Federal Reserve Bank of New York senior economist and assistant vice president Rae D. Rosen kicked off the discussion with some figures and predictions about the current recession. Namely, that it began in January 2008 and is likely to outlast all other post-war recessions. According to Blue Chip figures, unemployment in the state could top 8%. The good news: look for less of a decline in the second half of this year.
"Pay attention to interest rate spreads," said Rosen. "If they start to narrow it means that lending standards will also relax." Unfortunately, jobs will likely be one of the last sectors to recover.
Phil Lipper, senior managing director at Studley, painted a similar picture. He also compared New Jersey office and industrial rent rates to New York rates. The one silver lining may be that Northern New Jersey rents have remained relatively flat, with class A office space going for $24.84 per square foot in 2001, down only slightly from the current $28.11 price tag. "There wasn't much of a bubble to burst here," Lipper said, adding that the flat line makes it difficult for landlords to turn a profit because real estate taxes have continued to rise.
The panel discussion that followed centered largely on New Jersey's well-performing assets. Moderated by Richard F.X. Johnson, senior vice president and partner at Matrix Development Group, the panel included insight from Nick DeRose, senior principal, Langan Engineering and Environmental Services; NJEDA CFO Caren Franzini; Timothy Comerford, manager of PSE&G's area development department; and the City of Newark's deputy Mayor for Economic Development Stefan Pryor.
"New Jersey has one of the strongest industrial markets regardless of the economy," Pryor said, adding that some very significant deals are currently underway. "Because fuel prices have been so volatile, it's a good time to build out large industrial assets," he said.
State infrastructure is also top of mind for Franzini. "We need to be ready for the uptick with secure roadways, sewer systems and technologies," she said. For its part, PSE&G plans to accelerate its infrastructure improvements on electrical systems for over $900 million in spending. According to Comerford, the plan should be approved next month. PSE&G is also pursuing renewables, including a $1-billion wind farm off the Atlantic City coast and an in-the-works $800-billion plan to ramp up solar production.
The licensed site professional bill--which Gov. Corzine is expected to sign-off on this month--also received attention. "While there will be growing pains, it will ultimately streamline the cleanup process and help to protect the environment," DeRose said. The program has already been successful in Massachusetts.
Arguably one of the most talked about topics was green growth. In addition to a new clean energy master plan from the Board of Public Utilities, Franzini said, "we also want to be on the forefront of the new green industry. Just as biotechs were created in New Jersey, we'd like be the epicenter of the green industry."
Looking ahead, Pryor said there are some changes being proposed to the Urban Transit Hub tax credit bill, namely the financial requirements a business needs to apply. He's hopeful the current $75-million capital investment standard will be reduced to $50 million in the near future. And if all goes well, freight rail will also be folded into the program.
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