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
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.
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.
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
08540. Douglas G. Watson, CEO. 609-333-1300; fax, 609-333-8833.
III, North Brunswick 08902. Keith Rose, chief scientific officer.
732-246-8950; fax, 732-246-8948. Www.geneprot.com
Corrections or additions?
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