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Author: Melinda Sherwood. Published in U.S. 1 Newspaper on March 8, 2000. All rights reserved.

For start-up dot.coms, an ePark Venture

The newest wrinkle in real estate development since

"location" is the "smart-building," a state-of-the

art facility to custom fit to the growing number of "need-to-be

wired" companies rapidly coming to the market.

One former Princeton business tycoon has taken the "smart building"

idea one step further. Peter W. Hegener, the co-founder of Peterson’s

Guides at the Carnegie Center, envisions an even smarter building.

Not only does it come with the latest in telecommunications and wiring,

it comes complete with venture capital, business partners and services,

and professional consulting.

Imagine a sort of high-tech nesting ground for big Internet-driven

companies to the most infant of dotcoms — that is Hegener’s vision

for ePark Ventures (, a commercial real-estate project

that will pilot in South Brunswick and potentially branch out into

the rest of the country. "It’s a unique approach," says Hegener,

61, who with his wife, Casey, built Peterson’s from scratch to a 150-employee

firm when he sold it in 1995 to Thomson Corp. (which in turn is moving

the firm into larger quarters on Lenox "I believe we can create

an environment that is not a retrofit, but an ideal environment for

doing business in the future."

Following the traditional public incubator model, Hegener’s eParkPrinceton

will offer start-up businesses reduced rents and a bevy of professional

assistance from ePark partners, leading firms in communications, advertising,

management consulting, and technology. Tenant start-ups get both a

smart building — equipped with state-of-the-art communications

technology — and smart money — financial backing from a venture

capital fund Hegener hopes to grow to $50 million.

The first of the eParks, eParkPrinceton, is planned for the intersection

of Schalks Crossing and Perrine roads in Plainsboro. Hegener bought

the 17 acres of undeveloped land at a 1998 property auction for a

mere $533,700. "We bought the land at a very good price because

it was an FDIC auction," says Hegener. The Hillier Group is designing

the space — four, 60,000 square-foot-buildings — and Princeton

Development Group will be the exclusive leasing agency for eParkPrinceton.

Hal Hoeland, president of Princeton Development Group and a principal

of Hallbridge Real Estate Group with Suzy Trowbridge, expects space

to be available in 2001.

A crucial element of Hegener’s business plan is to attract "anchor"

tenants — companies that are already well-established in their

field — as well as early stage companies. The larger companies,

say a big advertising or Internet firm, will sell their services to

the start-ups, and in a sense, subsidize some of their costs.

Hegener may be new to the commercial real estate business,

but he maintains that he’s no stranger to high-tech entrepreneuring.

"We built our first two office buildings 25 years ago, and sold

them successfully," he says. "We acquired and sold companies

at Peterson’s. We moved Peterson’s into the age of cybernetics and

we saw what can done in the world of tomorrow. When you get to be

my age and have spent 30 years or more building companies, building

a reputation within the financial community, you have some retained

earnings that can be used to generate new ideas. People are willing

to listen to us because we’ve built companies before and we feel good

about what we’re doing. Our focus will be on a specific kind of start-up

— we will not be just another venture capital group trying to

invest in anyone who comes down the pike."

Born and raised in Dusseldorf, Germany, Hegener moved to New York

at the age of 12. His father had been killed in the battle of Stalingrad.

Hegener went to grade school in Brooklyn and later studied mechanical/management

engineering at Rensselaer Polytechnic Institute in Troy, New York.

He returned to New York to work for S&S Corrugated Paper Machinery

Company, a company that turned paper into board to make boxes.

Then he got bored. "I just couldn’t see myself devoting my life

to machines that made corrugated boxes," he says. "I wanted

to devote my life to people."

Four years after graduation he became the director of career services

at Princeton University, which put him on the path to founding Peterson’s.

"I took the concept of working with students working at Princeton,

encouraging them to go grad school, and expanded it," he says.

It was his wife, Casey, who brought him into the publishing business,

however. She had worked for both Harcourt Brace and the American Book

Company and taught English to second graders at the Stuart Country

Day School. She is also a partner in Hegener’s ePark venture.

Now, after spending nearly 30 years guiding students towards college

degrees, Hegener will guide young start-ups to IPOs. "We’re starting

a new venture fund," he says, "encouraging Internet start-ups

to submit business plans to us, and if we like it we will encourage

them to work with us, nurture them, and work towards IPO. We take

a stake in equity, and through our investment in them, they will pay

us back."

Public incubators, usually affiliated with a university or college

and backed by government funds, have been an important way for local

communities to develop their economy for some time. The private business

incubator is a new phenomenon, the result of soaring tech stocks and

major IPOs, and it’s becoming a popular model, says Dan Strombom,

who runs the Trenton Business and Technology Center, a public incubator

on Front and Broad streets. "There are quite a number of people

around the country who are attempting to do the same thing," says


Rent at the Trenton incubator is low — a small, one-person space

is as little as $225, while larger spaces are about $14 per square

foot annually, and the building is outfitted with T-1 lines for Internet

access. By comparison, ePark in Princeton will go to anchor tenants

for the market price, roughly $29 per square foot, says Hegener, with

rents below market value for start-ups. An added plus: state-of-the-art

wiring for companies reliant on the Internet.

Although Strombom sees both private and public incubators

working towards the same end, the private incubator is still untested.

"The private incubator model is too young to really assess,"

says Strombom, who has a BS in genetics from George Washington University,

and a masters from University of Washington in natural resource development.

"They’re banking on continuing rapid expansion of Internet companies,

but there’s going to be a supply and demand problem at some point.

There’s only so many quality companies around."

That poses a commercial real-estate dilemma too. Charlie Hatfield

of SJP Properties, the real estate firm that owns the Commons at 13

Roszel Road, says it may be a little unrealistic to rent to only high-tech

tenants. "I just don’t see how you can have a smart building that’s

so limited," he says. "It’s inherently difficult to do. Sure,

if you have Internet companies that need to be next to each other,

but if they’re competing with each other they’re not going to want

to be right next to each other and share ideas and employees."

Although Hegener intends to use the state-of-the-art communications

and wiring as a major selling point, most new buildings, says Hatfield,

offer similar amenities. "In my mind, if you’re building top of

the market class A corporate facilities, they’re smart buildings,"

says Hatfield.

But it is the whole package — the technology, capital, and consulting

services — that Hegener believes will be a winning model. "Some

companies want to do everything themselves, and bring their own toys,

and other companies want to focus on their own products and services

and want a building that’s ready to do that," he says. "All

of them are in the need of preserving capital for product development,

and the last thing in the world they have is the network or the bridge

to the outside world to raise money and find management consulting

help. We also think the political environment is right in New Jersey.

Governor Whitman and the EDA are interested in reaching out to companies

that are Internet focused, and I think we will find public money as

well as private money."

So far, Hegener has kicked in most of the money in the venture capital

fund himself. He expects it to grow significantly with the help of

financial partners — some already signed — whom he declines

to name at the moment. ePark’s business partners, companies that will

sell services and consulting to the start-ups, have also not yet been

named, but among Hegener’s targets are Lucent and Cisco. "We’re

definitely talking to Lucent, but we’re looking for leading companies

in management consulting, marketing, and advertising as well,"

he says.

"Once we announce our general partners we will be announcing a

contest nationally for groups to submit their business plans to us,"

says Hegener. "Each situation will be evaluated on its own merits.

We believe in year one we will work with four or five companies to

get them started." Eventually, Hegener hopes to launch eParks

around the country, and is currently looking into locations in Denver,

Chicago, and San Francisco.

"It’s very entrepreneurial and risky, but if anybody can uncover

a good idea Peter can," Hatfield concludes. "The risk to him

is not that extreme — he practically stole the land for the price.

So if he can get a dotcom in there that takes off he’ll be really


Epark Ventures, 17 Hulfish Street, Box 123, Princeton

08542. Peter W. Hegener, chairman. 609-252-9040; fax, 609-252-9042.

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