Biotech sector looks good to National Business Parks.

We are so bullish on the outlook for Princeton's biotech sector that we are considering beginning construction on a speculative basis of a new building specifically designed for the industry within the year's first quarter.

But we do not believe that 2006 will shape up as a banner year for commercial real estate throughout New Jersey.

Despite pockets of heightened activity, overall the state's office market is not that robust.

What we are seeing however is a dramatic new demand for research facilities from the biotech sector, which in New Jersey has been undergoing an impressive growth spurt.

Since NBP has management and leasing responsibility for College Park at Princeton Forrestal Center and Southgate Corporate Office Center in Morristown we have been active in two distinct markets.

During 2005 we recorded leases at both locations totaling more than 800,000 square feet of space. At Southgate, we leased the entire 210,000 s/f 475 South Street to Atlantic Health System as we were putting the finishing touches on a multi-million dollar renovation.

Similarly, at College Park, there has been a steady demand for space coming both from new companies as well as from College Park tenants entering into long-term renewals. The Park is operating at better than 95% occupancy with leasing emphasis now on the 72,000 s/f 400 College Road East, considered one of Princeton's most sophisticated office buildings.

But by far, the largest demand for space is currently coming from the biotech sector, which has a longtime relationship with the Princeton area.

During 2005, we wrote leases with Pharmasset, Bracco Diagnostics, Bracco Research, Celator and GPC Biotech among them, and at this writing are in advanced discussions with several other biotech firms for substantial space here.

Overall, much of New Jersey's office sector is still sluggish as companies like those across the country, are attempting to shore up the costs of doing business. As we have seen, many are making job cuts and sharply reducing their benefits programs which have become too costly for today's economy. For many of America's corporate giants, the cost of their benefits programs now outstrip their sales.

Then there remain geopolitical uncertainties, energy costs and a clouded unemployment picture with companies continuing layoffs and sending jobs overseas for lower labor costs. And until new business models are put into place, we will not see large-scale, aggressive demands for new office space.

We are planning to be in position to meet new demands for both office space and office/research facilities.

National Business Parks and its parent, Lawrence Zirinsky Associates have fully-approved plans to develop two new complexes on sites adjacent to the existing College Park campus. These are College Park 2, a 5-building office/research center containing 345,000 square feet that is being developed on a 31-acre site and College Park 3, a four-building premier corporate office center to be built on a 47-acre site. Both new complexes are being developed on a build-to-suit basis.

College Park at Princeton Forrestal Center, an award-winning 11-building office center fronting Route, has traditionally attracted multinational firms involved in research and development and financial services organizations. Current tenants include SES Americom; Panasonic; the law firms of Drinker Biddle & Reath; and Smith, Stratton, Wise, Heler & Brennan. National Business Parks, which is based at 2 Research Way at College Park and is opening an office at Southgate, is the management arm of Lawrence Zirinsky Associates of New York City.