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Asian Companies Buoy

LG Electronics, Konica Minolta and other giants boost the demand for spaceFast-growing Asian firms are aggressively expanding their real estate presence in the Garden State, which is home to many of the companies’ North American operations. The growth comes from global corporations and smaller ones that view New Jersey’s ports and its access to the financial hub of New York City as major advantages.

“There are a lot of Asian firms occupying a lot of space in New Jersey,” says Gil Medina, executive managing director of Cushman & Wakefield of New Jersey, a commercial real estate brokerage firm in East Rutherford. “They’re already a fairly significant player in the real estate market.”

At least 15 major Asian-based corporations, including Panasonic, Sharp Electronics and the pharmaceutical company Eisai Co., Ltd.—which together occupy at least 4 million square feet of space in New Jersey—have their U.S. headquarters or other major operations here. The state has more than 900 million square feet of office and industrial space, according to Cushman & Wakefield.

Medina says New Jersey has historically ranked among the top 10 states for foreign direct investment. Japan alone accounts for approximately $7 billion of the $30 billion that foreign companies currently have invested in the state. Medina says Korea is also a large investor and China, India and Pakistan are poised to play a larger role.

All this translates into an increased presence of Asian-based companies and a growing demand for local real estate, says Nick Kim, senior managing director at The Staubach Company, a real estate services firm with its New Jersey offices in Murray Hill.

The real estate needs of Asian companies “will grow probably 15 to 20 percent annually over the next three to five years,” says Kim, who heads Staubach’s new Asian Specialty Focus Group that was created in April to serve Asian-based clients. New Jersey is a favored location for many Asian companies, he says, because of its proximity to lenders in New York City.

He notes that the rapid expansion of Asian firms here marks a comeback from the financial meltdown that afflicted Asia in the late 1990s. “Those companies are coming back very strong,” he says. “They are in expansion mode.”

The state’s ports are a big draw, says Christopher Tichio, vice president of leasing at Alexander Summer LLC, a real estate services firm in Paramus. “Having the accessibility for these global companies to bring their goods into the United States probably gives New Jersey and the surrounding areas a little advantage,” says Tichio.

Asian technology companies like LG Electronics, whose North American headquarters are in Englewood Cliffs, have seen dramatic growth in recent years. John Taylor, a company vice president, says LG Electronics’ North American sales have more than doubled, from $4.5 billion in 2004 to $10 billion last year. He says the company’s New Jersey work force has risen from 250 employees to 400 over the same period. “We’ve been on a very fast growth track,” says Taylor.

He says LG’s real estate requirements have likewise ballooned in the past few years, from less than 100,000 square feet in 2004 to more than 1 million square feet in 2007. This includes leasing an additional 60,000 square feet of office space in Englewood Cliffs, to bring LG’s total usage there to 120,000 square feet, and leasing a 750,000-square-foot distribution center in South Brunswick, in which the company is moving.

Since the merger of its two founding firms in 2003, Japanese imaging and printing company Konica Minolta has expanded into a 246,000-square-foot presence in New Jersey. This includes about 192,000 square feet in Ramsey, where the company’s North American headquarters are located, and a 13,000-square-foot service branch in Iselin.

Helping to fuel Konica Minolta’s growth has been bizhub, the company’s successful network imaging product line, and its transition from black-and-white to color printing. Revenues are up by 15 percent over the past two years, says Bill Brewster, vice president of marketing at Konica Minolta Business Solutions. “We’re projecting similar growth or increased growth for the next few years,” he says.

Meanwhile, the rise of Indian firms in the pharmaceutical industry has boosted the Asian demand for local real estate. Ranbaxy Laboratories Inc., the Princeton-based subsidiary of Ranbaxy Laboratories Limited, India’s largest pharmaceutical company, currently manufactures about 40 percent of its 125 FDA-approved products in New Jersey, and plans to expand its generic drug portfolio by 25 new products every year. (See “Ranbaxy Aims for Brand-Name Muscle,” page 19.)

Ranbaxy Vice President Charles Caprariello says that when the company relocated from North Carolina to Princeton in 1998, it had 90 employees and a 40,000-square-foot North Brunswick manufacturing facility. Ranbaxy has since grown to 468 employees and occupies about 270,000 square feet of office and industrial space in the Garden state.

This includes 31,000 square feet of headquarters space and a 200,000-square-foot manufacturing building in New Brunswick that the company bought two years ago. Caprariello says Ranbaxy currently utilizes more than 90 percent of the manufacturing facility, expects to grow into the rest of space within the next few years and has an option to add an additional 30,000 square feet.

Tichio says businesses that are owned and operated by Asian immigrants have added to the demand for local space. He says the immigrants have been moving away from the retail and service industries and toward office-oriented businesses such as law, marketing and accounting.

Small Asian entrepreneurs that tend to occupy from 3,000 to 7,000 square feet of space have been particularly aggressive in their leasing activity, says Tichio. “They’re committing to much more space than they currently need in the hopes of expanding within a year or so,” he adds. But if they are unable to secure such a space, he says, they will sign a short-term lease for less space in order to have “the option in two, three years to move to a larger space.”

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