L-3 Communications may be shrinking its footprint at its Camden office complex of more than 20 years, but the defense contractor isn't cutting its headcount.
In fact, it's making a move that real estate experts say will be the first step in a wave of new commercial activity for the embattled city.
With roots in Camden that go back more than a century, L-3 has leased the three-story, 350,000-square-foot building at 100 Market St. since it opened in 1992. But the company is now vacating the second floor in an effort to be more efficient.
That means 116,000 square feet of high-end office space is now on the market in a city where large blocks are rare. Class A vacancy in Camden was just 3 percent before the space became available, according to JLL, the brokerage firm representing the building.
Not to mention that would-be tenants could go rent-free for at least 10 years.
Thanks to last year's Economic Opportunity Act, the sweeping overhaul of New Jersey's business incentives, companies can get tax credits large enough to cancel out their rent. The programs are especially generous to Camden, as state officials sought to spark interest in the city and create an edge over Philadelphia.
"As we think about how the EOA can and will impact Camden, we look at this building as really the first move on the chess board," said David Foster, president of the Cooper's Ferry Partnership. The nonprofit organization, which oversees projects to help revitalize the city, is set to buy the L-3 building from the state Economic Development Authority for an undisclosed price.
L-3, meantime, has extended its lease for 10 years.
Several companies have toured the building in recent weeks, Foster said. He expects the space, which will be rebranded the Camden Innovation Center, to ultimately draw two to four new users — "and that those tenants will be the leading edge of what we believe will be an influx of new companies into the city."
It's why the effort is as much about filling space as it is about creating a new office market in Camden, he said. A new office-using population can breed demand for new construction, a key ingredient in the renaissance that stakeholders hope for.
That revival also hinges on the growth of its health care and higher education institutions, which have anchored the South Jersey city for decades. And despite Camden's notorious social and economic struggles, the effort has broad support from business and political leaders.
Rick Widerman, an executive vice president with JLL, said the new incentives help complete the formula for new commercial construction in Camden. It starts with the pure lack of space in the market, and the nearby PATCO line to Philadelphia allows firms to employ the young, urban-minded workers who make up a growing piece of the workforce.
"For companies who understand those incentives … all of those things start to make economic and strategic sense," said Widerman, a member of the building's leasing team.
There's still the question of perception in a city plagued by a reputation for crime and poverty, even if those issues fester outside the central business district. Widerman said "the trick is to get (companies) down here and spend some time here" — and he hopes the tax breaks can pique the interest of even the most skeptical corporate site selectors.
Downtown Camden also has the land needed for new development, Foster said. The acquisition of the L-3 property will give Cooper's Ferry some 10 acres of surface parking lots — prime sites for new buildings when the right opportunity comes along.
The demand for new space in Camden has been evident in recent years. Take the 100,000-square-foot Ferry Terminal Building, which opened in 2007 as the city's first privately financed office building in nearly 50 years.
Marc Policarpo, the leasing agent for the four-story complex, said it was near full occupancy within two years and has remained so ever since. And that was years before the Economic Opportunity Act.
"The incentives were not nearly as attractive as they are now," said Policarpo, a senior vice president with Philadelphia-based Binswanger. "But there were people who either wanted to be or needed to be in Camden, and their choices for Class A space were limited to this building, basically … We were almost the only game in town if you wanted a decent place to hang your hat."
Demand still outweighs today's supply in the Class A market, said Dan Close, another member of the JLL leasing team. And there's growth potential in industries such as engineering, where firms are increasingly doing work in the city.
"We've seen a lot of people who are starting to derive business from Camden need a presence in Camden, so they're opening smaller offices," said Close, a senior associate. "But if you're 10,000 (square) feet and above, there's just nowhere to go."
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