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NORTHEAST REGIONAL REVIEW, page 4
Accent on Proximity, But some corporate citizens are just as concerned about the economic policies of Gov. McGreevey, whose "smart growth" battle against rampant development and sprawl has raised some hackles. This in the state that still calls its local government officials "freeholders," a term derived from the early 1700s, when only men who held their land "free and clear" were eligible for office. Corporate real estate professionals, however, know that "free and clear" is a relative term. New Jersey is confronting a $4.5 billion shortfall in the fiscal year that will begin July 1. McGreevey's anti-sprawl efforts have resulted in the preservation of 100,000 acres (40,470 hectares) of farmland 12 percent of the state total and he wants to preserve another 20,000 acres (8,094 hectares) per year going forward. He has also stated his preference for locally generated legal and zoning tools to cool development, including allowing cities to impose one-year building moratoria and imposing impact fees on developers to pay for new roads and schools. While some of these anti-development developments may have corporations thinking twice, their third thought may be toward other improvements in the business infrastructure of the state, like the $125-million in tax-exempt bond funding that is backing the redevelopment of a Port Newark Container Terminal common user facility. That's just a fraction of the $3.8 billion being invested in a host of improvements at Newark Liberty International Airport. The facility regularly moves more than 30 million passengers and about 1 million tons of cargo annually. Improvements to company pocketbooks and work forces are just as evident. "One of the most aggressive programs is the business employment incentive program," says Medina, which abates corporate taxes by anywhere from 10 percent to 80 percent of personal income taxes paid by employees of a relocating or expanding company. Another is the state's Urban Enterprise Zone program, which now numbers 30. In December, McGreevey announced that the state's fragmented work force development programs would be consolidated into a re-named Department of Labor and Workforce Development, headed by Commissioner of Labor Albert G. Kroll. In addition, two new lending programs have been approved to lend up to $10 million to developers to offset pre-development funding gaps for projects in older communities and to meet funding requirements for remediation of brownfield sites. Food and Medicine In April 2002, Preferred Freezer opened a new 137,000-sq.-ft. (12,727-sq.-m.) frozen seafood distribution facility and corporate headquarters on an 8.5-acre (3.44-hectare) site in the Greenville Yards industrial redevelopment area in Jersey City. Constructed on a cost-plus, build-to-suit basis, the facility was completed by Barrett Builders in less than eight months. It employs 50 people, and is one of five the company is building nationwide. "It is a very specialized niche, and we've been fortunate enough to be tutored by some of the best people in that industry," says Tom Barrett. "[Preferred Freezer President] John Galiher is an extremely intelligent guy, and a font of knowledge in his industry. Working closely with him was a great experience for us." The project was a relocation of sorts for the company, which had been headquartered in Perth Amboy, a mere 20 miles south. But in a zone as dense with food business and potential customers as this one, little moves make big differences. "We're now situated within the heart of the greater metropolitan distribution zone, within the confines of New Jersey ports, and minutes from all major highways to and from New York City," said Edward Borowski, vice president of operations for Preferred, at the grand opening. Not long afterward, Barrett broke ground on a 65,000-sq.-ft. (6,039-sq.-m.) warehouse/office facility for MCST Preferred Transportation, the transportation logistics arm of Preferred Freezer Services. Gil Medina says that such density sometimes begins to drive people out of New Jersey, until they begin to look around. At one point in the late 1990s, Tefal, the pot-and-pan maker owned by French management group Groupe SEB, was concerned about northern New Jersey cost factors making them less competitive. There was a strong push to move to South Carolina. "I told them the problem is they should look at our South Carolina south Jersey," says Medina. "I had a good relationship with the folks in Cumberland County, and arranged for [the company owners] to meet with the mayor of Millville, the freeholders, and the economic development directors. They went down for a tour, called me back at the end of the day, and said, 'We're going to your South Carolina.'" Medina says the land cost, quality of life and work force in central and south New Jersey are comparable to what companies would find in the south, with the incomparable advantage of staying situated in the dynamic Northeast. In Trenton, Precision Instrument founder and President A.J. Phillips said that his ability to access affordable financing was a major factor in his decision to move to a 9,000-sq.-ft. (836-sq.-m.) facility in New Jersey from Virginia. A $450,000 loan and a $250,000 technology grant from the state are propelling the company's development of an electrochemical sensor system that permits extremely detailed analysis for lubricating fluids used in various internal combustion engines. To maintain the output of just that kind of innovation, the EDA has opened the 20,000-sq.-ft. (1,858-sq.-m.) Commercialization Center for Innovative Technologies, situated on the 50-acre (20.2-hectare) Technology Centre research park in North Brunswick. Besides the incubator space, around 300,000 sq. ft. (27,870 sq. m.) of space is now completed or under construction in the park, including facilities for life sciences company Cambrex Corp., agrochemical firm Celgro Corporation (a subsidiary of Celgene) and Merial Limited, which produces pharmaceuticals and vaccines for animals. In September, Altana, a German drug maker, opened its marketing headquarters in an old Exxon building in Florham Park, N.J. It chose New Jersey over California partly because of the shorter flight times from Europe and the lesser time difference. The company also wanted to be near the biggest pool of pharmaceutical workers, said George W. Cole, the president of the division. "Seventeen of the 25 largest pharmaceutical companies have a presence in New Jersey," says Medina, and the concentration of biotech ventures is similarly dense. He notes that a cluster study of these sectors and other high-tech fields is now under way, under the auspices of clustering guru Michael Porter. "In economics, they speak of economies of agglomeration," he continues. "The fascinating thing about the biotech industry is that because we are in the northeast, high cost areas and labor costs sometimes become a competitive disadvantage. But in this industry, that's not an issue. If you're going to hire top scientific talent, you're recruiting from the world. To attract a person to New Jersey, Illinois or Mississippi, you're going to have to pay pretty much the same. Facilities are very expensive, and to do tenant improvements is going to cost you about $200 to $400 a square foot. The major factor driving this is not labor costs or cost of facilities the real driver is 'Can you find the talent?' There is a tendency to locate where the center of gravity already is." The Ties That Bind Now the challenge for the region is to maintain that gravity's dynamic and fluid nature, rather than letting it become a black hole. The key to that, many posit, is the cross-fertilization between old and new economies: just as traditional manufacturing and today's knowledge workers are teaching each other a thing or two, so too are traditional buildings and new technology doing a new step."One of the interesting things about this whole process is the transition of the economy from industrial to knowledge-based," says Medina, who is positioning his technology group at just this juncture. He only hopes that the traditional rivals of the region stop skirmishing long enough to come along for the ride. |
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