NEW JERSEY SPOTLIGHT
What's Growing
In the Garden State?
In the Garden State?
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wo long-term projects – one private and one public – will for years remind New Jersey residents and those evaluating the state for expansion activity that industry still grows in the Garden State. Pfizer's May announcement that it would invest US$400 million over the next five years to expand its considerable New Jersey real estate holdings is one project – Morris Plains is the corporate headquarters of the company's Consumer Healthcare business.
The other project involves a $70-million investment in a new ship-to-rail facility at the Elizabeth-Port Authority Marine Terminal, part of a $4.4-billion redevelopment program.
In addition to the Morris Plains location, Pfizer's New Jersey portfolio includes assets of Pharmacia Corp., which Pfizer acquired in 2002; the operations of the two were combined on April 16th. In terms of market capitalization, the combined company ranks third in the world. Pfizer plans to retain Pharmacia's Peapack and Bridgewater, N.J., facilities and will sublease a facility in Bedminster.
To make things interesting, Pharmacia had acquired AT&T's Basking Ridge, N.J., facility just prior to Pfizer's acquisition. Pharmacia had planned to invest in renovating the facility, but those plans were tabled once the deal was done. Pfizer has no plans to occupy that space.
"The difference between that site and the one at Morris Plains is that the majority of employees in Morris Plains will continue to work there for Pfizer as they did before the announcement," says Paul Fitzhenry, a spokesman for Pfizer's New Jersey operations. "It is about minimizing disruption to the existing Pfizer work force. Morris Plains represents the best of all the alternatives, not only from the standpoint of them already being there, but also not having to consider relocating to a site the same size, such as Basking Ridge."
Another reason the Morris Plains site got the nod was that it already has in place research and development activities, which Fitzhenry says was not the case in any of Pharmacia's New Jersey locations at the time. The issue then became whether or not the Morris Plains site could expand, which was not going to be a problem.
"New Jersey is not fully exploiting our advantages," noted Gov. James McGreevey in an April 15th address to his new Commission on Jobs, Growth and Economic Development, following his review of the report's findings. "We have one of the largest life science industries in the world. Yet we rank 24th among the 50 states in attracting funding from the National Institutes of Health." McGreevey charged the commission with, among other things, creating a blueprint for helping New Jersey not just compete, but thrive in the coming decade; working to make the state's university research sector a strong partner for industry; and making government more responsive to business needs.
"By upgrading these facilities, we will ensure that our port can handle future growth in cargo activity, which supports more than 225,000 port-related jobs and $14.6 billion in economic activity in the region," noted Gov. McGreevey at an April event marking the launch of the first phase of the ship-to-rail facility.
Located on a 70-acre (28-hectare) site, the facility will be able to handle up to 1 million containers per year when fully operational.
Other investments include: the deepening of shipping channels leading in and out of port terminals to 45 feet (13.7 m.) by 2004 and beginning the harbor-wide, 50-ft. (15-m.) channel-deepening project; the installation of modern cranes that can easily unload the larger ships that call on the port; the future construction of a ship-to-rail facility on the Port Newark property; creation of more than 100 acres (40 hectares) of new container terminal storage space at Port Newark and the Elizabeth-Port Authority Marine Terminal; and new security measures.
Nevertheless, barriers to entry are not likely to change much in the near term, according to some that follow the market closely.
"Even given all the amenities in New Jersey, there is a strong effort, particularly with our new governor, to maintain this quality of life and the availability of land by devising a 'smart-growth' development plan," says Mitchell E. Hersh, CEO of Mack-Cali Realty Corp., a Cranford, N.J.-based real estate investment trust (REIT). "Areas that are somewhat concentric to infrastructure, such as Jersey City along the [Hudson River] waterfront, where you have great transportation, amenities, proximity – and other cities with those types of attributes – will be the ones that probably will evolve into the epicenter of new business activity."
Even a casual observer of the New Jersey side of the Hudson River across from lower Manhattan would wonder if some of New York City had attached itself to its neighbor. Numerous new developments have sprouted along the waterfront from Weekawken to Hoboken to Jersey City to Bayonne that beckon New York companies with competitive business costs and a non-island location.
Still, says Hersh, "There is a very limited amount of new supply that can be added to the waterfront, and you can't make land. So there are some natural barriers to entry. But the transportation infrastructure is phenomenal in the waterfront area. That infrastructure has kept pace with the evolution of the amount of commercial and residential space that has been added there. Compared to comparable areas, such as New York City, there is a lot less congestion."
The other project involves a $70-million investment in a new ship-to-rail facility at the Elizabeth-Port Authority Marine Terminal, part of a $4.4-billion redevelopment program.
Pfizer's Regional Play
Pfizer's announcement came at about the same time the pharmaceutical giant announced a comparable investment in New York City, which includes the purchase of an office building on Third Avenue in Midtown (see North American Reports, p. 416). The bulk of the New Jersey investment will involve expanding Pfizer's Morris Plains site by up to 900,000 sq. ft. (83,600 sq. m.) from 2004 to 2008. The expansion will include renovation and new construction at the 175-acre (71-hectare) site, which currently houses 1.3 million sq. ft. (120,770 sq. m.) of office and laboratory space. When built out, the facility will have a capacity of up to 3,700 employees.
In addition to the Morris Plains location, Pfizer's New Jersey portfolio includes assets of Pharmacia Corp., which Pfizer acquired in 2002; the operations of the two were combined on April 16th. In terms of market capitalization, the combined company ranks third in the world. Pfizer plans to retain Pharmacia's Peapack and Bridgewater, N.J., facilities and will sublease a facility in Bedminster.
To make things interesting, Pharmacia had acquired AT&T's Basking Ridge, N.J., facility just prior to Pfizer's acquisition. Pharmacia had planned to invest in renovating the facility, but those plans were tabled once the deal was done. Pfizer has no plans to occupy that space.
"The difference between that site and the one at Morris Plains is that the majority of employees in Morris Plains will continue to work there for Pfizer as they did before the announcement," says Paul Fitzhenry, a spokesman for Pfizer's New Jersey operations. "It is about minimizing disruption to the existing Pfizer work force. Morris Plains represents the best of all the alternatives, not only from the standpoint of them already being there, but also not having to consider relocating to a site the same size, such as Basking Ridge."
Another reason the Morris Plains site got the nod was that it already has in place research and development activities, which Fitzhenry says was not the case in any of Pharmacia's New Jersey locations at the time. The issue then became whether or not the Morris Plains site could expand, which was not going to be a problem.
Room for Improvement
Pfizer's expansion notwithstanding, New Jersey could be doing more to attract investment in the pharmaceutical and life science sectors, concludes a report on New Jersey's Life Science Cluster prepared by Harvard professor Michael Porter, a leading expert on cluster-based economics.
"New Jersey is not fully exploiting our advantages," noted Gov. James McGreevey in an April 15th address to his new Commission on Jobs, Growth and Economic Development, following his review of the report's findings. "We have one of the largest life science industries in the world. Yet we rank 24th among the 50 states in attracting funding from the National Institutes of Health." McGreevey charged the commission with, among other things, creating a blueprint for helping New Jersey not just compete, but thrive in the coming decade; working to make the state's university research sector a strong partner for industry; and making government more responsive to business needs.
Ports to Gain Assets
While not the only infrastructure investment under way in New Jersey, the port redevelopment program at Elizabeth is key to the port's remaining a leading destination for international shippers on the East Coast. Cargo volumes at Elizabeth grew 13 percent in the past year
"By upgrading these facilities, we will ensure that our port can handle future growth in cargo activity, which supports more than 225,000 port-related jobs and $14.6 billion in economic activity in the region," noted Gov. McGreevey at an April event marking the launch of the first phase of the ship-to-rail facility.
Located on a 70-acre (28-hectare) site, the facility will be able to handle up to 1 million containers per year when fully operational.
Other investments include: the deepening of shipping channels leading in and out of port terminals to 45 feet (13.7 m.) by 2004 and beginning the harbor-wide, 50-ft. (15-m.) channel-deepening project; the installation of modern cranes that can easily unload the larger ships that call on the port; the future construction of a ship-to-rail facility on the Port Newark property; creation of more than 100 acres (40 hectares) of new container terminal storage space at Port Newark and the Elizabeth-Port Authority Marine Terminal; and new security measures.
See the SITES New Jersey Economic Development Authority www.njeda.com
The Institute for
Mack-Cali Realty Corp.
Port Authority of |
Room to Grow?
Further investment in New Jersey from public and private investors will, of course, take place. "What-exit-do-you-live-at?" jokes aside, New Jersey's quality of life is very much sought after by site seekers, given its proximity to Philadelphia and New York City, plenty of wooded and farm land and a world-class roster of colleges and universities.
Nevertheless, barriers to entry are not likely to change much in the near term, according to some that follow the market closely.
"Even given all the amenities in New Jersey, there is a strong effort, particularly with our new governor, to maintain this quality of life and the availability of land by devising a 'smart-growth' development plan," says Mitchell E. Hersh, CEO of Mack-Cali Realty Corp., a Cranford, N.J.-based real estate investment trust (REIT). "Areas that are somewhat concentric to infrastructure, such as Jersey City along the [Hudson River] waterfront, where you have great transportation, amenities, proximity – and other cities with those types of attributes – will be the ones that probably will evolve into the epicenter of new business activity."
Even a casual observer of the New Jersey side of the Hudson River across from lower Manhattan would wonder if some of New York City had attached itself to its neighbor. Numerous new developments have sprouted along the waterfront from Weekawken to Hoboken to Jersey City to Bayonne that beckon New York companies with competitive business costs and a non-island location.
Still, says Hersh, "There is a very limited amount of new supply that can be added to the waterfront, and you can't make land. So there are some natural barriers to entry. But the transportation infrastructure is phenomenal in the waterfront area. That infrastructure has kept pace with the evolution of the amount of commercial and residential space that has been added there. Compared to comparable areas, such as New York City, there is a lot less congestion."