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Princeton market experiencing boom in spec development.

Just when it seemed that "doom and gloom doom and gloom
Gloom and doom.

doom-and-gloom adj.
" might be the short and long-term prognosis for the Princeton market area, there has been a marked pick up in activity in this submarket sub·mar·ket  
A geographic, economic, or specialized subdivision of a market.

Being below what is usual in a particular market: submarket wages; submarket interest rates. 
 that, once again in its history, is currently seeing more speculative construction than any other area in the State of New Jersey.

Similar to the 1999-2000 real estate market, where Princeton experienced its most prolific speculative office building phase, five new projects are rising along the Route 1 and 1-95 corridors totaling more than 800,000 square feet of Class A office space that is being constructed without any pre-lease tenancy A situation that arises when one individual conveys real property to another individual by way of a lease. The relation of an individual to the land he or she holds that designates the extent of that person's estate in real property. .

However, unlike the late 90s, corporations are not eating up space at such a voracious voracious

said of appetite. See polyphagia.
 pace. In recent months, there have been several large transactions completed in the market and there are seemingly more major leasing deals on the horizon, indicating a stronger office leasing market ahead.

Current spec projects along the Route 1 corridor include:

Reckson Associates' 313,000 s/f, five-story Reckson University Square: Patrinely Group's 167,000 s/ f, five-story l l00 Campus Drive; Hilton Realty's 140,000 s/f, five-story 902 Carnegie Center; Opus opus (ō`pəs) [Lat.,=work], in music, term used in cataloging a composer's works, designating either a single composition or a group published together or considered a unit.  East's 120,000 s/f, four-story PrincetonSouth Corporate Center; Brandywine Realty's 75,000 s/ f three-story 1200 Lenox Drive.

In addition to these projects, Opus is constructing a second, 160,000 s/f building at PrincetonSouth, 83,000 s/ f of which has been preleased to Computer Associates. There is also nearly 500,000 s/f of available office product along the I-95 corridor in three projects: Princeton Pike Corporate Center (100 Lenox Drive--former Lenox China headquarters); the remaining space at American Metro Center in Hamilton; and the entire 220,000 s/f Technology Center at Princeton, which has remained fully vacant for the past two years.

Recently, however, American Metro Center, one of the Princeton market's most ambitious and successful renovation projects, has seen a spate of leasing activity totaling more than 300,000 s/f with 160,000 s/f remaining.

While these availabilities have caused a momentary mo·men·tar·y  
1. Lasting for only a moment.

2. Occurring or present at every moment: in momentary fear of being exposed.

3. Short-lived or ephemeral, as a life.
 spike in vacancy along the I-95 corridor, Opus' and Brandywine's commitment to building new office inventory into the submarket is a sign that steady demand will again surface in the Princeton Corridor, which also extends to Bucks County, Pennsylvania Bucks County is a county located in the U.S. state of Pennsylvania. As of 2000, the population was 597,635. A 2004 U.S. Census estimate placed the population at 621,342, making it the fourth most populous county in Pennsylvania, after Philadelphia, Allegheny, and Montgomery  and southern New Jersey.

The lower Bucks County market in particular is supply constrained con·strain  
tr.v. con·strained, con·strain·ing, con·strains
1. To compel by physical, moral, or circumstantial force; oblige: felt constrained to object. See Synonyms at force.

 for both existing inventory and developable land--there are no sites along the I-95/Route 1 corridors in Bucks County that can accommodate an office use of more than 200,000 square feet. Therefore, the I-95 corridor in Ewing, Hopewell and Lawrenceville will benefit from the continued demand from executives who live in Bucks County and want to shorten their commute TO COMMUTE. To substitute one punishment in the place of another. For example, if a man be sentenced to be hung, the executive may, in some states, commute his punishment to that of imprisonment. .

Other new leases during the second half of 2006 indicate winds of change on the horizon. Computer Associates' 83,000-square-foot lease and Church & Dwight's lease for 42,000 square feet at 29 Thanet Circle have proven that in a market with a high level of current vacancy, major companies are still willing to pay benchmark rental rates of more than $30 per-square-foot to achieve the kind of Class A space that their corporate buyer values demand.

During early 2007, there are six to eight other potential tenants kicking around the market for 30,000 to 100,000 square feet. Additionally, BlackRock's anticipated mid-range relocation from the Merrill Lynch Merrill Lynch & Co., Inc. (NYSE: MER TYO: 8675 ), through its subsidiaries and affiliates, provides capital markets services, investment banking and advisory services, wealth management, asset management, insurance, banking and related products and services on a global basis.  Scudders Mill Road property, as well as Novo Nordisk's potential new headquarters, provides nearly one million square feet of large space needs in the greater Princeton market area at the present time, and each of these requirements carries an element of growth/net positive absorption.

The Princeton submarket seems to be strong and stable going into the first quarter of 2007.

The increased activity of speculative office construction is mirroring the demands of high-quality, Class A office space that is desired in New Jersey.

This is a good sign for the future of New Jersey's economy, as these new properties will compete with each other to attract larger corporations to the area, perhaps as possible headquarters locations.

While it will be interesting to see how leasing activity is affected, the Princeton office market is poised to remain one of New Jersey's premiere submarkets heading into 2007.

By Steven Tolcash, EVP EVP Executive Vice President
EVP EGR (Exhaust Gas Recirculation) Valve Position Sensor
EVP Electronic Voice Phenomenon
EVP Europäische Volkspartei (Germany)
EVP Employee Value Proposition
, and Thomas Romano, senior VP, GVA GVA

general visceral afferent system of nerves.
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Title Annotation:Commercial Sales & Leasing
Comment:Princeton market experiencing boom in spec development.(Commercial Sales & Leasing)
Author:Romano, Thomas
Publication:Real Estate Weekly
Date:Feb 21, 2007
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