East Windsor’s News

New in Town

Expansions

Leaving Town

Contracts Awarded

Crosstown Move

Management Moves

Deaths

Corrections or additions?

These articles by Peter J. Mladineo were published in U.S. 1 Newspaper

on July 15, 1998. All rights reserved.

Carnegie Center Sold

By the way buildings have been getting gobbled up lately,

you would expect to see Godzilla’s tyrannosaurian head looming just

over the tops of the elms lining Washington Road. But the most active

building-munchers around here are real estate investment trusts. In

the past few months, REITs, publicly owned companies whose sole aim

is to increase their inventory, have been pretty hungry.

The latest REIT to dine, Boston Properties, has one juicy morsel on

its plate: Carnegie Center. As expected, Boston Properties, the

Boston-based

REIT headed by publisher Mortimer Zuckerman, has purchased a large

portion of the Class A office complex from the Landis Group. The $284

million deal includes 1.37 million square feet — eight buildings

and one of the Brunswick Towers in East Brunswick. The Carnegie Center

buildings, totaling 950,000 square feet, include 101, 104, 105, 202,

210 (Covance), 211 (CUH2A), 212, 214, and 201 (the Carnegie Family

Center), and the 420,000-square-foot Tower Center One at Exit 9 of

the New Jersey Turnpike.

Boston Properties doesn’t own buildings 102 (the Hyatt), 103 (owned

by Mack-Cali), 301 (the Summit Bank headquarters), nor 504, 506, and

508. However, the firm stated that it would begin managing those

latter

three (504, 506, 508) immediately, with the option to acquire them

in the future. In total they comprise 400,000 square feet.

Also Boston Properties does not yet have the titles to the Covance

or Raytheon buildings currently under construction. However, Boston

Properties has said it will acquire these two — comprising 394,000

square feet — when construction is completed this fall.

For Alan Landis, Carnegie Center’s developer who opened the office

park in 1981, the time to sell has never been better. His concern

is getting $137 million in cash and $83 million in stock. And Boston

Properties is assuming $64 million of the Landis Group’s debt. Landis

plans to stay in the business, too — he will join the Boston

Properties

board. He told newspapers that he planned to be "busier than

ever"

in his new capacity. The 35-person Landis Group will remain intact

at Carnegie 101.

Landis, whose firm has weathered several different economic

turns, is finally being rewarded for its sweat. "The Landis Group

put 20 years into this project," says broker Gerard Fennelly.

"There’s more to it than just buildings."

John Buschman, of Buschman Jackson-Cross, told reporters that, "if

there was an award for hanging on by the skin of your fingernails,

it would go to Alan Landis," he says. "Now he’s being rewarded

for his ability to stick with it."

Experts are estimating that this acquisition is costing Boston

Properties

anywhere from $150 to $200 per square foot. Currently, says Fennelly,

the average rent at Carnegie Center is $25 per square foot.

"Conceptually

they’re talking about going up to $27 or $28 probably next year,"

says Fennelly. "When there’s no supply it’s very achievable.

Not much new inventory is expected to come on to the market for

another

12 to 18 months, says Fennelly. "The fourth quarter of 1999 is

when we’ll see the inventory pick up. In the next year you’re going

to have rent growth. It’s going to be significant. And that’s probably

what Boston Properties is banking on."

Carnegie Center will also see construction of a speculative

115,000-square-foot

building scheduled to be built on the southern end of the center.

"That’s something we wouldn’t have considered a few years

ago,"

Landis was quoted as saying. "But the economy has improved and

the market is great."

However, Fennelly predicts, by the end of 1999 there will be 1.4

million

vacant square feet in the market, as well as a 10 percent vacancy

rate. "If we build as much as I think we’re going to build there

will be a leveling of rents," he says.

Fennelly has gone on record warning of the dangers of buying real

estate that is priced higher than what rental rates will justify.

"Generally speaking $197 per square foot surpasses replacement

costs and the rents probably don’t cover the price they paid,"

he says. "The REITs can pay more because they’re not borrowing

the money."

To Fennelly, this smacks a little of the speculative ’80s. "I’m

cautious on any kind of valuation that isn’t supported by rent,"

he says. "In the 1980s we had tax syndicators who were out trying

to lose money and developers who were trying to lose money. In the

1990s we’re building to make money. In this case they’re paying a

lot for the project based upon the returns that they give to a

shareholder.

It’s a little different than paying up and causing values to go up

but it still sends the same kind of signal."

But for the shorter term, some of Carnegie Center’s tenants who signed

leases early this decade may only be paying roughly $20 per square

foot now. This is bound to create some attrition when their leases

come up for renewal. "The rental rates from existing Carnegie

Center properties are 20 to 30 percent below what the rental rates

will be once tenants renew their lease," says Aubrey Haines of

GMH Realty at Crossroads Corporate Center. "The rates have not

yet caught up with the market. As they do you’ll see an escalation

in value."

Top Of Page
East Windsor’s News

If some of those tenants experience what Haines calls

"sticker shock," they might choose to relocate from Carnegie

Center. With slim pickings in the Class A market, Haines is trying

to entice them to rent space at Windsor Corporate Park. This new Class

A office center, carved out of the now-vacant Lockheed Martin complex,

has 300,000 square feet. Haines estimates that space there will go

for $22 per square foot. "The only reason we’re charging less

than Carnegie Center is because of our location," Haines explains.

"We’re pricing ourselves as a value alternative at this

point."

But Haines doesn’t see much of a chance that Windsor Corporate Park

rates will drive down Carnegie Center rents, he says. "Most

tenants

at Carnegie Center want to stay at Carnegie Center."

— Peter J. Mladineo

Top Of Page
New in Town

Lavipharm Laboratories Inc., 69

Princeton-Hightstown

Road, East Windsor 08520.

East Windsor’s office renaissance continues with the announcement

that Lavipharm Laboratories, a Greek pharmaceutical firm founded in

1911, is relocating its global research and development office from

Piscataway to the former Mettler-Toledo building on the corner of

Route 571 and the One Mile Road Extension.

Currently, the 50,000-square-foot facility is being retrofitted to

accommodate a staff of 30. Lavipharm focuses on transdermal

pharmaceutical

and cosmetic products, including nitroglycerine patches for the

treatment

of angina attacks, and an anti-acne patch.

Top Of Page
Expansions

Princeton Financial Systems, 600 College Road East,

Suite 2400, Princeton 08540. Will Mayhall, president/CEO.

609-987-2400;

fax, 609-987-9320. Home page: http://www.pfs.com.

Princeton Financial Systems has entered the trade order management

system business by buying the Tempo system from Research Park-based

Tower Mountain Software, Inc. Steve LaPierre, Tower’s president, will

be managing director of Trade Order Management Systems for PFS, a

subsidiary of State Street.

Federal Aviation Agency: Independent Systems

Management

Office, 340 Scotch Road, West Trenton 08628. Deborah Johnson,

manager.

609-882-2231; fax, 609-882-1992.

This systems management office for Federal Aviation Agency has

expanded

to encompass new territory. It formerly did maintenance for

controllers’

ground equipment for airports from Delaware to northern New Jersey.

Now it is responsible for upstate New York — Utica, Albany,

Saranac

Lake — up to the borders of Canada — and western Pennsylvania

to the Harrisburg and Wilkes Barre area. The realignment of 1995 has

come to fruition now, and so Deborah Johnson now manages 25 employees

instead of 19. She expanded and moved from the second floor to the

first floor.

Johnson went to the FAA electronics school in Oklahoma City and came

up through ranks as an electronics technician; she has been supervisor

and manager at Washington National Airport (now Reagan Airport) and

is the manager of this regional office.

Top Of Page
Leaving Town

Israel & Slomka, 29 Emmons Drive, Building F,

Princeton

08540. 609-514-7300; fax, 609-514-1919.

Earlier this year Lysa Israel and Laura Slomka closed their

five-person

events planning business at 29 Emmons Drive. Slomka has her own firm,

Laura J. Slomka Associates Inc., Box 844, New Providence 07974,

908-665-7799;

fax, 908-665-0520. She is currently working for the Franks for

Congress

Committee, to reelect Republican Congressman Bob Franks in District

7.

Israel also has opened her own firm, and she is located in Skillman

at 908-904-4701.

Macys Courier Service Inc., 1258 South River Road,

Cranbury, Box 313, Jamesburg 08831. Zinera Ann Macys, president.

609-395-0200;

fax, 609-395-9424.

Jet Messenger, which had bought Macys Courier out, closed this

Jamesburg

office and consolidated operations with its office in Edison. The

Jet Messenger number is 732-287-5600.

Top Of Page
Contracts Awarded

Theradex Systems Inc., 14 Washington Road,

Buildings

3 and 4, CN 5257, Princeton 08543-5257. Meg Valnoski, president.

609-799-7580;

fax, 609-799-4148. Home page: http://www.theradex.com.

For the fourth time the National Cancer Institute has renewed a $9

million five-year contract with Theradex. This contract research

organization

(CRO) expanded earlier this year by adding 3,700 square feet at

Washington

Park. It focuses on oncology and has offices in Chicago, Dallas, Salt

Lake City, London, Paris, Tokyo, and Sydney. For NCI it has monitored

more than 20,000 patients in nearly 1,000 protocols at over 135

institutions.

Top Of Page
Crosstown Move

Princeton Synergetics, 145 Parkside Drive,

Princeton

08540. Joel S. Greenberg, president. 609-924-2020; fax, 609-924-6942.

This business has been moved to a home office from 900 State Road.

Top Of Page
Management Moves

Trenton Savings Bank (Peoples Bancorp Inc.), 134

Franklin Corner Road, Lawrenceville 08648. Wendell T. Breithaupt,

president and CEO. 609-844-3100; fax, 609-844-0101.

Dan Chila has left CoreStates, where he was senior financial manager

of the retail division, to be senior vice president and chief

financial

officer of Trenton Savings Bank and its parent company Peoples

Bancorp.

He reports to COO Lee Bellarmino.

Top Of Page
Deaths

Shirley H. Robinson, 72, on July 1. She had worked at

Princeton University, Princeton University Press, and The Silver Shop

in Palmer Square.s

John Henneman Jr., 63, on July 7. A French history

scholar,

he was a history bibliographer at Princeton’s Firestone Library.

Virginia S. Jeydel, 66, on July 11. The wife of Alan K.

Jeydel, she was president of the New Jersey Symphony Orchestra League.


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