n late April a joint-venture partnership of Advance Realty and Boston-based CrossHarbor Capital Partners, LLC, announced that it had acquired the former Sanofi U.S. Research and Development Campus in Bridgewater, N.J., located on U.S. Highway 202/206 in Bridgewater Township.
Encompassing approximately 1.2 million sq. ft. (111,480 sq. m.) of lab, office, and GMP production, the 110-acre (44-hectare) campus will be branded as the New Jersey Center of Excellence. A Jones Lang LaSalle team led by Managing Director Dan Loughlin represented Sanofi in the transaction, while Advance and CrossHarbor were represented in-house. JM Zell Partners also advised Sanofi. Gregory Nalbandian, a senior vice president and managing director with NorthMarq Capital, represented Advance in the formation of its joint venture with CrossHarbor.
"The former Sanofi U.S. Research and Development Campus is a jewel of Bridgewater and one of the most dynamic properties in the State of New Jersey," said Bridgewater Township Mayor Daniel J. Hayes, Jr. "The Garden State's biotechnology and pharmaceutical industries are recognized national and international leaders, and this campus is surrounded by the type of highly skilled and educated workers that are integral to the success of these sectors. We look forward to working with Advance and CrossHarbor to fill the property with a vibrant mix of companies."
One of those vibrant entities will be Advance Realty itself, which has been based in Somerset County since its beginnings in 1979. Currently based in neighboring Bedminster, the firm will relocate its headquarters to the campus, as it works with township and county officials to explore mixed-use redevelopment of a portion of the property.
"The former Sanofi campus is a tremendous asset, and the Somerset County Business Partnership felt it was important for the new owner to have an understanding of the County's economic environment," said Mike Kerwin, president and CEO of the Somerset County Business Partnership. "Advance Realty has that understanding and has demonstrated it through the integral part they've played in the county's business landscape for over three decades."
"Our first task will be to continue to evaluate the property's master plan to make sure that it meets the market's needs," Advance Realty President and CEO Peter Cocoziello said last month at the announcement. "We look forward to collaborating closely with local officials as we develop a plan for the site that fits into Bridgewater Township's and Somerset County's comprehensive economic development strategy. We are confident we will be able to position it in a way that will make it attractive to a wide range of tenants.
"We are based in Somerset County and are committed to furthering the economic vitality of the region by creating jobs and ratables," he continued. "Not only was this purchase a great opportunity to expand our presence in the region, it also adds to our portfolio a property that is going to spur innovation and help maintain the State of New Jersey's position as the country's leading home to bio and pharma companies."
Jones Lang LaSalle's recently issued Global Life Sciences Cluster report found the New York City/New Jersey cluster to be the seventh strongest in the nation, based on such factors as sector employment and number of establishments, venture capital support and NIH funding. Among other factors, the report noted the cluster's employment of over 106,000 people and its 3,700 life sciences establishments, the most of any cluster in the country.
According to Choose New Jersey, 3,100 of those are in the Garden State. Moreover, the state anticipates $2.6 billion in pharmaceutical investment over the next two years, from a sector that has an annual economic impact in the state of $58 billion.
"Although some of the large life sciences and pharmaceutical firms have continued to consolidate their operations through the area, demand has remained strong," wrote the Jones Lang LaSalle report's authors, "especially within New Jersey as small and mid-level firms have increased in both numbers and size in the last few years."
Consolidations have come from such firms as Roche, Pfizer and Dendreon. But biotech firm Dendreon, along with such firms as Allergan, Savient, Celgene and others, has also been among those signing leases for space in the region: The company has moved its headquarters from Seattle to 40,000 sq. ft. (3,716 sq. m.) in Bridgewater even as it closed its manufacturing plant in Morris Plains, N.J., then sold it to Novartis in December.
'Embracing a Change'
The re-visioning of the suburban R&D complex is part of a national trend highlighted by The Wall Street Journal last week, which noted a big drop in suburban office space development as both companies and people look more frequently to infill city-center locations. But the suburban sites aren't going anywhere. And mixed-use, live-work-play complexes that replicate city centers continue to rise in suburbs nationwide anyway. So some see it as a natural fit to locate such village concepts on former corporate oases such as Sanofi's.
In an interview, Cocoziello says Sanofi's attention to high-level maintenance of the complex and its state-of-the-art equipment are what make it "world class," enough so that Ashland Specialty Ingredients took 200,000 sq. ft. (18,580 sq. m.) and Amneal Pharmaceuticals took another 150,000 sq. ft. (13,935 sq. m.) within the past 120 days.
"I've acquired several corporate dispositions, and they were the most high quality group we've ever acquired a site from," he says of the Sanofi corporate real estate team. "They had everything so well organized that from the time we entered into a contract, we closed in about 30 days. Because the due diligence and process was so well set up, and they did such a great job maintaining the facility, it became clear to us what the site consisted of. They were a pleasure to work with, very competent and knowledgeable."
Cocoziello say since the site's closure everything's been maintained at an exceptional standard and is in full operation, including a 5-megawatt central cogeneration power plant and a dual feed from two separate utility substations operated by Jersey Central Power & Light (JCP&L), part of FirstEnergy. Full campus amenities include all the perks, a fitness center, cafeteria and auditorium among them. But he calls the power plant the site's biggest asset, backed by backup generators at each building, and HVAC equipment that never recirculates existing air inside the buildings. In addition to the fact that the cogen plant by definition produces heat as well as power, further infrastructure includes a 100,000-gallon diesel tank and full natural gas service.
"So you're able to arbitrage energy costs," says Cocoziello. "Then overlay what just happened with the Sandy storm, and you recognize you're in a position to create confidence, with uninterruptable power. This isn't just any old site."
"Ashland and Amneal were drawn to the property specifically because of the infrastructure that's already in place," said Neal Opper of CrossHarbor Capital Partners at the April announcement. "We see it as the perfect site for small to mid-sized tenants that seek amenities-rich, move-in ready research and development space in an environment that was expressly designed to meet the needs of a cutting-edge company."
It helps that the area already is known as "the medicine chest" for its array of life sciences companies and talent. Cocoziello says state and local leaders continue to offer the right prescription for growth.
"There's no doubt about it," he says of Gov. Chris Christie. "Our governor has made a difference in how companies view the State of New Jersey." Somerset County and Bridgewater Township leaders, meanwhile, are eager to support repositioning the property through zoning changes now under consideration, so that retail, hotel and multifamily space will be options.
"The community is embracing a change," says Cocoziello.
So is Cocoziello's company, which will move between 50 and 60 people from nearby Bedminster to the newly acquired property.
"We feel that if we're on site, we can execute to the high standards we demand of ourselves," he says. His team is evaluating several spaces on the campus that are move-in ready.
"In fact, most of the buildings here have all the furniture in place," he notes. "It's a big attribute for some of the companies that it's plug-and-play."