Carnegie Center: A Hospital Site?
American Cyanamid aka General Growth
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.
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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."
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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).
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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.
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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."
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
Corrections or additions?
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— the web site for U.S. 1 Newspaper in Princeton, New Jersey.
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