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Hi-tech, warehouse space in NJ holds its own.

Imagine driving to work on tree-lined streets, alongside spacious lawns and through annual flower gardens. Parking is easy, on-site, facing landscaped islands and grassy knolls. The building entrance appears to have two levels, and the lobby is an attractive public area. This may sound like your typical Class-A office environment, but in today's commercial real estate arena, it is also becoming the backdrop for new or upgraded high-tech, industrial and warehouse business parks.

Throughout 1991 and the first half of |92, these hybrid centers have experienced active leasing, in contrast to nearby corporate centers struggling for tenants. The reasons, according to a number of developers that specialize in warehouse/industrial buildings, are three-fold: economics, flexibility and location.

"Single-story industrial, high-tech and warehouse space can satisfy a wide range of uses from regional and corporate headquarters, to showrooms and light assembly facilities," explained Jeffrey Kessel of George Kessel Associates. "In most cases, rental rats are lower than pure office buildings. In addition, flex structures like ours can also accommodate companies looking to consolidate offices as well as expand facilities."

Based in Bergenfield, New Jersey, Kessel is a leading developer of high-tech space, i.e. building that offer aesthetic qualities such as oversized windows and landscaped grounds, as well as practical amenities like tailgate loading, large by areas, 20-foot ceiling heights, heavy power capabilities and abundant on-site parking. The company is currently developing the 47-acre Commercenter/Totowa business park in Passaic County on Riverview Drive, close to the Route 80/46 and 23 interchange. The park has five single-story flex structures and one three-story office building all of which are fully occupied or close to 100 percent leased.

"We are filling space as fast as it becomes available," Kessel said. For example, the latest building, 20 Commerce Way, was 80 percent leased just three months after completion. As a result, Kessel is starting construction on the next high-tech structure which is expected to mirror the successful flex building at the park.

Recent activity included expansions as well as new tenants, and the uses exceeded the typical industrial/high-tech usage. For example, Sandvik Process Systems enlarged its headquarters for the second time since it moved to 29 Commerce Way in 1990. The latest expansion included a dramatic two-story corporate-style atrium entrance and reception area which was easily created because the building's basic design allows for windowed office mezzanine areas. Sandvik now occupies a total of 26,500 square feet in the building.

In addition, Kessel leased space to several new tenants at 20 Commerce Way including the U.S. Headquarters of Siemens Fiber Optics (F.O.C.), a division of Siemens AG, and Bell Atlanticom Systems, Inc. Both companies combined executive and warehouse facilities at the building.

Another developer of high-tech parks, North Jersey Development Group, also experienced steady activity in the past 18 months. Moving into the second half of 1992, the East Hanover-based owner/ developer/manager sold the final parcel of available land at its 30-acre Roundhill Corporate Center located in Rockaway Township. At the same time, nearby office buildings continue to struggle for tenants.

"There is a growing demand for ultra-high quality high-tech and industrial structures in New Jersey," noted partner Daniel Cohen, "but the surrounding area and park-like settings are just as important as the buildings, themselves. Companies are looking carefully at the grounds and the overall environment of the business centers they consider moving into. They want their facilities to be visually appealing and conveniently located so that they can attract and keep quality personnel."

Roundhill's record is a case in point; built on both a speculative and built-to-suit basis, the 210,000-square-foot six-building park earned a Rockaway Township Beautification Award for its campus setting and exquisitely landscaped grounds. It continued to attract tenants during the past two years of development, and currently is close to 100 percent occupied. The newest occupant is Edy's Grand Ice Cream, an affiliate of Dreyer's Grand Ice Cream Inc., which is building a 39,000-square-foot warehouse and distribution facility on Lot 6. Other tenants include New Jersey Natural Gas Company, BASF Corporation, Fette America, Anghel Laboratories, and Wells Fargo Guard Services.

With Roundhill's completion, the company expects to move ahead on a similar complex, Rockaway Business Center, which will be modeled after Roundhill according to Louis Antonucci, partner of North Jersey Development Group. A joint venture with Tomen Inc. USA, the 210,000-square-foot park is planned to include six new buildings, each with a minimum of 19,000 square feet. The park will be located on Greenpond Road, and several of the structures will be built into the surrounding hills. Ben Katz of Cushman & Wakefield is the broker for the property.

Similar to the steady high-tech/flex activity in northern New Jersey, warehouse space continued to lease according to Wilson Associates, owner/manager of more than 1.5 million square feet of warehouse and distribution facilities in the New Jersey Meadow lands. The company reported more than 890,000 square feet of transactions consummated between the end of 1990 and the beginning of 1992 with a total value of excess of $55 million. This activity resulted in 100 percent occupancy of the 64-acre Gotham Industrial Park in Carlstadt where Wilson Associates is based.
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Title Annotation:Review and Forecast, Section V; New Jersey's industrial business parks
Publication:Real Estate Weekly
Date:Jun 24, 1992
Previous Article:Indicators pointing up in New Jersey.
Next Article:Leasing pace picks up for Manhattan markets.

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