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This article by Barbara Fox was prepared for the April 21, 2004 edition of U.S. 1 Newspaper. All rights reserved.
Strong Demand on Princeton Pike
Many commuters know Princeton Pike as “the other Route 1,” the road you take when you want to avoid the traffic lights on the four-lane highway. Drivers coming up I-295 from Philadelphia peel off at Princeton Pike north to take the back way into Princeton, and shoppers taking the back way out of Nassau Park often use the Pike.
From the Class C buildings on Princess Drive to the Class A buildings on Lenox Drive, the Princeton Pike area has also established itself as an office community, alluring to businesses that want to be “in Princeton” yet handy to Philadelphia, and attractive to workers who live in less pricey communities in Bucks County.
As evidence of the popularity of Princeton Pike in general and Lenox Drive in particular — just two spaces are currently available for lease on Lenox Drive. And this is at a time when there are huge vacancies elsewhere, a time when several commercial real estate companies have admitted they have exactly the same vacancies as last year.
The landlords in this community include the Jingoli Organization (for 264,000 square feet at 3131 Princeton Pike), First Industrial and the Larken Associates (both for Princess Drive), Ariel Abud (for 3100 Princeton Pike) and Hilton Realty (Lawrence Executive Center at 3120 Princeton Pike). The landlord in the news is Brandywine Realty Trust, which just bought its sixth building on Lenox Drive in the complex developed by DKM and known as Princeton Pike Corporate Center.
“Now we own all the multi-tenant buildings in the park,” says George Sowa, senior vice president of New Jersey operations for Brandywine, the Pennsylvania-based real estate investment trust (REIT) with more than $2 billion in holdings. Brandywine has properties in Virginia, northern Pennsylvania, and western Pennsylvania; Sowa is responsible for New Jersey and Newtown/Bucks County.
“This location has been affirmed by major corporations,” says Sowa, referring to Bristol-Myers Squibb, Bloomberg, and Merrill Lynch. Bristol-Myers bought the former RCN/Union Camp site in Lawrenceville on Princeton Pike, Bloomberg purchased the Atchley site for a future 1 million square foot office park in Ewing, and Merrill Lynch has built its 1.8 million square foot campus in Hopewell. “They could have gone anywhere in the world.”
In December, 2003, Brandywine bought Building 1 at 989 Lenox Drive, paying $20 million to the Praedium Group, or $178 per square foot. “It made sense for us to own this, to help with our overall operations and to increase tenant flexibility,” says Sowa. The Commons at 7 and 9 Roszel Road sold for $250 a foot, and Patrinely sold its College Road West property for $235 per square foot, Sowa points out. “We don’t think $178 per foot was an outrageous number, considering the property’s institutional value and the economies of scale.”
Current tenants in Building 1 include KPMG, Epam Systems, New Jersey American Water (formerly Elizabethtown), Interlink Healthcare Communications, iXP (emergency communications), and Sirius Satellite Radio. Building 1 has the only two spaces available on Lenox Drive (see the commercial rental listings that start on page 11 and that are sorted by township).
Brandywine’s pride and joy is the building that it added to this park, three stories and 120,000 square feet at 2000 Lenox Drive, opened in the year 2000. Peterson’s is the name-on-the-wall tenant, but the roster also includes several divisions of Publicis (formerly Nelson Healthcare), Ono Pharma, Aspen Technology software, and the search firm of Ken Clark International. It is also where Sowa’s office is located.
In March, 1998, Brandywine Realty Trust spent $50 plus million or about $130 per square foot for three Lenox Drive buildings, numbers two, three, and four. They were part of DKM’s $137 million portfolio that also included three buildings in Trenton and one in East Windsor.
Of the DKM buildings, Stark & Stark has its name Building Two at 993 Lenox Drive. Building Three, 997 Lenox Drive, has two major law firms, Dechert and Fox Rothschild. At Building Four, 1009 Lenox Drive, Uniform Code Council has 36,000 square feet, and Navigant Consulting is the name-over-the-door tenant.
1000 Lenox Drive has always been a single tenant building and was owned by American Reliance Group, later known as Highland Insurance. That company got into financial difficulty, and Brandywine paid $7.575 million for the 52,000 square-foot building and its developable acreage. CUH2A now is the major tenant there.
‘We own all the multi-tenant buildings in the park, close to 700,000 square feet,” says Sowa. “We also have ground and could go to another 400,000 square feet, so it could be about 1.1 million square feet.”
The purchase of the last multi-tenant building on Lenox Drive “makes tremendous sense,” says Sowa, emphasizing the flexibility of one-owner office parks. Brandywine Realty uses a regional platform, and Sowa is in charge of all of New Jersey plus Newtown, Bucks County. “With our property in Newtown, Pennsylvania, we can give tenants flexibility to expand within the park or move from one state to the other. We can tear up a lease and right-size them at any point during the lease term.”
New Jersey and Pennsylvania vie to offer the richest incentives. One difference is that the New Jersey Economic Development Corporation represents the entire state, whereas in Pennsylvania each area has its own Economic Development Council to be the company’s advocate in the governor’s office. In 1997, for instance, when Lockheed Martin moved 3,000 workers from East Windsor to Newtown, it finagled a $20 million loan at 1 percent interest plus a 10-year tax abatement deal on the improvements to the property. “Most companies are very, very savvy and they play it back and forth,” says Robert Cormack of the Bucks County EDC.
In the Newtown area near I-95 and Lockheed Martin, Brandywine has developed the 102,000 square-foot ICT building. Also in Newtown it has 130,000 feet in two buildings plus 60 acres that can be developed to 400,000 square feet. “Between Newtown and Lawrenceville, we can develop 800,000 square feet within 15 minutes of each other,” says Sowa.
Despite being a public REIT, Brandywine can move quickly, says Sowa. “We can write checks against a $500 million credit facility, but our real source of funds for this purchase was the sale of some non core assets.” Within 15 days, Sowa claims, his company can do all the due diligence and come up with the cash. Brandywine has retained the two Trenton office buildings that came with the DKM portfolio but sold 104 Windsor Center to New York-based GHP. Among its tenants there were iStat, Evans East, and a daycare center. “Not in our geographic core,” says Sowa.
Sowa could win a “good guy” award in the industry. “He works hard, and he is an honorable guy that the brokers like because he doesn’t BS,” says John Buschman of GVA Williams Buschman, a Brandywine tenant. Buschman has a mantra: “A quick no is the second best answer,” and he says that “George is a quick no guy, he doesn’t waste your time.”
Sowa’s father owns a motel in Florida, but when George was growing up in Bordentown, his father had a service and sales appliance store in Wrightstown. Sowa picked up the entrepreneurial spirit. “My parents always emphasized that it is important to tell the truth and do the right thing,” says Sowa. “If there is an issue, rather than conceal it, I try to get it on the table early and try to address it.”
His wife, a nurse practitioner, works part time, and they live in Yardley with their two school-age daughters. The couple met on a blind date in Plainsboro, a double dinner date where the guys did the cooking, and the second date was December 26, an excursion to Manhattan. That did the trick. “I had worked there for eight years, and I always loved New York. We did the tourist thing, and it has been a fairy tale ever since,” says Sowa.
After graduating from Cornell in 1982, Sowa worked in a brokerage, then in a private real estate syndicate in New York for eight years. For another eight years he worked at Linpro, the developer and manager of half of Plainsboro. Sowa’s future boss, Gerald Sweeney, also worked for Linpro, in the Delaware Valley office, and in 1989 Sweeney became CEO of Brandywine Realty Trust, headquartered in Plymouth Meeting. Sweeney hired Sowa in 1998.
He predicts that tenants will benefit from competition between the two states, and that New Jersey and Pennsylvania will vie to offer perks in tax breaks and grants to keep companies from hopping the line. “The prospective tenants used to stop at Lawrenceville, but Harrisburg has gotten extremely aggressive.”
Says Sowa: “Companies we have spoken with seriously considered Pennsylvania but ended up staying in place.”
Brandywine Realty Trust (BDN), 2000 Lenox Drive, Suite 102, Lawrenceville 08648. George D. Sowa, vice president. 609-895-9595; fax, 609-895-9899. Home page: www.brandywinerealty.co
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