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NAIOP panel: Tech firms, startups key to N.J. real estate industry's future

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Mack-Cali CEO Mitchell E. Hersh.
Mack-Cali CEO Mitchell E. Hersh. - (Aaron Houston / NJBIZ)

Mitchell Hersh wants to “Google-ize” his Jersey City office buildings.

At least, that's how he describes how Mack-Cali Realty Corp. plans to modernize its commercial space along the Gold Coast, with an eye toward the collaborative, open and "edgy" environments that can attract new industries such as technology and media.

"Obviously the work place has changed, and the densities have changed," Hersh said. "Financial services is not what it was. So (for) the tenants that we're appealing to … it's going to support the new workspace environment."
 
The Mack-Cali president and CEO discussed the shift this week before members of NAIOP New Jersey, the commercial real estate association, during its annual outlook event. As he and others business leaders weighed the industry's future, they touted how entrepreneurship and startups can drive activity going forward.
 
Dennis Bone, who heads the Feliciano Center for Entrepreneurship at Montclair State University, said the Garden State has the potential to become a hotbed for technology and growth-minded companies, especially in its cities. But the state for now is failing to keep pace with the "tremendous developments in this area" in Lower Manhattan and Brooklyn, which often draws New Jersey's top intellectual talent right out of college, he said.
 
"We have the assets, we have the location, we have the people," said Bone, the former president and CEO of Verizon New Jersey, said during the panel at the Hilton Short Hills. "But we don't have the reputation that Brooklyn or New York has in the space."
 
One of those assets is the growth of urban "live-work-play" communities that appeal to the younger workforce, but can be offered for "significantly less" than across the Hudson, Hersh said. Manhattan and Brooklyn rents for apartments are at least $75 and $60 per square foot, respectively, while Jersey City is in the $40 range, he said.
 
"They're much more affordable, the lifestyle and quality of life is expanding rapidly in terms of the amenity base," said Hersh, whose company recently broke ground on a 69-story apartment tower in Jersey City.
 
He added that the pricing advantage, combined with the new government incentive programs that are driving additional development here, is creating "a positive bent toward the state."
 
The panelists Wednesday also pointed to another key ingredient for entrepreneurship and innovation — education. And New Jersey stands to gain in that area after the sweeping merger last summer involving Rutgers University and the University of Medicine and Dentistry of New Jersey.
 
The reorganization meant that the combined entity received $702 million in annual external research funding as of July, putting Rutgers at 24th among institutions nationwide, said James Hughes, dean of the university's Edward J. Bloustein School of Planning and Public Policy. Rutgers also is gaining new benefits and academic affiliations through its membership in the Big Ten Conference.
 
That means Rutgers and the state's other research universities now have "a foundation in place … to provide the baseline for our technological future."
 
"(To) all of the economic development activities in the state, and all of the real estate brokers, that asset should really be stressed," Hughes said. "We've never had that before, and we have it now."
 
Bone said that asset is "part of the central focus."
 
"As we think about transitioning … to this knowledge-based, interactive, do-it-yourself economy, the higher education institutions are at the heart of that strategy," he said. And "some of the value that New Jersey has left on the table" in recent years has come from not incorporating higher education into economic development projects as other states have — in hubs such as Silicon Valley and the Research Triangle Park in North Carolina.

Joshua Burd

Joshua Burd

Josh Burd covers real estate, economic development and sports and entertainment. Before joining NJBIZ in 2011, he spent four years as a metro reporter in Central Jersey. His email is joshb@njbiz.com and he is @JoshBurdNJ on Twitter.

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