Compared to the dozens of other “stranded assets” in New Jersey, the stars seem to be aligning in the push to redevelop the former Hoffman-La Roche campus in Nutley and Clifton.
The Swiss pharmaceutical giant has taken the lead in the process after announcing plans to vacate the site in 2012. Since then, it has spearheaded a sweeping planning effort that included both towns, while overseeing remediation and lining up a potential anchor tenant in the medical school that’s been proposed by Hackensack University Medical Center and Seton Hall University.
All that has led to a quicker pace than you might find at other sites.
“I do think that this process — having been initiated by Roche and having the communities work together up front — has really expedited the process,” said Patricia Adell, owner of Real Estate Solutions Group LLC. “It’s not going to be the answer for every asset, but it certainly did help to move this one.”
Adell, a Princeton-based consultant who works on Roche’s planning team, touted the effort Friday as a panelist at PlanSmart NJ’s Regional Planning Summit in Trenton. She cautioned that “nothing is a done deal at this point,” but highlighted the project as both a positive story and an exception in a state that is coping with a glut of vacant corporate campuses.
The state’s stranded assets crisis was the subject of the PlanSmart event and of a major two-year research project unveiled by the planning advocacy organization. The project will compile data such as vacancy and demographics, all with the aim of quantifying the problem and creating a roadmap for government officials on how to revitalize the properties as mixed-use assets.
The end result is not one that’s achieved easily, the panelists noted at the conference.
“The biggest challenge with these corporate-owned buildings is they’re built-to-suit,” said Kevin Welsh, a broker and senior vice president with CBRE’s Capital Markets Group. “They’re really single-purpose facilities, and that’s a doubled-edged sword.”
Welsh said the properties are not designed to be multitenant facilities, making it tougher to market and reconfigure the building. He also noted that the corporations selling the buildings are not always willing to take the write-down despite being in challenged markets.
But he added that “we look at these sites as … tremendous opportunities for the communities and tremendous opportunities for the developers.” The trick, he said, is to “create a vision” for the site as a mixed-use property in order to attract different types of developers.
That’s what CBRE did when it marketed the 221,000-square-foot Sony Electronics Inc. building in Park Ridge, assembling a team that included an architect, land use professional and other consultants. That attracted mixed-use developers such as HornRock Properties, the firm that ultimately acquired the site and is now looking to reposition it.
“It was the opportunity that drove it,” Welsh said, also noting the value that came from having Sony agree to lease back the property.
The panelists noted that redevelopment of such properties still faces the hurdle of local governments that are skeptical of multifamily housing. Adell said that was a concern planners faced with the 116-acre Roche site, one they navigated as they put together three different redevelopment plans ahead of a sale to a developer.
But the Roche site has a huge advantage with the potential to have the Hackensack-Seton Hall medical school as an anchor tenant. The school is considering occupying more than 400,000 square feet on the site, which accounts for nearly 50 percent of the remaining commercial space
That includes 80 percent of the remaining high-quality lab space, “which is that part that’s most difficult to retenant,” she said. There are still many steps to be taken before the deal is complete, but it could help address what would be “basically an albatross around (the) neck" of a developer.
“We always had talked about (how) if we ever hit a home run, it would expedite development,” Adell said. “And that seems to be what’s happening.”
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