Excerpts from feature article published in the NJBIZ magazine, April 19, 2010
As competition for tenants intensifies amid a glut of office space in the market, property owners are turning to architecture firms to refresh tired, older buildings to enhance their value and heighten their appeal for current and prospective occupants.
"In order to both retain and attract tenants, upgrades in a recession like this are almost mandated, whether you can afford to do them or not," said Matthew Jarmel, principal of Livingston-based JarmelKizel Architects and Engineers Inc.
During the first quarter of 2010, the office vacancy rate in northern and central New Jersey returned to 26.2 percent — the record high first reached during the third quarter of 2009, according to commercial real estate brokerage Jones Lang LaSalle. And with more distressed office assets going back to lenders, even landlords with fully occupied buildings have need to worry, Jarmel said. "If somebody's buying a building at a discount, they'll have the money and the ability to ... steal your existing tenants away," he said.
"We're trying to attract tenants in a market that's not particularly great," said Jon Parker, managing principal of J&B Realty, owner of 2572 Brunswick Pike, in Lawrence Township. "Long term, we're trying to make the property more valuable.” Last year, J&B hired Clarke Caton Hintz, a Trenton-based architecture firm, to redesign a new facade for the 200,000-square-foot office and warehouse facility, replacing the existing windows and adding multiple entrances; the company also is looking into installing a solar-energy system in the building.
The 40-year-old property, which Parker and his business partner purchased in 1997, is fully occupied, but Accumed Pharmaceutical, which leases 125,000 square feet in the building, will be vacating its space in the next 18 months as a result of its acquisition by generic drug maker HHP, he said. Meanwhile, another tenant, educational products company Films for the Humanities, has moved out of its 65,000-square-foot space, he said.
“Everybody wants to move into something that is brand-spanking new — or that at least looks like it's relatively new," Parker said. After construction is complete in June, the $600,000 renovation "will show the building a lot better and make it easier for us to rent it out," said Parker, who signed a 30,000-square¬foot lease at the beginning of the year with Education Affiliates, a career training firm.
With property upgrades, "there's a series of impressions that owners are trying to make with their buildings," said Marlyn Zucosky, Clarke Caton Hintz's director of interiors. "The exterior of the building when you're first approaching it, that first impression is really important."
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