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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 (www.ePark.com), 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
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,"
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,"
"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
08542. Peter W. Hegener, chairman. 609-252-9040; fax, 609-252-9042.
Home page: http://www.epark.com
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