Carnegie Center: A Hospital Site?

Carnegie 902

At Alexander Road

Sarnoff’s Land

FMC

Near Carnegie

American Cyanamid aka General Growth

Princeton Township

Hamilton

Lawrence

Cranbury

Forrestal Center

Princeton Nurseries: Hospital Option?

Corrections or additions?

This article was prepared by Barbara Fox for the April 27, 2005

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

Filling in the Route 1 Blanks

Picture a small boat with a very heavy object that slides from

starboard to port and back again, and you will understand the meaning

of a "loose cannon." A cannon that is not fastened to the deck can

wreck a boat’s equilibrium at best and make a hole in the boat at

worst.

Now consider that the University Medical Center of Princeton claims it

will announce its new location in about three weeks, according to its

spokesperson. And though the Medical Center is by no means a loose

cannon – it has taken a careful, measured approach to its move from

downtown Princeton – its move will certainly affect the equilibrium of

Princeton’s real estate market. Wherever the hospital goes – and sites

in West Windsor, Plainsboro, and South Brunswick are said to be under

consideration – a critical mass of doctors’ offices and other

ancillary businesses will surely follow. Meanwhile an economic

downturn – which has been holding back commercial real estate

construction – has broken. Last year just one "on-spec" building was

going up on Route 1. This year speculative development is mushrooming

everywhere.

Twenty years ago, when U.S. 1 Newspaper was founded, the building boom

had just begun. Now so much has been built, it is hard to imagine that

any space remains. But a look at the map does reveal empty spaces.

What could go in those empty spaces? And how soon?

Let’s fill in the blanks, starting with Route 1 and the Carnegie

Center, because Carnegie Center North (the undeveloped part on the

Princeton side on Route 1) is one of two strong candidates for the

Medical Center site. A hospital at that location would dramatically

affect properties up and down Route 1.

Aiming for at least a 50-acre site, the Princeton hospital plans a

facility of from 750,000 to 1.2 million square feet, to accommodate a

projected 20 percent population growth over 20 years.

In addition to the 75 acres at Carnegie Center North on Route 1 south,

across the highway from the Bank of America building, -another

potential location is the Princeton Nursery property (just north of

Princeton Forrestal Village, adjacent to the new Barclay Square

apartment complex). Both fit within the eight-mile swath between South

Brunswick and Quakerbridge Road that is the medical center’s target

area. Both are on the Princeton side of Route 1. We’ll look later at

the Princeton Nurseries site.

Top Of Page
Carnegie Center: A Hospital Site?

Twenty years ago the Carnegie Center had just over a half million

square feet, and that included the first four office buildings of the

100 series plus the Hyatt hotel. Today the park has grown by a factor

of five. It has 21 buildings in 2.5 million square feet, and 16 of

those buildings are owned by Boston Properties. Counting the acreage

on the other side of the highway (Carnegie Center North and South),

Boston Properties has approvals in place for another 2 million square

feet, says Micky Landis, senior vice president.

The potential site for the hospital, on the western (Princeton) side

of Route 1 is the acreage north of Carnegie Boulevard. Sometimes

called Carnegie North, it could be built out to 1.2 million square

feet. On the same side of Route 1, the plots south of Carnegie

Boulevard (Carnegie Center South) could be developed for another

200,000 or 300,000 square feet.

Carnegie North could have as few as two buildings and as many as eight

buildings. "We have the ability to move footage around," says Landis,

who says he maintains "regular communication" with the hospital’s

decision makers. Landis declines to say whether his eagerness to get

the hospital contract has led him to offer a deep discount on the

price. "Every business decision stands on its own," he says. "Any time

that one looks at discounting for volume, there is a certain amount of

strategic decision making that is a part of the view. Any larger scale

business opportunity has different dynamics and different markets."

Landis also declines to say whether Boston Properties would go against

its usual practice and sell the land outright, or whether it would

construct a build-to-suit deal and retain the property in its

portfolio.

Would the hospital’s arrival change the makeup of the Carnegie Center?

"My guess would be it would have an impact on the west side of Route 1

in terms of the associated buildings," says Landis. "A significant

percentage of future development would be for medical related private

use. I don’t think it would impact the east side."

The company Landis represents, Boston Properties, has experience in

building hospitals and medical buildings, and he hopes this gives him

an edge. "We have two hospitals under construction right now in

Massachusetts, and we just completed an eight-year project for the

National Institutes of Health on government-owned land in Maryland.

The difference in constructing for laboratory and medical use is

staggering," says Landis. The NIH facility, for instance, has 10-foot

spaces between the ceiling of one room and the floor of the room

above.

"I would hope that other sites might not be able to provide everything

that Boston Properties can because, in fact, we are an experienced

developer of hospitals. No other developer in the Princeton region

would be an experienced developer of hospitals," says Landis.

Landis, who is the brother of Alan Landis, the original developer of

the Carnegie Center, does not like to make predictions: "I’ve read in

the paper that they would prefer to be on the west side of Route 1

because that is considered Princeton," he says. "If that is important

to them, there are other sites they can consider. If there are

compelling economic reasons to go to the east side of Route 1 they

will do it."

Top Of Page
Carnegie 902

At Carnegie Center South, Hilton Realty (the family firm owned by

George Sands) has moved quickly and, as is typical of Sands, quietly.

Three months ago it bought the plot for Carnegie 902 at Carnegie West

from Advance Realty.

The property borders Canal Pointe Drive and Carnegie Boulevard (that’s

the road that, on the other side of Route 1, goes past the Bank of

America building). Hilton’s site is adjacent to the new Residence Inn,

diagonal to the Macaroni Grill and On the Border restaurants, and a

couple of blocks to MarketFair.

Earlier this month, with no fanfare, Hilton began clearing ground for

a five-story Class A office building with 140,000 square feet

(www.902Carnegie.com). Carnegie 902 will have its own gym and cafe.

"This is a micro market," says Hilton’s Mark Hill, who expects to have

tenants in the building by the fall or winter of 2006. "That address

and that location on the Princeton side of Route 1 affords us a

advantage over construction up Route 1 or down Route 1."

Hill declines to say what the purchase price was, noting that "we

purchased an entity, as opposed to a piece of ground." He will list it

"at the top of the market," which would be upwards of $35 per square

foot, and he hopes to get tenants that can take an entire floor,

28,000 square feet.

Up and down Route 1? Apparently Hill refers to the on-spec building

that the Patrinely company has started at the Forrestal Center to the

north and the speculative construction that Brandywine Realty will be

doing on Lenox Drive (see stories below).

Top Of Page
At Alexander Road

Construction halted three years ago on the 316,000-square-foot

behemoth at University Square, near the corner of Alexander Road and

Route 1, across from the Hyatt. If a real estate investment trust

sells it to a private company, owned by Finn Wentworth of Gale &

Wentworth fame, construction may resume on what would be the

single-largest speculative office building in Princeton-area history.

Originally, the site at the corner of Alexander Road and Route 1

belonged to Hayden Chemical, which made penicillin during World War

II, and in the 1950s it was owned by American Cyanamid, before that

firm moved south to Quakerbridge Road in the 1960s.

Matrix developed the University Square site and sold the remaining

property, fronting Route 1, to Reckson, a real estate investment trust

for about $13 million. It included three existing buildings and 18

acres of adjacent land for $5 million, or $16 per developable square

foot, planned for the construction of the new five-story building. It

was supposed to have been finished by the fall of 2001.

But during Reckson’s initial excavation, some environmental

contamination from Hayden Chemical was found. "They got everything

cleaned up, and we are waiting for a ‘no further action’ letter from

the Environmental Protection Administration," says Sam Surtees,

community development director for West Windsor Township.

The activity in Surtees’ office lends credibility to the idea that

Reckson will sell the property to Finn Wentworth (formerly of Gale &

Wentworth). "Six weeks ago, a slew of attorneys and engineers and

accountants were looking over the approvals," says Surtees.

Finn Wentworth (Lehigh University, Class of 1980), co-founded Gale &

Wentworth with Stan Gale in 1988, acquiring the New Jersey interests

of the Sammis Company. The portfolio grew to be one of the nation’s

largest private suburban office portfolios. Along with Gale, Raymond

Chambers, and Lewis Katz, Wentworth purchased the New Jersey Nets NBA

franchise in 1998 merging it with the NY Yankees to form YankeesNets

corporation, the holding company for the New York Yankees, and later

adding the New Jersey Devils.

Wentworth separated from Gale in 2002 and formed Normandy Realty, a

New Jersey-based real estate investment company, along with David

Welsh, Morton Olshan, Keith Hightower, and Michael Gilfillan. Normandy

Realty is the reported buyer for the Reckson property.

As designed by Reckson, the five-story building would feature a

two-story atrium lobby, a modern fitness center, a first-class dining

facility, and teleconferencing and boardroom facilities. It would be

more than twice the size of most Carnegie Center buildings, a third

larger than 100 College Road West (the long metal and glass building

just south of Forrestal Village), and 25 percent larger than the

biggest building in College Park at the Forrestal Center, 600 College

Road (U.S. 1, October 11, 2000).

Meanwhile the 47,000-square-foot, two-story building next door, at 693

Alexander Road, remains empty. Built by Compass Realty and Development

in the style of a French chateau, it formerly housed an industrial

facility, the Rosenblad company. Capstar, a for-profit division of the

Educational Testing Service, had made ambitious plans to take the

whole building, but since then it has been sold and downsized to 100

people. The spokesperson for Capstar (now Thomson Prometric) says an

announcement is imminent about where the employees will move.

Top Of Page
Sarnoff’s Land

Although part of Sarnoff’s 345-acre property was, at one time, being

considered for the hospital, the hospital has not made any recent

inquiries, says Walter Schmidlin, director of corporate real estate.

Sarnoff had obtained approvals for 3 million square feet in 2002. The

current, old building has 600,000 square feet, and Princeton

University bought the rights to developing 810,000 square feet on the

90 acres that front Route 1. That leaves 1.5 million feet of offices

and labs that Sarnoff could add.

But since 2002 there has been no action on the development plan. "It’s

market driven," says Schmidlin, "and the market is sending mixed

signals."

Top Of Page
FMC

The 125-acre FMC tract, located on Route 1 at Plainsboro Road, has

some 50 acres that are open and developable, in addition to the

company’s existing facilities on the site. FMC has 500,000 square feet

on this campus, but since 1999 it has downsized from 545 to 275

workers, and it has closed the building that fronts on Route 1.

Top Of Page
Near Carnegie

On the former Steiner property known as the Palladium, on the corner

of Meadow Road and Route 1 (between the Carnegie 500 series and the

Lowe’s shopping center), Mack-Cali has obtained site plan approval for

offices and a hotel totaling 700,000 square feet.

Mack-Cali Realty Corporation is a real estate investment trust with

other holdings in Princeton – Princeton Overlook, 5 Vaughn Drive, 103

Carnegie, 500 College Road East, 3 Independence Way, and 437 Ridge

Road. Some speculate that Mack-Cali made that purchase hoping it would

be eligible for the hospital’s new site.

Top Of Page
American Cyanamid aka General Growth

The former American Cyanamid property, 653 acres, is big enough for

the hospital. As the place where cows used to graze on Route 1, it

attained iconic status in the early 1990s.

The history: American Home Products bought the agricultural division

of American Cyanamid in 1994 and changed its name to the name of its

pharmaceutical division, Wyeth. Wyeth sold the division to

Germany-based BASF in 2000 but kept the valuable real estate. When

BASF closed the facility in 2002, Wyeth sold the former American

Cyanamid property to the Rouse Corporation at a bargain price – $35

million or about $53,600 per acre. Shortly after that time, Rouse was

sold for $12.6 billion to General Growth Properties, the biggest

shopping center company in the nation.

With current buildings amounting to 886,000 square feet, the site is

zoned for as much as 1.5 million square feet of research, office, and

manufacturing space – but no residential space.

But those in the know predict it will be a slow and laborious process

to figure out just what should go where and then get the approvals

passed. West Windsor Township will require a detailed traffic study

before it allows anything here. And when those buildings get razed,

environmental problems may crop up. So even if the medical center

wanted to move so far south and east, it might be discouraged by the

hurdles required by this site.

The Rouse Corporation has been influencing Princeton real estate for

more than 20 years. Princeton University commissioned Rouse analysts

to study Palmer Square before it sold its interest in the Square to a

university alumnus, Arthur Collins, in 1982. Rouse has said it wants

to hold plenty of meetings on the Cyanamid site to get the input of

the community.

Top Of Page
Princeton Township

When the 90-person Institute for Defense Analyses moved to Bunn Drive,

it left behind a 30-year-old building on Thanet Circle that was

constructed like a fortress. Hillier has designed the $6 million

renovations for the two-story, 53,000 square foot office building on

10 acres at Thanet Circle.

Tom Romano, who is leasing the property for GVA Buschman, notes that

it will be the largest contiguous block of space in Princeton. The

owner – GHP Office Realty, a real estate investment firm based in

White Plains – also owns 300 Alexander Park and also owns 104 Windsor

Center, the former one-story Lockheed-Martin Property now occupied by

i-Stat and Evans East.

Top Of Page
Hamilton

Two 31,000-foot office buildings, next to the VanNest Preserve, will

be called VanNest Office Park. The developer, ABC Realty, also owns

University Office Plaza 1 and 2 also on Quakerbridge Road.

Tom Romano of GVA Williams Buschman is leasing the property and says

he expects to see steel going up on May 6 or 7.

Top Of Page
Lawrence

George Sowa of Brandywine Realty may break ground on a 75,000 square

foot building on Lenox Drive as early as this summer. Princeton Pike

Corporate Center has 700,000 square feet and is 99.4 percent leased,

he points out, so it makes sense to build more.

"We can do another 400,000 feet in four buildings," he says. He has

been holding approvals for two 120,000-foot three-story buildings at

2100 and 2200 Lenox Drive. Just approved: Two 75,000-foot three-story

buildings at 1100 and 1200 Lenox Drive.

Brandywine owns everything here except for two user-owned buildings –

Lenox and Gillespie Advertising. The park is what the real estate

industry calls an "assembled portfolio." Buildings 2, 3, and 4 came

from the original developer, DKM. Brandywine bought Building 1 from

Praedium at the end of 2003. When Highland Insurance went bankrupt, it

bought that 55,000-foot building sitting on 25 acres, "and that is

where the two new buildings are," says Sowa.

It doesn’t bother Sowa that, right next door, is a low-priced

development on Princess Road. "People gravitate to the quality and

price point and location that they desire." And Princeton Pike

Corporate Center would definitely benefit if Capital Health Systems –

in the chess game it is playing with Princeton’s hospital – manages to

elicit approval to move one of its Trenton hospitals to Princess Road.

Top Of Page
Cranbury

One company, Preferred Real Estate, is sitting on two huge blocks of

space – the former American Standard factory at the Hamilton train

station and its most recent acquisition, the Rhodia campus in

Cranbury. Though tenants are trickling into Hamilton’s American Metro

Center, about two-thirds of the 470,000 square feet remain to be

leased.

Preferred, based in Conshohocken, Pennsylvania, has put forward two

marketing plans for Rhodia’s campus, newly named the Mid-Atlantic

Corporate Center. "We are marketing 6 of the 14 buildings for sale or

lease and plan to clear 40 acres of the site for a corporate

build-to-suit," says Preferred’s Matt Malatich. "The site is great for

a corporate headquarters or hospital. With more than 11,000

age-restricted residences in Monroe, the patient demographics are

wonderful." The second possibility is to market all 83 acres for a

corporate headquarters build to suit.

Top Of Page
Forrestal Center

The Patrinely Group is building the first speculative office park in

the last five years. Location: Campus North at Princeton Forrestal,

1100 Campus Road on the east side of Route 1.

The first 167,000 square-foot five-story building is scheduled to be

finished this fall. The campus is approved for five buildings and

800,000 square feet on 71.6 acres, and the Houston-based Patrinely

Group has bought the land from Princeton University. The recently

built Campus Road is at the back of the site. It parallels Route 1 and

runs from Scudders Mill Road to Stellerator Drive and has been

extended to College Road.

Designed by former Hillier architect Terry Steelman, the new Class A

space will have food service and a fitness center (U.S. 1, November

11, 2004). The project is a joint venture with USAA Real Estate

Company, a wholly-owned subsidiary of USAA Insurance Company.

Patrinely Group also built and then sold 100 College Road West and 150

College Road West.

A ready-to-go project in that area, College Park II, is a 31-acre site

that would front Schalks Crossing Road; it falls halfway between

Plainsboro and South Brunswick. "We have full approvals from both

municipalities as well as cross easements in place with Princeton

University," says Tom Stange of National Business Parks, "for a

350,000 square foot expansion." It could include three 60,000-foot

single story buildings and two 75,000-foot multi-story buildings.

Top Of Page
Princeton Nurseries: Hospital Option?

Of the 14 sites originally considered by the medical center, two seem

particularly viable, given the requirements – 50 acres and from

750,000 to 1.1 million square feet – and the center’s apparent desire

to stay west of Route 1. Those sites are Carnegie Center West (see

page 12) and the Princeton Nursery property (just north of Princeton

Forrestal Village, adjacent to the 100-acre apartment complex, Barclay

Square. Of more than 250 acres available, more than 100 are in

Plainsboro, and 150 are in South Brunswick.

The site is owned by Princeton University and represented by Picus

Associates, which declined comment for this story. But the Princeton

Nurseries site has a serious advocate, Rosemary Blair (see the letter

on page 2). And unlike the Carnegie Center alternative, which may

attract opposition from Canal Pointe residents who are saying that the

hospital will decrease property values, the Princeton Nurseries site

does not have a "Not In My Backyard" or NIMBY contingent. That’s

because Picus Associates carefully structured the Barclay Square deal

so that none of the apartments could be sold right away. They are only

for rent.

Blair cites the site’s proximity to Princeton Forrestal Village, with

its hotel, nursing home, and senior citizen retirement community.

Coincidentally, Gale Associates (Village owners), had reframed the

Village to focus on doctors’ offices, so doctors could move close to

the new hospital immediately.

Concerning traffic, Blair notes the medical center’s statistics that

fewer than 20 percent of the clients live west of Route 1. Automobiles

and ambulances can easily reach the site from the east via Route 522

of Dey Road and Scudders Mill Road to College Road. Those coming from

Princeton are likely to access the hospital from Route 1.

Twenty years ago, when this newspaper was founded, many objected to

development on Route 1. That didn’t stop the development. The

challenge then is the challenge now – to plan for building in smart

and forward-thinking ways. And to build at a measured pace, so that

structures don’t stand empty for years and years.

Does that mean the medical center should locate east or west of Route

1? Or north or south of Alexander Road? Trustees of the medical center

(which is now officially called the Princeton Healthcare System:

University Medical Center at Princeton) are weighing that now. A

spokesperson says that a decision is expected in mid May. So secure

that cargo and batten down the hatches, folks. This boat won’t sink

but it could tilt strongly to starboard.

should locate east or west of Route

1? Or north or south of Alexander Road? Trustees of the medical center

(which is now officially called the Princeton Healthcare System:

University Medical Center at Princeton) are weighing that now. A

spokesperson says that a decision is expected in mid May. So secure

that cargo and batten down the hatches, folks. This boat won’t sink

but it could tilt strongly to starboard.


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