As Jeff Schotz will tell you, Panasonic never had to be sold on Newark before it announced plans to move there in 2011. It was just a matter of finding a location that fit the company’s vision for the future.“They were going through an evolution from consumer products to business-to-business products,” said Schotz, SJP Properties’ executive vice president for leasing and marketing. “They wanted to create a new location, a new dynamic for their employees, for their customers, for the company.
“And they wanted to drive that statement by moving to a location like Newark.”
Schotz spoke Thursday morning — two years after his firm and Matrix Development Group completed Panasonic’s new North American headquarters — as he recalled one of the city’s biggest success stories in recent years. And it was just one of many projects touted during the Newark CRE Summit, a commercial real estate industry event meant to highlight rising interest in the city.
Staged by CapRate Events, the program showcased everything from the swelling pipeline of multifamily development in Newark to the role of state incentives in many of those projects. It also put on display one of the city’s newest and most cutting-edge projects, a new $30 million “indoor vertical farm” that will be operated by AeroFarms at a former warehouse in the city’s Ironbound section.
“It’s an important concept because this is a purely new tenancy, in a commercial sense, for Newark — something that we’ve never seen before and something that hopefully we’ll see more of,” said Frank Giantomasi, of Chiesa Shahinian & Giantomasi PC, who moderated a panel featuring Schotz, AeroFarms CEO David Rosenberg and others.
AeroFarm’s 69,000-square-foot project, which broke ground last week, is expected to transform a vacant former steel factory. The facility will use the company’s aeroponics technology and LED lights to grow year-round crops without sun, soil or pesticides.
And Rosenberg said the project will be AeroFarms’s ninth vertical farm, but it also will serve as the company’s new headquarters and R&D facility. That’s thanks to Newark’s location.
“We needed a place where we could attract the talent and get the talent from the nearby area or the city,” Rosenberg told the audience at the Newark Club, adding that the company also needed a pool of blue-collar labor. “We also looked for a place that had easy access to where people eat food.”
The AeroFarms project is happening with the help of a $6.55 million Grow New Jersey tax credit from the state Economic Development Authority. Tim Lizura, the authority’s president and chief operating officer, said the EDA has made about $1.2 billion worth of awards in Newark, leveraging about $3 billion investment.
But Lizura also pointed to “the greater notion” — that the state is “really there to prime the pump” rather than trying to subsidize every project in the city. He said a case study was Jersey City, where the EDA has subsidized only about 13 percent of the 24,000 multifamily units under construction or approved there; the rest, he said, are the result of the private sector trying to capture the market.
“(That) was proving the market, priming the pump — and now you look at the private development community making a significant investment,” Lizura said. “That’s where we need to get Newark to, that’s where we need to get all of our big cities to so that we can have private investment that is 80 percent of the market, and not the other way around.”
While most of Newark’s new development is residential, the city has seen pockets of commercial construction. On Broad Street, SJP Properties has all but completed Prudential Financial’s new 740,000-square-foot office tower, while Fidelco Realty Group has completed a new call center for Cablevision.
But the city has also seen momentum among smaller office tenants, according to Jackson Marsteller, a market analyst with CoStar Group. Of the 600,000 square feet worth new leases signed there in the past two years, 82 percent of them were by tenants of 10,000 square feet or smaller.
Marsteller said the market has historically been supported by the insurance sector, government and health care, but is seeing new interest from the legal, communications and logistics industries. He noted two of biggest deals in the last two years were signed by international logistics firms, a sign that the industry needs office space to manage its growing business at Port Newark-Elizabeth.
“I do see a lot of (companies) trying to move closer to their operations, especially as you start getting more international players,” said Marsteller another panelist. “As you get more international logistics coming, especially firms that used to be going into the West Coast that are now coming through the Panama Canal and over, I think you’re going to see a decent amount of expansion.”
The panel also highlighted the role of the Prudential Center, the city’s 8-year-old arena and home of the New Jersey Devils. Hugh Weber, the arena’s president, said it was an obvious place for businesspeople to entertain clients, but also that its management sees the facility as a town square for the city and its content as “an accelerant to all of the things that are happening in the community, including development.”
“It’s not just about the physical space. We don’t own any land in the city, but we hope to be additive in every single project,” Weber said, pointing to a residential project as an example. “Obviously the lifestyle of what you’re attracting is important, so having places for people to go and things to do … (and) having people come through our doors every year and having it be a destination is obviously a big part of that.”
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