Corrections or additions?
This article by Barbara Fox was prepared for the April 16, 2003 edition of U.S. 1 Newspaper. All rights reserved.
When All Roads Lead to 8A
Out by the New Jersey Turnpike is where the action
is, if you are looking for new construction. No matter that the venture
capital market has gone sour for biotech companies, never mind that
the stock market has gone south for financial and IT firms — companies
that sell consumer goods still need a place to store their stock,
and they still like to be out by the turnpike.
To be sure, there is some speculative construction of laboratories
(speculative, meaning that the developer does not have tenants in
his pocket when he breaks ground). For instance, a 50,000 square foot
building is going up at Princeton Corporate Plaza’s lab center. "We’re
out of space so we’re just chugging along," says Pam Kent of Kent
But the high tech market, once crying for space, now has a surfeit.
Take the two empty buildings at the Technology Center of New Jersey
— there was supposed to be just one, but major tenant GeneProt
announced early in April that it is slashing its European staff and
is not likely to expand to the United States after all. (See page
62 for details).
Laboratory subleases large and small are surfacing everywhere. A biotech
that rents space on FMC’s campus wants to get out of its lease, several
labs are vacant at Exit 8A (see listings below), and even a major
player like NEC Laboratories America has space to spare.
Subleases are diluting the office market, where vacancy
rates approach 17 percent, says Gerard Fennelly of NAI Fennelly. Office
leasing prices have quietly gone down 10 to 15 percent, he suggests,
and competitive properties are increasing the value of the workletter
(what the landlord will contribute to the tenant’s fit-out costs).
The notion that subleases affect the market becomes plain when you
consider that more than 10 percent of the properties included in the
listings that follow are sublease opportunities.
In the office sector, lots of space stands vacant, and not much "spec
construction" has been started. A Linden-based family-owned firm,
M. Gordon Construction, is trying a novel way to jump over the "on
spec" office construction hurdle by offering equity positions
to future tenants. The normal practice is for businesses to buy into
a finished condominium. Under the new plan a tenant who will take
a full floor can have equity participation and influence construction
decisions without the risk of holding the mortgage for the construction
loan. "Instead of having money in the stock market, people would
rather put it into their own businesses."
M. Gordon’s project is billed as the first "pure" office building
at Exit 8A, a three-story 100,000 square foot Class A building, Cranbury
Executive Center at 1249 South River Road. It’s an investment alternative
to Wall Street stock market and real estate investment trusts, claims
Stan Kurzweil of the Somerset office of Colliers Houston.
But at Exit 8A, home of the big box warehouse, the bulldozers have
been at work on spaces small and large. Small, at Exit8A, is under
100,000 square feet, and Sandy Kerzner is finishing such a building
at his warehouse park at 8A Corporate Center. Matrix Development Group
sold a 500,000 square foot building, is building another one for a
current tenant, and just broke ground on a spec building, this one
230,000 square feet.
Richard Schroeder of SRP&J Associates (formerly Schroeder/Perez)
on Route 130 designed Kerzner’s most recent three buildings at 8A
Corporate Center. "He needs to spend enough to make it look very
attractive," says Schroeder, "so it does not look like a typical
plain old box. But he has to be sure the costs aren’t wild. So we
utilize brick on the exposed sides for a nicer scale and a warmer
feeling than the vanilla boxes."
Matrix started the development at 8A and is still the biggest player
there. Its latest spec building, 5 Fitzgerald Avenue in CenterPoint
at 8A, is its second industrial site in two years and is 80 percent
complete, says Jim Murray, Matrix’s project manager. With 230,000
square feet it is made of pre-cast structural concrete and has 32
In addition to its spec building Matrix is also doing
a build-to-suit, a second home for W.W. Grainger, the Illinois-based
distributor of industrial equipment and supplies.
Murray points out that there were four empty "on spec" 500,000-foot
warehouses at 8A — . Murray leased Matrix’s 24 Englehard, pictured
on the cover of this issue, to Petco Animal Supplies and a hospital,
then sold the property to the Campbell estate. "We were lucky
or skillful or both in landing both tenants and a buyer," says
The three remaining boxes are empty. Pictured on page 13 is the one
built by Keystone Property Trust, an industrial REIT with 10 million
square feet along the NJ Turnpike. The vacant Cranbury East has 1,600
feet of frontage on the turnpike and has the distinction, says Keystone’s
Marc Petrella, of being the only big box on the Exit 8A market that
can be expanded to 1 million square feet. Petrella has filled another
big box, Cranbury West, with the cosmetics division of LVMH and an
apparel distribution company, Washington-based Sanmar.
The most unusual of the available big boxes is the one that Matrix
had built for Volkswagen. Volkswagen tripled its space, just finished
moving out, and now Paul Torosian of Trammell Crow is marketing the
300,000-foot space for its current owner, Clarion. Pictured on the
cover, it was designed by Ed Klimek of KSS Associates on Witherspoon
"Understanding that it was not just `things’ inside, but people,"
says Klimek, "we punctuated the simple concrete box with large
panels of glass. We balanced the big horizontal with a lot of verticality
near the entrance, so the entrance would be perceived as elegant."
Klimek may talk about the esthetics of the former VW building, but
the truly important element in any warehouse is more basic — the
floor. "We created a high quality concrete slab that can take
loads of racking units that are 32 feet tall and is very very flat,"
says Klimek. The warehouse machinery is sensitive to irregularities,
and it could be toppled by any imperfection. The architects employ
a concrete expert and a testing agency for each bore, then everyone
takes part in an elaborate testing procedure for an area that doesn’t
matter, the floor under the office. Says Klimek: "We won the contract
for the new VW building largely because of the care we took in the
details of the floor."
— Barbara Fox
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