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Real EstateHere Comes the Next Generation At McBride Enterprises
Date: July 6, 1994
Location: Franklin Lakes
Title: Real Estate/Here Comes the Next Generation At McBride Enterprises
Author: Richard O. Aichele
Subject: Despite the transition, community service remains a tradition with this developer
Two years ago, Mahwah”s Ramapo College had a problem. It needed money to restore a 97-year-old gatehouse for use as the offices of its foundation, which raises funds for scholarships. Not surprisingly, McBride Enterprises in Franklin Lakes, a developer of office, industrial, retail and residential real estate, stepped forward. The company “provided a good portion of the funds,” recalls Cathy Napolitano, the foundation”s executive director. College president Robert Scott says the gesture was typical of the McBrides. The college, as a sign of appreciation, named the gatehouse for J. Nevins McBride, then the family”s patriarch. “It”s incredible how active they are in the community,” Scott says. “They give not just money but also time.”
McBride Enterprises” peers share that view. Last month, the company won the 1994 Award of Excellence for large developers from the New Jersey chapter of NAIOP, the Association for Commercial Real Estate. “We selected McBride not only because of the projects the company controls, but mainly because of its community service and involvement in areas where it does business,” says Jeffrey Horn, NJ-NAIOP”s executive director.
The company, now in its third generation of family ownership, has built more than 20 million sq. ft. since the early 1950s. It now manages more than 4 million sq. ft., of which it owns 2 million sq. ft. In addition to developing real estate, however, the McBrides have also been involved in community service for two generations. McBride Enterprises has helped St. Joseph”s Hospital, the Boy Scouts of Passaic and Bergen County, and occasionally pitches in to help with municipal needs. When Mahwah”s swimming pool and tennis facility found itself “too short of dollars in 1991 to reopen,” McBride Enterprises was one of two sponsors who donated funds, says mayor David Dwork.
While philanthropy remains a part of tradition at McBride Enterprises, other aspects of the company are changing. The most significant is a new generation, which began taking the helm before J. Nevins McBride died in May 1993 at the age of 85. His sons, Peter, 48, and David, 47, have taken charge as president and chief executive officer. Both have been active in the business for years: Peter joined the company in 1970 and David in 1985. Statistically, less than 10% of family businesses survive into the third generation, but Peter acknowledges his company is “bucking the odds.”
The transition to the next generation, industry sources say, has been made tougher by inadequate estate planning. According to observers, the McBrides have spent past months struggling with the complex legal issues involved in transferring the family business from the last generation to the present one. Admits David: “Perceptions are that succeeding generations are less competent or not as willing to work as hard as the founders. But the reality is that the IRS owns 50% of every business and of every dollar that isn”t properly disposed of before an individual dies.” He adds that survivors are often put in the difficult–if not impossible–position of giving half the value of the former generation”s estate to the IRS, while at the same time maintaining the resources needed to keep the business going. Brokers who know Peter and David say their main challenge is to be as entrepreneurial as earlier generations. “They have had considerable tax problems,” says a source. “Right now, they are in the business of preserving capital rather than developing capital.”
McBride Enterprises traces its roots back to 1898, when Frank A. McBride, Peter and David”s grandfather, started a construction business that later grew into one of the largest contractors in the state. Known then as Frank A. McBride Mechanical Contractors, the company built factories in Paterson and Woodbridge for Curtiss Wright, an aircraft propellers and engines manufacturer. In the early 1950s, J. Nevins McBride, who had earlier worked with his brothers Frank and Joe for Frank A. McBride Mechanical Contractors, branched into real estate. At the same time, McBride Enterprises, which Nevins headed, became the parent organization of seven affiliated companies–which were involved in civil engineering, general contracting, electrical contracting and mechanical contracting, among other things–some of which were operated by his brothers.
As the company grew, its activities expanded to housing projects, such as a 2,500-acre planned residential community in Franklin Lakes, as well as build-to-suit corporate headquarters for companies like Jaguar and UPS. One of Nevins McBride”s first projects in the early 1950s was an industrial park in Fair Lawn. The 180-acre site, which has more than 2.25 million sq. ft. of industrial space, is still owned and managed by the McBrides and will now be the site of their first apartment project. “Fair Lawn has designated the last 20 acres of our industrial park for its Mt. Laurel requirements,” says David. A proposal for a multi-use project including an A&P supermarket was rejected by the town. Planning is now underway to build a 300-unit apartment complex with 20% of its units set aside for low-income housing.
In addition to the Fair Lawn Industrial Park, the company developed four other sites in Oakland, Rockleigh, Wayne and Mahwah. Jaguar moved to Mahwah”s 400-acre Ramapo Ridge Office Park in 1989 and contracted with McBride for a $25-million, 200,000- sq.-ft. headquarters facility. UPS moved into the park in 1990 taking a $100-million facility. Tenants and owners in other McBride properties include Este Lauder, Willinger Brothers, Gugenheim Metals and TCI of Northern New Jersey in the Oakland Office and Technical Park. Volvo leases four buildings in the Rockleigh Office and Industrial Center for its national headquarters.
Over the coming years, McBride Enterprises “will continue to focus on office and industrial development,” says Peter. The company”s holdings, says vice president John T. Lieser, include 66 acres in Mahwah , 32 acres in Oakland and “a good chunk of land” in Wayne. “We”re always open to build-to-suit projects and activity is picking up,” he adds. Peter claims, however, that environmental difficulties are making things tough. Adds David: “We have two buildings that are slightly polluted, and we have to find the former tenants to make them clean up the place and hope they have the wherewithal to do it.”
Real estate”s future, coming out of the recession, is not too rosy, the McBride brothers say. David predicts “a very slow recovery. Nobody is making any real money in the office market today unless they have a truly unique building in a unique place,” he says. Peter believes opportunities may lie in the revitalization of urban areas in which “older vacant buildings would be recycled.” The coming years will show how far this generation of McBrides can take their companies along these directions. u
