NULLNever mind the weakening economy. Developer Matrix heads for the busiest year in its history.
The rush for new office space by displaced Manhattan companies may have emboldened many developers to speed up their Northern New Jersey projects. But for builders far removed from the demand created by the September 11 terrorist attack, the challenge is to find ways to navigate the economic slowdown.
Cranbury''s Matrix Development Group is one such firm. It has little space to rent or land to build on in Northern New Jersey, where the New York City companies have been relocating. But Matrix has lined up enough business elsewhere to make 2001 the busiest year since the firm was founded 22 years ago. In the past 18 months, Matrix has launched projects totaling 5.5 million sq. ft., making it among the most active developers in the state.
Yet Matrix president Joseph Taylor, 44, sounds like a doomsayer. "We certainly expect that things will slow down in the wake of the [September 11] tragedy," he says. "Virtually every transaction has taken longer to consummate."
Even so, Matrix more than has its hands full. Just last month it won a rigorous bidding contest for a 99-year lease for Legal Center, a 20-story office tower with 411,617 sq. ft in Newark. That makes Matrix the de facto landlord for the fully occupied building. Its owner, the Port Authority of New York & New Jersey, granted Matrix the much sought-after lease. According to the Port Authority, the first 50-year term of the lease could bring Matrix some $200 million in revenue.
Taylor, a Philadelphia native with a passion for sailing, is just as enthusiastic about two new construction projects that total 800,000 sq. ft. at Exits 7A and 8A on the New Jersey Turnpike. In the 7A market, Matrix is under contract to buy 420 acres adjacent to its existing land holdings in Washington Township, which can accommodate development of up to seven million sq. ft. Matrix is also pursuing approvals for additional land at Exit 8A, where Taylor says he is "just about to sign the contract" with the property''s sellers. And that''s just for starters. In Hamilton Township near Interchange 3A of I-195, Matrix last month received approvals to build a 660,000 sq. ft. warehouse and distribution facility. In Branchburg, Taylor last month secured construction approvals for his company''s third office building at Matrix Corporate Center. The new structure will be the twin of a 145,000 sq. ft. building approved earlier this year and will be part of a complex that includes a 90,000 sq. ft. building and 32 developable acres that Matrix acquired two years ago. Meanwhile, Matrix recently unveiled plans for a new warehouse and distribution facility with 229,245 sq. ft. at CenterPoint, the firm''s complex in Monroe Township near Exit 8A. Still other projects include two million sq. ft. of warehousing and distribution facilities being built at Northeast Business Park off Exit 7A. Tenants will include Seaman''s Furniture and Lifetome Loan.
Of all these ventures, the Legal Center in Newark puts Matrix into its biggest new market. The deal marks Taylor''s first foray into Northern New Jersey. For years it sought to acquire properties through competitive bidding in Florham Park and Parsippany, but has so far failed to clinch any. "We are absolutely going to use [the Legal Center] as a way to articulate to the community in Northern New Jersey that we want to make additional investments there," Taylor says.
In fact, the Newark play has more to do with Matrix''s urban initiative than its Northern New Jersey aspirations. "You will see us trying to do more in Perth Amboy, and trying to crack into Elizabeth, Bayonne and Newark," Taylor says. Matrix already has in hand approvals for a 240,000 sq. ft. industrial building in Perth Amboy.
Taylor''s biggest urban project is in New Brunswick, where Matrix partners with residential real estate developers Applied Companies of Hoboken and Roseland Property Co. of Short Hills. The $130-million venture will convert two parking lots into a pair of residential buildings with a total of 767 apartments and parking for 1,700 cars. Construction is scheduled to start in the next four-to-six weeks.
The ambitious New Brunswick project is part of a drive by Taylor to gain a foothold in several industry segments. While Matrix made its mark with industrial development near Exit 8A, the reputation that followed has been a sore point with the company. "There has been a long-held misconception that Matrix is principally a warehouse and industrial developer," says Taylor. "In fact in the past several years, on a true value basis and investment dollars, we have done a lot more office than industrial."
In recent years, Matrix has bought and sold office properties totaling 750,000 sq. ft. in Cherry Hill, Mount Laurel and Moorestown, plus a 700,000 sq. ft. office building in Monmouth County''s Eatontown. But Matrix has since grown disenchanted with investing in Monmouth County and Southern New Jersey office properties and has disposed of most of its portfolio there. "It was a good time to sell," Taylor says. "We got a great number for [the properties]."
Going forward, Matrix plans to be in different market segments at the same time. "There is not a market we would not consider looking into," says Taylor, who concedes that he "waited too long to get into the multifamily business" and that he was "awfully late" to spot the boom in the waterfront markets of Jersey City, Hoboken and Secaucus. But he still has an eye on the Meadowlands, where he expects "room for a number of developers" if the existing Continental Airlines arena makes way for the proposed Newark arena for New Jersey''s Devils and Nets.
To be sure, the slowing economy is tempering Taylor''s pace. His latest venture at CenterPoint office park at Exit 8A has no tenants as yet and he hasn''t decided whether to start construction in November or to wait until March. That will be "when the weather breaks and gives us an opportunity to make sure the economy is where we think it should be," Taylor says. The Hamilton project will also be "on hold until we see what happens in the market."
While Matrix works with several financial partners, its closest ally is Boston''s AEW Capital Management. "We feel the pulse of the market through Matrix," says John Lamb, vice president at AEW, whose firm invests on behalf of pension funds and other institutional investors. "We are quite pleased with the returns we receive from our Matrix investments," Lamb adds. Taylor''s real estate partners are also pleased. "Matrix is straightforward to work with," says David Barry, a principal at Applied Companies, a residential developer.
Sailing, not real estate, was Taylor''s first enthusiasm. A 1979 graduate of Bowdoin College, he interviewed with banks and insurance companies before taking a job with Tishman Management Leasing in Manhattan. The real estate boom of the early 1980s saw Taylor become a project manager for New Jersey''s R. H. Realty, Matrix''s predecessor company. Taylor became CEO at the age of 30 when R.H. Taylor reorganized.
Long before his real estate forays, Taylor found another calling in Haiti, which he first visited in 1975 while still in high school. He has returned annually since then and participated in regular fund-raising efforts for Haiti''s poor and its destitute children. Leisure time is spent sailing with wife Leslie and sons Jes, 15; Adam, 9; and stepson Chris, 26, on Long Island Sound and Block Island Sound, where the family frequently finishes second or third in competitive racing. Back on the job, Taylor seems determined to settle for nothing less than first in competitive real estate. nEmail to firstname.lastname@example.org