Real Estate New Jersey editor Eric Peterson moderated the lively discussion with panelists Gil Medina, executive managing director of Cushman & Wakefield; Michael Fasano, manager of Marcus & Millichap; Ray Sohmer, senior managing director of CB Richard Ellis; Charles Klatskin, chairman of Lee & Klatskin; Michael Alfieri, president of M. Alfieri Co., and Peter Sudler, the president of Sudler Management Corp.
Ask Klatskin what's ailing New Jersey and he'll tell you: "Everything: Politicians, traffic, building codes. New Jersey's reputation is terrible and getting worse every day. I have clients that are moving to Pennsylvania because they can't get anywhere on the roads here."
Sudler, too, said the trends of rising taxes, traffic and government corruption and the lack of a manufacturing base along with out-of-control state regulation are hurting the state's reputation. "The combination of these things really is putting a damper on development in the state," he said. "Maybe when they impact the economy and we start to see unemployment go up something will happen."
Medina, a former state Secretary of Commerce, fell back on Mark Twain's description of German composer Richard Wilhelm Wagner's music to describe the state: "It's not as bad as it sounds." If New Jersey was a country, he noted, it would have the 17th largest economy in the world. But short-term thinking is costing the state business and jobs.
"Trenton is focusing on easy, short-term solutions. Nobody is looking at long-term goals," Medina said. "Government is incapable of providing long-term vision. It has to come from the private sector, the academic community and citizens. We have to take our state back."
Alfieri said he has not seen the trickle down of companies leaving Manhattan for lower rents at his Metro Park office buildings. But the city's skyrocketing rents helped him raise his. "We were able to raise rents 10% this year because rents in NYC are so high. But we're still not at the point where we see new construction," Alfieri said.
With about 18 million sf of lease expirations in New York City during 2009 and 2010, Sohmer said he believes the Garden State will see more business from Manhattan, although it likely will be focused on the Hudson waterfront. "I'm optimistic that in the next several years we are going to see a trend or at least see those companies taking a look at New Jersey," he said. "The dollars speak for themselves."
But New Jersey cannot pin its hopes for success on businesses crossing the Hudson. "We cannot rely on New York City to be our white knight," he said. "Traditionally, it has not been. The solutions have to be organic."
If the state is successful in garnering more companies from New York City, it will face a housing problem. "Affordable housing is going to be the big issue in the future," Fasano said. "We now have less than 3% residential vacancy in New Jersey. We don't have the affordable housing for those people we're trying to bring in."
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