. "The local retail sector continues to show steady improvement as the economy generates job growth," says Mitchell LaBar, the regional manager of Marcus & Millichap, which released the figures in a national retail research report. Employers are expected to add 14,000 jobs this year, which is expected to drive down the overall retail vacancy rate in Manhattan to 4.2%, according to the report. While attention is traditionally paid to retail corridors on Fifth and Madison Avenues in midtown, new retail submarkets are emerging. In the Penn Plaza/Garment District, vacancy has dropped to 0.4% from 1% in the past year and demand for retail space in the Meatpacking District has led to a vacancy rate in Chelsea of 1.5%. Harlem's vacancy rate of 6% is expected to drop to 5.5% by year end. While vacancies are expected to decline, there is still 100,000 square feet of new retail space scheduled to hit the market this year. This figure does not include large projects expected to come online in the outer boroughs, including the Bronx Terminal Market, and the Atlantic Yards project in downtown Brooklyn.

Wednesday, June 21, 2006

Jones Lang LaSalle


Land Prices Increasingly Drive
Housing Markets, Fed Study Says
By CAMPION WALSH
June 21, 2006


WASHINGTON -- Housing prices in big U.S. cities have increasingly reflected underlying land value rather than building value since the mid-1980s, and that trend is likely to continue, according to a Federal Reserve study released Tuesday.

In the 46 biggest metro housing markets, land's share of property prices increased on average to 51% in 2004 from 32% in 1984, according to the study authored by Michael Palumbo, chief economist in the Fed's flow of funds section, and Morris Davis, a former Fed economist now at the University of Wisconsin.

The increase was especially sharp during the 1998-2004 housing boom, when land's share of property values gained 11 percentage points, the study said.

"With residential land having appreciated so significantly over the past 20 years around the country, the future course of land prices is expected to play an even more important role in governing home prices -- in terms of average appreciation rates and volatility -- in the next two decades," according to the study.

The report concludes that land's increased share of property values "could mean faster home-price appreciation, on average, and possibly larger swings in home prices."

Even if land appreciation returns to the slower pace seen before the 1998-2004 boom, cumulative gains in land value mean that house prices might rise more quickly on average than they did before the boom, it said.

Regionally, relatively expensive housing markets have seen somewhat bigger increases in land's share of prices in the 1998-2004 period, but the current housing boom has been marked by rapid appreciation of residential land "just about everywhere," according to the report.

The Fed study also found that at some point since 1984 most large U.S. cities have gone through one pronounced price cycle in which residential land lost value for several years, usually after several years of rapid appreciation.

"In real terms, land prices have generally taken several years to go from peak to trough, and the subsequent recovery from these price declines has generally occurred at a more gradual pace," the study said.

Write to Campion Walsh at campion.walsh@dowjones.com
Jones Lang LaSalle


PLOTS & PLOYS
Yachts and Models
June 21, 2006; Page B4


The search goes on for new lures to sell slow-moving luxury condos.

In Florida, Miami-based Fortune International and Shefaor Development are throwing in a 60-foot yacht for condo buyers to lounge in while their unit is being built. To qualify, buyers must buy one of the units priced over $1 million. For an additional $300,000, they can have use of the yacht for 60 days a year every year they own the condo.

"We're not only selling real estate, we're selling a whole lifestyle," Shefaor co-principal Gilbert Benhamou says of the 232-unit ArTech development midway between Miami and Fort Lauderdale in Aventura.

To give buyers a feel of their new condo, the interior of the yachts will be outfitted like their landlocked new home, including a similar kitchen. Those paying for continued use of the boat will share it with five other condo buyers and receive fractional ownership. Developers hope the $1.8 million yachts will help them sell out a project they say is 80% sold.

Meanwhile, in New York, fashion models are moving from the catwalk to the condo sales office in a bid to stimulate sales. In the two months since founding ID Model Management, Paolo Zampolli says six models have earned their brokers' licenses and seven others have signed up for licensing courses. Models have sold two apartments in the Cipriani Club Residences at 55 Wall Street to two Italian financiers, says Mr. Zampolli, expressing confidence his models' looks and ambition will help him best Manhattan's more seasoned brokers.

Warning Sign?

Will the robust commercial construction market follow home building down the path of slower growth? So far, construction of hotels, malls and hospitals is picking up the slack for the dropoff in growth among single-family homes.

But there may be a blip on the horizon. A novel indicator of construction activity six to nine months in the future is showing softness for the first time in 20 months. The Architecture Billings Index, published by the American Institute of Architects, measures revenue at 300 architecture firms around the country; most do commercial rather than residential work. The index is meant to be a rough leading indicator of future construction spending. The idea is that hiring an architect is the first step to actual construction. The index was 49.6 in May, down from 54.2 in April. A score above 50 indicates revenue growth. A figure below 50 indicates contraction.

Possible causes for the slowdown include high material prices, rising interest rates and most importantly, an overall slowdown in the economy, says Kermit Baker, chief economist for the American Institute of Architects and author of the survey. Another possible explanation: Most of the revenue drops were among smaller firms in the survey, who tend to focus on residential projects. Some economists argue the Architecture Billings Index takes too small a look at the construction market to be a meaningful predictor.

Pricey Property

Office-building and apartment values jumped in the first quarter as strong leasing activity helped rents climb and vacancies fall. But investors are still paying a steep premium for properties in both sectors.

The average value of an office building in the U.S. was up 4.3% in the first quarter to $162.51 a square foot from the fourth quarter, according to the survey of the top 50 U.S. office markets by Reis Inc., a New York-based commercial real-estate research firm. Buildings that sold in the first quarter went for an average $210.94 a square foot, a 29.8% premium over the average value.

Some of the discrepancy between underlying values of properties and the prices being paid for them is because higher-quality buildings are trading more often, but much of the disparity is due to the flood of money looking for returns in the commercial real-estate market, says Reis Chief Executive Lloyd Lynford.

Apartments' average value posted a 3.2% gain to $84,940 per unit. Those sold in the first quarter went for $104,677 per unit, a 23.2% premium over the value. The reasons for the disparity are similar to those in the office sector.

---- Kemba J. Dunham, Christine Haughney, Alex Frangos and Ryan Chittum
Jones Lang LaSalle


PLOTS & PLOYS
Yachts and Models
June 21, 2006; Page B4


The search goes on for new lures to sell slow-moving luxury condos.

In Florida, Miami-based Fortune International and Shefaor Development are throwing in a 60-foot yacht for condo buyers to lounge in while their unit is being built. To qualify, buyers must buy one of the units priced over $1 million. For an additional $300,000, they can have use of the yacht for 60 days a year every year they own the condo.

"We're not only selling real estate, we're selling a whole lifestyle," Shefaor co-principal Gilbert Benhamou says of the 232-unit ArTech development midway between Miami and Fort Lauderdale in Aventura.

To give buyers a feel of their new condo, the interior of the yachts will be outfitted like their landlocked new home, including a similar kitchen. Those paying for continued use of the boat will share it with five other condo buyers and receive fractional ownership. Developers hope the $1.8 million yachts will help them sell out a project they say is 80% sold.

Meanwhile, in New York, fashion models are moving from the catwalk to the condo sales office in a bid to stimulate sales. In the two months since founding ID Model Management, Paolo Zampolli says six models have earned their brokers' licenses and seven others have signed up for licensing courses. Models have sold two apartments in the Cipriani Club Residences at 55 Wall Street to two Italian financiers, says Mr. Zampolli, expressing confidence his models' looks and ambition will help him best Manhattan's more seasoned brokers.

Warning Sign?

Will the robust commercial construction market follow home building down the path of slower growth? So far, construction of hotels, malls and hospitals is picking up the slack for the dropoff in growth among single-family homes.

But there may be a blip on the horizon. A novel indicator of construction activity six to nine months in the future is showing softness for the first time in 20 months. The Architecture Billings Index, published by the American Institute of Architects, measures revenue at 300 architecture firms around the country; most do commercial rather than residential work. The index is meant to be a rough leading indicator of future construction spending. The idea is that hiring an architect is the first step to actual construction. The index was 49.6 in May, down from 54.2 in April. A score above 50 indicates revenue growth. A figure below 50 indicates contraction.

Possible causes for the slowdown include high material prices, rising interest rates and most importantly, an overall slowdown in the economy, says Kermit Baker, chief economist for the American Institute of Architects and author of the survey. Another possible explanation: Most of the revenue drops were among smaller firms in the survey, who tend to focus on residential projects. Some economists argue the Architecture Billings Index takes too small a look at the construction market to be a meaningful predictor.

Pricey Property

Office-building and apartment values jumped in the first quarter as strong leasing activity helped rents climb and vacancies fall. But investors are still paying a steep premium for properties in both sectors.

The average value of an office building in the U.S. was up 4.3% in the first quarter to $162.51 a square foot from the fourth quarter, according to the survey of the top 50 U.S. office markets by Reis Inc., a New York-based commercial real-estate research firm. Buildings that sold in the first quarter went for an average $210.94 a square foot, a 29.8% premium over the average value.

Some of the discrepancy between underlying values of properties and the prices being paid for them is because higher-quality buildings are trading more often, but much of the disparity is due to the flood of money looking for returns in the commercial real-estate market, says Reis Chief Executive Lloyd Lynford.

Apartments' average value posted a 3.2% gain to $84,940 per unit. Those sold in the first quarter went for $104,677 per unit, a 23.2% premium over the value. The reasons for the disparity are similar to those in the office sector.

---- Kemba J. Dunham, Christine Haughney, Alex Frangos and Ryan Chittum