Last week, I wrote about Grow NJ and the recent awards received by JP Morgan and RBC. While I still believe these deals are wins for our local economy, there is a flip side to the coin.
Not coincidentally, Tishman Speyer last week began marketing over 150,000 square feed at 194 Wood Avenue South in Iselin. This space is currently leased to JP Morgan.
In Newark, almost 1 million square feet is being marketed in Two and Three Gateway Center. Most of that space is being vacated by Prudential, the recipient of $210 million from the EDA in 2012 to build a new headquarters building.
Panasonic received over $100 million in 2012 to move from Secaucus to Newark. The buildings they vacated have since been knocked down, likely to be redeveloped as residential.
In 2011, Pearson Education received $82.5 million when they committed to move from Upper Saddle River to Hoboken. Mack-Cali continues to market over 475,000 square feet of space for a December occupancy, but a redevelopment of the 47-acre site is much more likely than someone leasing a building built in 1973.
In all of these instances, I still agree with the tax incentives given. Keeping jobs in New Jersey is a must for our local economy. The loser in these scenarios is the landlords of the buildings being vacated. The challenge they will face is what to do with older buildings that may be functionally obsolete or simply not as appealing as new construction.
Tishman Speyer will have little problem filling their space at 194 Wood Avenue South as MetroPark is a very active submarket and their building is one of the best in Central New Jersey. However, for the Gateway buildings to be leased in large blocks, it will likely take the assistance of another Grow NJ grant, which in my mind will be money well spent.