Telecom’s Equalizers

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Published in U.S. 1 Newspaper on March 8, 2000. All rights reserved.

Real Estate: Aubrey Haines

A tight labor market might make bosses spruce up the

office, or move to better digs. No sense in having your best workers

snared by an offer from a company that lives in an office complex

with all the perks — why not move there yourself?

"In an environment of tight labor, companies are using top-quality

office space to attract the best talent," says a report issued

by Aubrey Haines of Trammell Crow at 600 Alexander Park. His

survey of the Princeton office market shows that, of the 2 million

square feet of new construction, two-thirds is upscale Class A space.

(A Class A building is loosely defined as fairly new, with such amenities

as an onsite cafeteria, upscale trim, and state-of-the-art wiring,

and in a desirable location.

Leasing activity, Haines discovered, was 20 percent higher last year

than ever before, and here too, the Class A space dominated. Nearly

1.2 million square feet was leased in 1999, compared to 450,000 square

feet of Class B. Landlords with space that does not meet the standards

of Class A, he predicts, will be hard to fill up this year. Particularly

at risk is relet space in older buildings and Class B space that is

not located in the core of the Route One corridor.

But the overall leasing record for 2000 will not equal 1999 simply

because there is not as much available space.

The trend to upscale leasing is reflected in rental rates that rose

dramatically in the first half of last year. Averages for Class A

went up 7.1 percent last year, compared to Class B, which rose 3.9

percent. Class A’s average is $27.58 per square foot but new buildings

are leasing higher, and one building is above $30. The Class B rate

is $22.48.

The Trammell Crow survey predicts that "a couple of large availabilities

in an inferior location will put pressure on rental rates in the middle

range of the market." The survey declines to specify just where

that might be. But, it warns, a tenant looking for 50,000 feet of

Class A space before the end of 2000 has only four options.

Nearly two-thirds of the 30 million square feet of office space in

the Princeton market is occupied by an owner, Haines has concluded.

That seems surprising until you think of the hundreds of small business

owners who got fed up with skyrocketing rents in the 1980s and bought

their own condo spaces. Then consider how many buildings in this territory

are occupied by such heavy hitters as Merrill Lynch and Bristol-Myers

Squibb. Then the figure of 18-million square feet of owner-occupied

space begins to make sense.

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Telecom’s Equalizers

DSL and Asynchronous Transfer Mode (high-speed transmission

for voice, data, video and VPN applications) are two of the state-of-the-art

services that Bell Atlantic is now offering to businesses in the Middlesex

County area, says William Freeman, president of Bell Atlantic.

"Small and medium-sized businesses will have the same capabilities

as large businesses," says Freeman, who will be speaking on "The

Changing Landscape of Telecommunications: How It Will Impact Your

Business," on Monday, March 13, at 4:30 p.m. at the Middlesex

Chamber meeting at St. Peters’s University Hospital. Call 732-821-1700.

Cost: $35

A North Plainfield native, Freeman joined New Jersey Bell when he

graduated with an economics major from Drew University, Class of 1974;

he also has an MBA from Rutgers. In 1987 he was appointed director

of external affairs at Bell Atlantic Network Services. In 1989 as

a Presidential Exchange Fellow he worked in the federal General Accounting

Office in the trade, energy, and finance group. He was president and

CEO of Bell Atlantic-Washington D.C. from 1994 until April of 1998.

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