Harold Kent

Corrections or additions?

This article by Barbara Fox was prepared for the October 17, 2001

edition of U.S. 1 Newspaper. All rights reserved.

Central New Jersey: Still Strong in R & D

Pharmaceutical and biotech companies seem to be the

hungriest space eaters on the commercial real estate scene in


With one gulp, a firm from Illinois — GeneProt — has devoured

virtually all the new corporate space at the New Jersey Economic


Authority’s technology campus on Route 1 South in North Brunswick.

"No sooner had we planned out the brochure to market the facility,

then we leased it," says Sab Russo of CB Richard Ellis. This deal

is emblematic of the strong Princeton market.

Three developers continue to produce laboratories "on spec,"

meaning that they break ground without a lead tenant in their pockets.

Princeton Corporate Plaza has 70,000 feet under construction on Deer

Park Drive in South Brunswick, Eastern Properties continues to churn

out labs at Cranbury’s Cedar Brook Corporate Center, and the New


Economic Development Authority (NJEDA) is in the design phase for

at least 60,000 square feet at Tech Center V in North Brunswick.

Older space also is being recycled for laboratory use. ValiGen U.S.

has moved into the former AT&T space on Carter Road, and Neil


a generic drug manufacturer, bought the 64,000-foot plant once owned

by the Daily Racing Form on Lake Drive in East Windsor to supplement

its existing 30,000 feet. While promotion materials for this area

have been talking about the Princeton-Rutgers research corridor for

years, the corridor is finally fulfilling its promise for biotech

development, says Doug Petrozzini of Grubb & Ellis. "With demand

outpacing the supply, it has become quite a center for biotech."

Compared to those building lab space, developers of office space are

less optimistic. Reckson Associates has significantly slowed progress

on its behemoth office building at University Plaza on Route 1 North.

This building would have 316,000 square feet in a market where most

are no more than 150,000 feet. And because many companies are


sublease offers proliferate in today’s market.

Nevertheless, "on spec" construction continues aggressively

at Exit 8A, land of the big box warehouses. "In the hot areas

within three miles of 8A, so many buildings are coming out of the

ground you would think they would tip over," says C. Robert


of Binswanger Klatskin, managers of Forsgate Corporate Center.


is in excess of a half million square feet, not rented yet, but they

will get rented. This area has a proven track record. Corporate


likes it, and companies that are there that need additional space

are expanding in that marketplace," he says, citing Volkswagen

and Tommy Hilfiger. "They are happy or they wouldn’t be


Top Of Page

Of the three landlords doing on-spec construction of

laboratory facilities, one is the state of New Jersey through the

NJEDA, a self-supporting, independent state financing and development

agency. Impatient with efforts to attract technology businesses to

New Jersey, the NJEDA began to construct its own facilities.

So far the NJEDA has built three new buildings on its 50-acre


campus in North Brunswick, and Johnson & Johnson has been occupying

an existing one. Started with support from the legislature in 1995,

the campus is intended to be a "state of the art research park

to offer modern laboratory and production facilities that can be


to fit their specific research and development needs." It is


next to Johnson & Johnson and Rutgers’ Cook College campus, with all

of the expertise in biosciences available there, and some Cook College

operations are among the tenants.

The NJEDA thought at first the Tech Center would attract young


and it offered contracts with the hefty laboratory build-out costs

included in the rent. But relatively well-established companies


up large hunks of space, at least in part because laboratory space

is so hard to find.

So the roster here has both big and little companies. Among the


ones are Cambrex Corporation, a global supplier of products and


to the life sciences industry; Celgro Corporation, a wholly owned

subsidiary of Warren-based Celgene Corporation that does gene


for better herbicides; and Datamark Technologies, a subsidiary of

Impower Inc., which develops and manages electronic customer loyalty

and stored value programs.

Chubb Computer Services, on the other hand, is the training and


division of the Fortune 100 firm. Another major tenant, Merial


is a joint venture of two big firms, Merck and Rhone Merieux; it


manufactures, and markets veterinary pharmaceuticals and vaccines.

Top Of Page

GeneProt has only a small presence in the United States

now but is very confident it will grow. Founded by several graduates

of Northwestern University’s Kellogg School of Business, it has most

of its current operations in Geneva, Switzerland; it plans to open

its corporate headquarters in New Jersey in the first quarter of next

year. Here will be a big proteomics discovery and production facility

that will use what GeneProt calls the "country’s largest


supercomputer." The 60,000-foot Tech Center III broke ground in

April, and GeneProt expects to occupy all the space and be operational

by early next year.

All the scientific team and most of the executives are in Geneva now,

but GeneProt is closing its office in Evanston, Illinois, and has

installed some administrative personnel in two trailers at the Tech

Center. GeneProt eventually expects to employ about 150 people in

Tech III. It will also have 3,200 square feet (four small incubator

modules with one bench and one hood apiece) at the adjacent


Center for Innovative Technologies. (In fact, if 20,000 square feet

had not been allocated for such incubator purposes, the hungry


would likely have taken it all. This center now has room left for

17 more start-ups that need just 800 square feet.)

As it is, GeneProt has also said it will build its own four-story

40,000 square foot office as a corporate headquarters. (Whether this

will be at the Technology Center or another location was not


but GeneProt has the option of expanding further within the Technology

Center if it needs to.)

GeneProt’s proteomic research can help to discover new drugs and


based on the proteins found in the body. GeneProt plans to profile

the proteins in healthy and diseased fluids or tissues by studying

how organisms develop, how cell types and tissues mature, and how

diseases progress as they vary over time. Among the companies that

are trying to commercialize proteins, GeneProt labels itself unusual

because it works on an industrial-sized scale, and because it intends

to deliver potential therapeutic agents within six months.

GeneProt has already set up what it calls the "world’s largest

proteomic discovery center" in Geneva. This center runs 51


mass spectrometers for 20 hours a day. Also, off site, it taps the

supercomputing capabilities of Compaq Computer Corporation systems

— similar to the systems that mapped the first draft of the human

genome. Compaq is one of the investors in GeneProt.

Creating jobs and supporting technology companies to attract them

to New Jersey — and keep them from moving out of state —


the purpose of this NJEDA effort. Statistics from the Biotechnology

Council of New Jersey show that, assembled, the state’s 110


companies employ 7,500 people with a median compensation package of

$83,380. They spend $1.3 billion in R&D expenditures, and their total

economic impact amounts to $3.9 billion. And U.S. 1 Newspaper’s


show that at least half the state’s 110 biotechnology companies are

located in the greater Princeton area.

So why New Jersey would want GeneProt to move here is easy to


and vice versa is also true. New Jersey has more scientist per capita

than any other state, and alliances proliferate here. Helpful


helpful to biotech companies includes a 10 percent R&D tax credit,

a two percent investment tax credit, an opportunity to "sell"

operating losses to more profitable companies, a job creation credit,

and a utility savings pool.

GeneProt’s Business Employment Incentive Program (BEIP) grant is worth

$3,279,920 over 10 years, based on the total state income taxes


to be paid by GeneProt employees. This program is one of the state’s

most successful job creation initiatives since 1996, says Caren S.

Franzini, NJEDA’s executive director. It has jump started almost


new jobs in more than 250 companies planning to invest more than $8

billion in New Jersey.

At the Tech Center GeneProt also qualifies for a construction


of more than $6 million from the state. This allowance is like a


letter" a promise from the landlord to build out the space


to tenant requirements. The usual work letter might by $20 or $30,

but the EDA promises $100 per square foot and builds the extra amount

into the rent.

"This greatly supports our speed-to-market strategy and allows

us to apply resources elsewhere, for example, in recruitment and


says Cedric Loiret-Bernal, GeneProt’s CEO.

Top Of Page
Harold Kent

Two other places where hungry biotechs can find homes

are being developed by the private builders. At Princeton Corporate

Plaza, Harold Kent is getting rid of the non-technical tenants and

building even more space on Deer Park Drive. Lab tenants are a


for this architect/developer, who is doing his part to facilitate

the growth of new biotech businesses. Until recently one entire


was taken up by Wyeth Ayerst, but most of the tenants are smaller.

Many of the start-ups are able to expand within this park from 1,000

to 5,000 square feet. PharmaSeq recently expanded, and Charged


Technologies will go from 2,000 to 6,000 square feet this year.

Kent’s new 70,000-square-foot building is slated for completion in

August, 2002. It is located next to Building 2 (the Gold’s Gym


At Exit 8A, A. Joseph Stern at Eastern Properties has also proven

that a private developer can profitably accommodate growing tech


The newest big move-in here is Purdue Pharma, which has taken a big

chunk of space, 115,000 feet. "Eastern Properties intended to

build without prelease, but the demand was so great they couldn’t

keep up with the construction," says Petrozzini.

Eastern Properties’ minimum size is a little bigger than Princeton

Corporate Plaza start-ups. Eastpark at 8A, for instance, has three

5,000 square foot modules that cater to young companies coming


from academic labs. These growing firms need more than just a couple

of benches and hoods. The Eastpark modules operate with a revolving

door, says Petrozzini. "After a year, Eastern will build them

a 10,000 or 15,000 square foot lab. They have proven that you can

successfully do that."

Cedar Brook Drive is the site of Eastern’s current activity. Among

the companies here are Songbird (the Sarnoff spinoff), Xenogen


(formerly DNX), Galderma R&D, and the generic drug company, Mova


An existing 23,000-foot space at 1 Cedar Brook Drive is being built

out as lab space now, on spec, and Eastern is applying for permits

for 82,000 feet at 9 Cedar Brook.

Bristol-Myers Squibb is doing its own development and

continues to build out on its new/old space at the former Mobil


In August it broke ground for expansion on its 96-acre campus on


Hill Road. To be completed in 2003 are two buildings worth more than

$40 million. In addition, the company will spend $190 million for

new technology in these buildings.

As for the rehab market, ValiGen U.S. Inc. staked out its territory

in a long-empty building that had not been used for biotech, taking

the whole building to allow for expansion, and subleasing some of

it. The campus has 452,000 square feet, a build-out roughly equivalent

to the 100 and 200 series, combined, at the Carnegie Center, but


out over 125 acres.

Townsend Capital, of Towson, Maryland, bought the former AT&T (now

Lucent Technologies) campus prior to the ValiGen lease. ValiGen’s

new 77,000-foot quarters used to be the conference/training center,

and it had been vacant for at least a decade. ValiGen is paying full

rent on 50,000 feet of the "like new" space plus a discounted

amount on what will be expansion space five years from now. Meanwhile

it hopes to attract a subtenant. "If we could find a biotech doing

similar research, ValiGen could move into the space after the


moves out," Petrozzini says, "but it may be easier to find

an office user that needs some swing space. Then ValiGen can go in

later and build the lab they need."

Meanwhile, next door at that site, Lucent Technologies has emptied

226,000 square feet, leaving laboratory space needing significant

renovation but with excellent telecom underpinnings. "It has a

ton of power, and dual feed," says Petrozzini. Another 25,000-foot

structure could be the corporate headquarters for a small company.

The remaining square footage is in the residential part of the


center, and whether this will be developed — or razed to become

part of an open space package — has not been decided.

The unspoken question everywhere is, did the Princeton area suffer

from (or profit from) any real estate activity as a result of the

September 11 tragedy? "I have asked that question many times to

major players in the industrial market," says Lonshein of


Klatskin. "Deals that were on tap have not stopped. In fact I

personally got the green light to conclude a warehouse transaction

after this happened. But office activity has stayed closer to New


ValiGen (U.S.) Inc., 350 Carter Road, Princeton

08540. Douglas G. Watson, CEO. 609-333-1300; fax, 609-333-8833.


GeneProt, 671 Route 1 South, Technology Center

III, North Brunswick 08902. Keith Rose, chief scientific officer.

732-246-8950; fax, 732-246-8948. Www.geneprot.com

Corrections or additions?

This page is published by PrincetonInfo.com

— the web site for U.S. 1 Newspaper in Princeton, New Jersey.

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