From: New Jersey Business, January 1999
By James T. Prior
The overwhelming majority of the new office space, residential towers and hotels being developed along the once-neglected riverfront in Jersey City is being done by a brace of builders Mack-Cali Realty Corporation, Lefrak Organization, Hartz Mountain Industries and Panepinto properties, Inc. This foursome is molding millions upon millions of square feet of space -- literally a city within the Garden State's second-largest city. They are heightening the skyline of the west bank of the Hudson River in competition as the sixth borough of New York City.
Here is a tour of the four developers' brick and mortar efforts:
Mack-Cali, the Cranford-based REIT (real estate investment trust), has some 250 properties, with 28 million square feet of space with 2,300 tenants in 12 states. In New Jersey, it has a whopping 113 properties with 14.1 million square feet of space. Its Jersey City properties, developed or planned, are staggering in size.
Brant B. Cali, executive vice president, says its Harborside Financial Center has attracted top international companies and leased almost all of its first three waterfront buildings (Plazas 1-111), filling 1.9 million square feet of space. Rental rates are in the high $20s-low $30 per square foot. It plans 3.9 million square feet in Plazas IV-VII/VII-A -- five new skyscrapers ranging up to 1.5 million square feet in the 59-story Plaza VII.
When completed, Harborside will have more than 6 million square feet of office, residential and hotel space. It owns two piers jutting out into the river, which are being reinforced and prepared for future development of a 300-room hotel on the south pier and about 230 upscale rental residential units on the north pier. It also owns the water rights between the piers, where it may develop a marina.
"It is an ideal location on the water, right at one of the stops on the Light-Rail System now being developed," says Cali. "New York Waterways recently introduced ferry service from Harborside to MidTown Manhattan. It's only a 20-minute trip. Moreover, there is the Exchange Place stop on the PATH right here at Harborside. As we develop the piers, we'll also complete the waterfront walkway. It will actually become the Rockefeller Center West of New Jersey."
On the north side of Harborside, Mack-Cali plans a world-class 56-story office showplace, the American Financial Exchange, which will have 1.8 million square feet of sophisticated space, fiber optic service, 32 elevators and floor plates up to 57,000 square feet.
Edwin H. Cohen of Cushman & Wakefield of New Jersey, East Rutherford, the exclusive broker on the tower, says interest in space has been exceptionally high. Published reports indicate that U.S. Trust Corp. will relocate some 300 employees from its Manhattan headquarters and Cigna Corp. is also ready to sign a lease for space and relocate workers from Manhattan to the Newport facility. Cohen, who was involved in luring Bankers Trust to Harborside in Jersey City some 14 years ago, says lease negotiations are in progress on seven floors for two tenants. He would not identify those tenants. He says asking rentals are $29 per square foot, plus full electricity.
Richard LeFrak, president, says, "There is simply more demand for new quality office space in the New York/New Jersey region than there is supply. The total occupancy cost at Newport is 30 percent to 50 percent lower than comparable Class A properties in Manhattan.
In addition to the two office buildings of about 1.4 million square feet, Lefrak is renting up its new 36-story, 446-unit residential Atlantic Tower. This is the second in the new four-building, $250-million Towers of America gated community at Newport. A ll units in the first tower, the 33-story Riverside, are rented more than three-quarters to residents who work in New York City.
Newport now has: seven apartment towers with some 2,540 rental and condo units; a thriving office complex of 1.5-million square feet of occupied office space in two high-tech office towers; the highest grossing retail mall (the three-level Newport Mall) in the Northeast and one of the largest international supermarkets in the nation.
In October, Stern again plunked down an additional $10 million for another one-acre site in the Colgate Center on which he plans a similar sized office building at 70 Hudson Street. In total, Hartz has an option on four waterfront sites from Colgate-Palmolive Co., which has owned the 20-acre complex for 150 years.
Stern has been much encouraged by the 20-year lease it has signed with mutual fund manager Lord Abbett, for 150,000 square feet at 90 Hudson Street. The Wall Street firm also has an option on 50,000 square feet. The deal enabled Stern to secure permanent financing for the structure. He is asking $30 to $34 per square foot for rental space in his two buildings. Lord Abbett is moving the entire operation from the General Motors Building in Manhattan, "from the chairman to the stock boy," as Stern puts it. So, it is not simply a move of the back office staff.
"We exercised the option on 70 Hudson because there are tenants in the market who require 400,000 to 700,000 square feet of space over the next several years,' says Stern. "Combined with the remaining space at 90 Hudson, we can satisfy the needs of a wide variety of organizations who need prime space built to today's standards."
He is also involved (via Columbia Development Company, L.L.C.) with Garden State Development, Inc. and Mack-Cali in the American Financial Exchange, the 1.8-million square-foot complex on a 5.25-acre waterfront site, just north of Harborside. At 56-stories, it would be the tallest building in New Jersey. "When I conceived this project approximately three years ago, it hinged upon New York Waterways opening ferry service from this site to downtown and midtown Manhattan," he explains. "As an interim use, there is an 850-car surface parking lot to provide parking for ferry service while the site is marketed for development."
Panepinto also is handling Columbus Plaza, a 3.5 acre site in downtown Jersey City, with direct access to the Grove Street PATH station, about three blocks from the waterfront. "The project includes a 750,000 square-foot mixed-use residential/commercial development, containing a 210-unit apartment tower, 420,000 square-foot office building, 750-car parking garage and 115,000 squarefoot retail/commercial space. This project is in the approval stage and the residential and retail/commercial stages should commence in late 1999."
Liberty Center is yet another Panepinto undertaking. It is a two-acre site on the east side of Washington Boulevard and is approved for a 900,000 square-foot office building. This project will start if anchor tenants sign for 40 percent of the space, he advises.
Journal Square Plaza III is a pet project for Panepinto. This is the third and last phase of the Journal Square Plaza Urban Renewal Associates development at Journal Square, directly across from the Journal Square PATH station. The initial stage of this construction was a 50,000 square-foot office building which this magazine and its parent, the New Jersey Business & Industry Association, awarded its "New Good Neighbor" Award for architectural excellence, civic concern and economic contribution. The second phase was a 1,000-car parking garage with a 275,000 square-foot office now fully occupied. Now, the third phase is a 19story 500,000 square-foot office building which has all of its foundation work in place. It will be started upon signing of an anchor tenant for about 40 percent of the space, he explains.
A unique project on Panepinto's list is the Apple Tree House Conservancy, a joint effort of the public and private sector to acquire, rehabilitate and maintain a pre-Revolutionary War home. It is believed that Generals Washington and Lafayette planned strategy there.
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