Corrections or additions?
This article by Barbara Fox was prepared for the April 17, 2002
edition of U.S. 1 Newspaper. All rights reserved.
Sizing Up the Downturn
One person’s loss can be another another person’s gain.
That seems to be the story of the sublet market in Princeton. When
the stock market turned sour for dotcoms and telecommunications
and when the banks and the pharmaceuticals consummated their mergers,
those companies found themselves with excess space and lengthy leases.
Usually expensive space, the Class A kind.
More than half of the available Class A rentals in Princeton are
as sublets, says Jerry Fennelly, who has been tracking this
micromarket for 20 years. Currently, a total of 1,091,000 square feet
of Class A space needs to be leased. Of that, 569,000 feet is in
A very small portion, 87,000 feet, is shell space (never before
and the remainder, 434,000 feet is "relet," where a lease
has expired and a tenant has moved on in the usual way.
Overall, Fennelly’s figures show that there has not been so much space
on the market since the early 1990s. Counting all the categories,
there is a total of 2.5 million square feet of vacancies. That is
almost exactly the amount of new space that has been built over the
last 10 years. Back in 1992, 2,549,000 vacant square feet represented
23 percent of the market. In today’s larger market that same amount
of vacant space amounts to just 15 percent of the market.
That’s good news for the landlords, who claim they aren’t worried.
Indeed, Class A landlords are in much better shape than they were
10 years ago. Then, many were left with empty buildings that had never
been leased. Now, it is their tenants — the companies that
— that are left holding the bag, paying rent on space they no
"If not for the sublet market," says Micky Landis, senior
vice president of Boston Properties, which owns most of the space
at the Carnegie Center, "occupancy levels would be at a fairly
strong rate. Rates have not changed, but workletters have increased
a bit. Including sublet availability, I would say it is in balance,
not out of whack as either a landlord’s or a tenant’s market. "
But Wayne Kasbar of Newmark JGT suggests that it is indeed a tenant’s
market when it comes to sublets. "There are some great
out there for tenants who can take advantage of the large amount of
space that is being sublet," says Kasbar. Some pointers for
looking to improve their space with a sublet:
might be able to work out a "blended" deal with the landlord,
blending in one year’s lower rent with the regular rent for a
lease. Kasbar’s sublet listing at 101 College Road, for instance,
offers 18,000 square feet for the next 18 months at just $18, compared
to the "regular" asking price of $27.
on the sidelines have a great opportunity to get some very nice fitout
and very nice furniture," says Tommy Romano of Insignia
Cross. His firm is subleasing two floors of the Fleet Bank building
at the Carnegie Center at rates comparable to regular Carnegie rates,
and he is also subleasing the bank’s former operations center in
at $10 per square foot.
space," for temporary purposes such as housing workers acquired
through a sudden expansion until contiguous space is available. For
instance, Geneva Pharmaceuticals rented space formerly occupied by
Mathematica at 101 Morgan Lane as a temporary headquarters and has
just signed a lease for larger space in the 500 series at the Carnegie
the companies in Class B space that want Class A amenities without
the prices. "A substantial portion of leases being made in College
Park," says Vincent Marano, COO of National Business Parks,
with Princeton firms that now have the opportunity to expand or trade
up from Class B to Class B space." Companies that could not find
buildings with more than 40,000 square feet are now able to step into
vacancies due to downsizing and consolidation.
So many are moving out and up, that Class B landlords are the ones
to be more aggressive in pricing. Nearly one-fourth of the Class B
space is vacant — 1.1 million feet. Two thirds of that is re-let
space, with just 10 percent in sublet. By comparison, the Class C
market is paltry, just 321,000 available feet, with a small sublet
Other significant news involves Thanet Circle, an enclave just north
of Princeton Shopping Center. The Institute for Defense Analyses has
vacated its fortress on Thanet Circle in favor of a reclusive area
on Bunn Drive, and it has contracted with Newmark JGT to sell its
48,000 square foot property on 9.25 acres.
Meanwhile Church & Dwight is moving its newly acquired staff members
from the former Carter Wallace property to new buildings on Thanet
Circle, and it has begun to market the Carter Wallace campus —
750,000 of mixed use buildings on 115 acres on Half Acre Road, near
Exit 8A. Back in the 1980s, when Mobil vacated its 800,000 square
foot campus, there was general despair about finding a tenant —
until Bristol-Myers Squibb stepped up to the plate. This time around,
the eventual buyer could come from much further afield, says Julie
Nachamkin, the Cushman Wakefield representative assigned to sell the
— Barbara Fox
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