Otsuka America Pharmaceutical Inc. has signed a 67,531-square-foot long-term lease at University Square, becoming the building’s first tenant.

The deal, announced on July 22 by University Square’s property management firm RXR Realty of Short Hills, will give Otsuka the entire top floor of the long-vacant office building on Alexander Road at Route 1. RXR did not reveal the amount of the lease, but its website lists space at University Square at $36.50 per square foot.

Otsuka, which now occupies 18,500 square feet at 100 Overlook Drive, would not comment on whether the new lease is an expansion or a move. According to real estate industry website, RXR president Todd Rechler said Otsuka will be “consolidating and expanding its east coast operations from two separate existing facilities.” Otsuka also has a location in Rockville, Maryland. There is no word on an official move-in date.

The deal is now official, though Otsuka must get formal approval from the township to do construction work in its new space, such as painting, carpeting, and sectioning offices.

Though the deal is a go, it was tentative. It had been reported (including by U.S. 1 on July 8) that the lease had been signed but that lenders, nervous about giving out money for tenant improvements, were forestalling progress. David Simpson, part of the Newmark Knight Frank team, said, however, that the holdup had “nothing, nothing, nothing to do with the lending.” The players, rather were waiting for the state to approve Otsuka’s move from Maryland. A week before the deal was signed the state approved a $1.4 million incentive for Otsuka, according to the New Jersey Economic Development Authority. “We couldn’t do the signing until that happened, and that’s the truth” Simson said.

If all goes well with the township, he said, he would expect Otsuka to move in in the first quarter of 2010.

University Square, a 313,000-square-foot office building that first went up more than four years ago, has never been occupied. Unofficially it has become the symbol for troubles in the commercial real estate market in Princeton. Some officials, worried that the five-story granite-and-glass building with hundreds of dormant parking spaces would become a white elephant, even suggested that the complex be used for overflow parking for the Princeton Junction train station. When a building sits idle for a long time, Simson said, rumors begin to fly. Now that Otsuka has signed, however, Simson said the building should soon see more tenants. He said Newmark is in talks with at least five prospective tenants, including one “shake-hands” deal to lease half the second floor.

Whether the deal with Otsuka signals a turnaround for the commercial real estate market here remains to be seen, but Simson said that now that Otsuka has paved the way, the building should live up to its promise. “It’s been an uphill battle, but the dominoes are finally colliding the right way,” he said, citing the economy and a tough speculative real estate market.

University Square currently has approximately 245,469 square feet of class A office space available for occupancy.

In the deal, Otsuka was represented by Jane Moni and Lori Gaffney of Triad Commercial Real Estate, while Newmark Knight Frank’s David Simson represented RXR. The Newmark Knight Frank team included David Simson, Tom Romano, and Steve Tolcach, who are leading the exclusive leasing assignment on behalf of RXR.

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