COVER STORY, APRIL 2008

OFFICE & INDUSTRIAL UPDATE
Profiles of office and industrial developments in Northeast.
Stephanie Mayhew

In this month’s issue of Northeast Real Estate Business, we are taking a look at several office and industrial developments across the Northeast. Developers are taking prime pieces of land and creating campus like settings for office and industrial users, and sometimes even meeting the needs of both with state-of-the art flex facilities.

Lehigh Valley Crossings

Lehigh Valley Crossings in Lower Macungie Township, Pennsylvania, will feature a three-building, 1.2 million-square-foot industrial complex.

The fundamentals of the Northeast industrial market continue to draw companies from around the world. According to Kim Meincke, director of Real Estate for Opus East, LLC, the Lehigh Valley market in particular has garnered much attention from new companies locating to the market and existing companies expanding their presence.  

To meet the current demand in the Lehigh Valley market, Opus East is currently constructing Lehigh Valley Crossings in Lower Macungie Township, Pennsylvania. The three-building, 1.2 million-square-foot industrial complex will feature 580,000-, 400,000- and 210,000-square-foot facilities ideal for light manufacturing and distribution. “The Lehigh Valley offers companies with distribution networks servicing the Northeast corridor excellent access to population centers via integrated interstate road networks, direct routes to the New York and New Jersey ports, and efficient facility and labor costs,” remarks Meincke. “With the completion of the new Route 222/Route 100 Bypass, Lehigh Valley Crossings is basically one traffic light from Port Elizabeth/Port Newark and it is centrally located within easy access to the expanding intermodal yards of Central Pennsylvania.”  

Construction is set to begin this month on the first building, which is slated for completion fourth quarter 2008. Each building at Lehigh Valley Crossings will feature cross-docked and rear-loaded configurations, 32-foot clear height, ESFR, concrete truck courts and loading areas, insulated precast and steel construction, truckers lounges and ample truck and car parking. Opus East plans to lease or sell the industrial facilities, which are being marketed by Meincke.

The Opus A&E designed facilities are being constructed to attract national and local companies requiring modern distribution facilities that offer high-cube storage, energy efficient design, column spacing to provide flexible racking layouts, ESFR, large truck courts and access to a strong labor force. “U.S. ports are expected to continue to grow, along with the need for intermodal facilities to reduce road congestion and fuel costs,” Meincke notes. “When companies are able to utilize or integrate transportation options such as truck, intermodal or ports, to create the most efficient distribution networks, consumers win.”

The Picatinny Applied Research Campus

The Picatinny Applied Research Campus in Morris County, NewJersey, a new high-tech office/research park, is slated to feature 1.1 million square feet for high-tech, defense and academic tenants and users.

A groundbreaking project is currently underway at the U.S. Army’s Picatinny Arsenal/Armament Research, Development and Engineering Center (ARDEC) in Morris County, New Jersey. A joint venture partnership comprised of Advance Realty Group and InSitech, Inc., a partnership intermediary for the ARDEC, is constructing the Picatinny Applied Research Campus (PARC).

The new, high-tech office/research park is slated to feature 1.1 million square feet of labs, office space and multi-purpose space for high-tech, defense and academic tenants and users. The complex will be comprised of one- to three-story build-to-suit and multi-tenanted buildings, which will offer Class A office and flex space designed for maximum flexibility in floor plan layouts and tenant fit-outs. “The PARC is a great project because of the partnership with the army and the opportunity in the market for this type of product,” says Kevin Tartaglione, senior vice president and COO of Advance Realty Development. “Overall, the partnership between Advance and the army, the real estate itself and the opportunity to create a high-tech research and development facility in this location is something that we are excited to be a part of.”

The ARDEC features $1.5 billion in high technology equipment, more than 64 high-tech laboratories, more than 2,000 on-base scientists, research, development and engineering personnel, as well as many intellectual assets, some of which only exist at the base. In addition, the nanotechnology lab located on the base is the largest nanotechnology reactor that is actively producing compound material in the country today. “The Picatinny Arsenal dates back to the Revolutionary War and over the past couple hundred years, it has evolved into a high-tech research and development campus,” explains Timothy N. Teen, president and CEO of InSitech, Inc. “It is not a classic Army facility with troop deployment and troop training; it is similar to a corporate research campus at Merck.”

Teen and Tartaglione both agree that the PARC has garnered quite a bit of attention from prospective users because of the amenities that the PARC will offer, as well as the ability to access the multitude of amenities located within the ARDEC. “Any company whose research and development is aligned with the Army’s mission is invited to participate in the PARC,” explains Teen. “It is clear that the PARC is unlike any development in the country and probably in the army’s network of laboratories as well. The fact that private sector companies can relocate right inside the secure area of the military’s research development compound, collaborate with the Army, use its facilities and work with the Army’s subject matter experts is extraordinarily compelling.”

Construction is underway on the first phase of the project, which will include 100,000 square feet of office/lab space encompassed within three new buildings. ICS Builders recently erected the steel for the first building, a 27,500-square-foot, single-story flex facility; and Grassie & Sons Excavating has begun work on a new parking lot and other site work for the first phase of development. The first building is slated for occupancy this June. “Picatinny has a history of being considered a high-tech location and as this development continues to gain momentum and become populated with tenants for the PARC, Picatinny will again be on the map locally and nationally as a high-tech, high-end research and development area, which will attract excellent tenants as well as employees and scientists that want to be in this type of environment,” remarks Tartaglione.

River’s Edge

Phase I of River’s Edge in Medford, Massachusetts, will include three office buildings totaling 410,000 rentable square feet.

Preotle, Lane & Associates Ltd. is developing phase I of River’s Edge in Medford, Massachusetts. Constructed on a former brownfields site, phase I encompasses 30 acres and will include three office buildings totaling 410,000 rentable square feet and one 220-unit luxury rental building totaling 240,000 square feet. The first office building in the development will feature approximately 115,000 square feet on four levels.

According to John J. Preotle, Jr., a principal at Preotle, Lane & Associates, the office market in Medford continues to be strong due to superior access and a strong labor force. “A transit-oriented development such as River’s Edge boasts a significant price advantage when compared to the Cambridge/Boston markets, and it gives employers access to a first-rate labor force,” he notes.

The first building in the development, which has been Leed Gold precertified, will sit on a 80- to 100-foot landscaped plaza and feature a precast and glass facade. Along with views of the river, building 1 will also include a café and a fitness center. The infill project is situated 0.4 miles from the Wellington/MBTA station, 4 miles from Boston, 3.5 miles from Cambridge and 2.5 miles from Logan Airport.

All of the office buildings in the River’s Edge development will front an elegant 10-acre riverfront public park that was designed by Shadley Associates. Other amenities include more than a 1/3 of a mile of frontage along the Malden River, 100 yards of sculptured granite seat walls at multiple overlooks, 44 benches and a mixture of open parkland and trees with more than 8,000 plants. The park will also  include more than a mile of paths for walking running, rollerblading and bicycling and an all-purpose sports field.

Phase I of the development is slated for completion in 2012 or 2013, and phase II is projected to be complete in 2017 or 2018. George Nugent, Phil Giunta, Jennifer Nicholson and Ann Newman of Grubb & Ellis are heading up the leasing efforts for River’s Edge. The architect of record is Gensler Architects.

Valley Forge Office Center

Increasingly difficult land development approvals, the increased cost of raw land and new construction, and fewer ground-up development opportunities have made redevelopment and infill projects more and more popular in the Northeast. One such project is Keystone Property Group’s  $107 million redevelopment of the Valley Forge Office Center in Wayne, Pennsylvania. “The property is an extremely desirable office location in a market where there is a shortage of ‘trophy’ quality office space,” notes Gregory R. Hansen, CCIM, senior vice president of Marketing and Development for Keystone. “The entire area is improved when old and dated 1970s buildings are enhanced by new modern façades and brought up to current building codes and storm water ordinances.”

Keystone purchased the six-building, 516,000-square-foot office park in August 2005 and set to redevelop the complex into a Class A facility. After Keystone completed renovations on building 480, a 49,750-square-foot facility; and building 500, a 60,839-square-foot building, in first quarter 2007, the firm tackled buildings 656 and 676. In order to enhance and add space to the two facilities, Keystone combined and expanded both buildings to incorporate an additional 32,253 square feet of office space along with a three-story atrium connector lobby. The redeveloped building now totals 146,704 square feet and features increased floor plate depths from 65 feet to 95 feet, as well as an increased number of corner offices. Other redeveloped buildings include 530, a 130,288-square-foot facility; and building 580, which totals 128,257 square feet.

Redesigned by Thomas E. Hall and Associates, the new exterior includes an all-glass curtain wall façade with various treatments around the building including: horizontal aluminum mullion extensions, an aluminum eyebrow supported by aluminum clad columns at the base, glass enclosed elevators with views to the outside, aluminum clad entrance canopies at each building entrance,  a curtain wall that extends above the roof line and decorative lighting fixtures throughout.

Set on 24.29 acres, the park is situated in the sought after King of Prussia/Wayne location at the confluence routes 202 and 422, Interstate 76 and the Pennsylvania Turnpike. The complex also boasts high visibility from Route 202 and Swedesford Road. “Pent up demand for this type of office space is evidenced by our marketing track record,” explains Hansen. “In the last 12 months prior to construction completion, we completed 162,000 square feet of leases.” Currently a total of 389,895 square feet has been leased, and at building 656/676 alone, a total 66,098 square feet has been leased. CB Richard Ellis is leasing the exclusive leasing agent for the property.

Wall Commercial Park

Sheldon Gross Realty is currently developing Wall Commercial Park, a new 300,000-square-foot office and flex project located on Route 34 in Wall Township, New Jersey. Sheldon Gross, president and CEO of Sheldon Gross Realty, has been assembling the 47-acre property for the last 25 years, a portion of which has been in his family for more than 100 years.

“The market began to move into Monmouth County, making it extremely attractive, so that is when we decided to start developing Wall Commercial Park,” he explains. “First, we built a 60,700-square-foot flex building, fully leased it and then ultimately sold it. And we completed a 24,000-square-foot office building that is also fully leased, so we knew that the time was right for this type of a development.”

In total, the park will be comprised of three office buildings and one flex building. The first phase of construction included a 58,000-square-foot office building and a 60,700-square-foot flex building, while the final phase will feature two office buildings of 163,200 square feet and 30,000 square feet. Construction of phase I  began spring 2007 and phase II is still in the design and planning stages.

Situated on a beautifully wooded site, Gross believes that the campus like setting and its strategic location are the development’s most unique aspects. Located just minutes from exits 98 and 100 off the Garden State Parkway, Wall Commercial Park is only one quarter of a mile north of Monmouth Executive Airport. The site is also easily accessible from routes 18, 33, 34, 35, 36, and 66, as well as Interstate-95 and the New Jersey Turnpike. Additionally, Wall Commercial Park is just 1 hour from both Philadelphia and New York City and 45 minutes from Newark Liberty International Airport. “One of the big advantages of the property is all of the highways that are close proximity to it,” notes Gross. “Everything that anybody could want is right there.”

Upon completion, Wall Commercial Park will feature amenities that take advantage of the wooded site — recreation trails, sitting areas with benches and many other park like areas. Gross adds that ultimately one of the buildings will feature a cafeteria or restaurant. “Wall Commercial Park is a unique opportunity for companies that want to be closer to the Shore’s recreation facilities and yet have great employees and access to the roads,” Gross remarks. “Monmouth County is a very unique location, and despite some other areas slowing down in activity, Monmouth County has not.” Sheldon Gross Realty will continue to manage and lease the park once it is complete.

800 Adams Avenue

O’Neill Properties Group is nearing completion on 800 Adams Avenue, a 65,558-square-foot Class A office building in Valley Forge, Pennsylvania. As the first new office building in Valley Forge in 5 years, 800 Adams Avenue features superior access to transportation corridors,  high concentration of amenities and access to the labor force in Upper Montgomery and Berks counties via Route 422. “The office buildings in this market are simply outdated in an area where there is a high demand for new office space,” says Brian O’Neill, founder and chairman of O’Neill Properties. “The construction of 800 Adams Avenue will breathe new life into the community and transform the area into a business hub.”  Situated in the Valley Forge Corporate Center, the Class A office building is within minutes of I-76, Route 202 and the Valley Forge Interchange of the Pennsylvania Turnpike, and it is just one-half mile from Route 422. “With several new roads planned for the area as well as the rebuilding of Betzwood Bridge, the construction of this office building is a significant first step in transforming this corporate center into a true business complex,” remarks O’Neill. Construction is set to be complete this month.

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