The meeting (Friday, May 18) was held at the Yale Club in Manhattan, but the conversation was all about New Jersey. The New York real estate community came out to hear Hersh and Victor Kinon, partner at Scarinci & Hollenbeck and the chair of the Urban Land Institute of New Jersey, speak on why businesses are looking to relocate here.
Hersh and Kinon both noted the primary reason is the financial savings. These, they noted, come in the form of "considerably" lower rents and tax incentives including: Business Employment Incentive program, Urban Enterprise Zone (including sales and tax exemptions on qualified corporate equipment and supply purchases), New Jersey Long Term Tax Abatement (fixing real estate taxes for up to 20 years), Business Relocation Assistance Grant Program, job training grants, no commercial rent tax, no city corporate or personal income tax, lower state income tax and the fact that PSE&G rates are as much as 38% less than Con Edison's rates in New York.
Hersh noted that Mack-Cali's projects are pre-leasing well and existing buildings in Harborside are finding little to no vacancies. Harborside Financial Center Plaza 10 has been fully pre-leased to Charles Schwab & Co. as its East Coast headquarters. The property is a 19-story office building that will be completed in the first quarter of next year. While blocks of space are still available at Plaza 5, a 34-story, 980,000-sf office tower, many have been leased and this project will not be completed until the third quarter of 2002.
The success of the development has led Mac-Kali to enter into a joint venture with Lincoln Property Co., according to Hersh, to create a 300-unit luxury apartment complex on the north pier. Mack-Cali is contributing its land in exchange for cash and a percentage of ownership in the property.
A year ago this week, Mack-Cali also broke ground with Hyatt on a new nine-story, 300-room hotel. Its completion is expected in late summer of 2002. Hersh said it's the first full-service hotel on the New Jersey waterfront.
Kinon noted the development by companies such as Mack-Cali and the success these projects have found reflect the change of this city from when he was involved in one of the first projects here in the 1980s. He says that at that time this city functioned as a parking lot for New Jersey residents getting on PATH trains for Manhattan. When first approached about the project then he had suggested a parking garage would have better luck than an office building.
Today, he says the market here is thriving because of the vision of those first few developers who ventured across the river and the local and state government for creating tax incentive programs that have truly recreated the city. He joked that north Jersey has truly become the sixth borough of New York City for these very reasons as traditional companies make their way across the Hudson River in greater numbers.
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