Public-private partnerships, infrastructure spending, the gas tax and a booming industrial real estate market all featured prominently during an April 30 NJBIZ-hosted panel discussion on construction and development in the Garden State.
Moderated by George Vallone, president and co-founder of Hoboken Brownstone Co., the event in Somerset included three expert panelists: Michael Hochman, partner and NJ Office Market Leader at Grassi & Co.; Michael McBride, partner and chair of the Construction Practice Group at Connell Foley LLP and Kevin Haney, president and chief operating officer at Maser Consulting PA.
While issues vary considerably in importance depending on the sector, Michael Hochman, the accountant on the panel, said taxes are always complicated for his clients. He also underscored the importance of succession planning. Having a plan in place, especially for family businesses, ensures that companies can move forward without a hitch.
Michael McBride, the attorney of the group, added that ownership is critical and the fact that the profit margins are already small in this industry, the importance of a succession plan cannot be understated. Kevin Haney, the engineer on the dais, added that a lack of a plan only benefits a business’s competitors.
The industrial market is robust now, and Haney suggested that New Jersey is keeping pace with Texas and Florida during this boom. E-commerce is a large reason for the strong market and why construction is hot. McBride pointed out that improvements the Port of Newark and the raising of the Bayonne Bridge will increase shipping to the regions, further bolstering the demand for industrial space with vacancy rates already low.
McBride also bemoaned the lack of transparency surrounding the gas tax and noted that it is unclear where and how the funds are being spent. While further discussion is expected to happen sometime soon within the Murphy administration, the transparency issue is still in question.
One topic discussed at length was New Jersey’s recently enacted law allowing Public Private Partnerships, or P3s, which greatly expands the ability of various public entities to access a new capital funding program.
McBride said that P3 projects are best utilized as a special kind of contract involved in infrastructure projects, such as the building and development of schools, hospitals, transport systems, water and sewerage systems. Additionally, in order for them to be profitable, the projects likely need to top $50 million in value.
While New Jersey has had little experience with P3s, in 2009 the state passed a limited P3 bill for higher education projects which Montclair State University took advantage of for the construction of one of its dorms.
Moderator George Vallone advised project leaders to put a team together – developer, architect, contractors, engineers – and then staying with that team throughout a project. Not only does that approach save money Vallone said, it also reduces the number of change orders. And most important, it builds stronger relationships.
NJBIZ’s next panel discussion will be May 21 on the business of Cannabis.