Mercer Commercial Real Estate - "On Sale"?

Mercer Business, Oct 2007 by Hill, Maggi S

Haines pointed to current projects underway that underscore the appeal of the area to builders. "One of my clients, OPUS East, has 280,000 square feet in two buildings under construction at PrincetonSouth Corporate Center in Ewing. OPUS also plans to start construction later this month on two more buildings totaling 120,000 square feet at Mercer Corporate Center in Hamilton. OPUS is one of the largest developers in the US, and it has a national perspective. They are under construction with 34 million square feet around the US, and they are currently very bullish."

A factor that continues to negatively impact commercial development not just in Mercer County but in the rest of New Jersey as well is the cumbersome nature of the approval process.

"These issues are exerting negative pressure on the commercial market in the long-term," noted Michael Pratico of Richardson Commercial. "In addition to increasingly burdensome municipal requirements, there are also various challenges in dealing with state agencies, including the DEP (Department of Environmental Protection) and the DOT (Department of Transportation), which seem to be getting worse."

This leads to an issue at the forefront of not only developers minds but also of most business owners in and around the county; how to prevent companies from taking their businesses (and by extension) their employees across the river to Pennsylvania, where property taxes are lower and the approval process less burdensome.

[The Mercer Regional Chamber of Commerce is holding a symposium on the topic later this month in an effort to deter-mine what needs to be done at the state and local levels to prevent the migration to Pennsylvania, Maryland, and other nearby states. Look for the report in our December issue.]

"Businesses may be leaving New Jersey because of its overall high cost of living and cost of doing business with onerous state business taxes, rising property taxes, a range of higher-than-average business taxes compared to other states, increasing energy costs, and labor rates, to name a few," says Joseph Ridolfi of Joseph R. Ridolfi & Associates.

NAI's Fennelly concurred, saying, "The Baby Boomers who have money have the ability to relocate to other parts of the country. Generally speaking, it costs more to be a resident of New Jersey compared to Pennsylvania and other states. Therefore, people will continue to seek a less costly place to live. This in turn will take our highly-educated workforce across the [Delaware] river, which in turn will decrease office demand here and increase demand in those areas where the population is growing. The people will get what they asked for, a decreasing population, and potentially lowering values."

Mercer Oaks' Haines said he wasn't seeing much evidence of outward migration as yet. "Actually, this spring one of my clients moved from Pennsylvania to New Jersey. Since 2000, several major corporations have moved facilities into the Princeton area, including NRG Energy and Tyco, both of which moved their corporate headquarters to Princeton, occupying a total of over 200,000 square feet, and they are growing," he said.