Real estate developers and North Jersey municipalities can in fact get along, reaching compromise over the conversion of office space to residential and other uses.
I wrote a story Sunday that focused on the tensions between towns and landlords over adaptive reuse, or rezoning commercial office space — which Bergen County is glutted with — for multifamily development, where there's a big demand.
Mack-Cali Realty and Upper Saddle River have already started tangling over the 47-acre campus that publisher Pearson Education is vacating. The real estate giant would like to build luxury apartments there, since office space is at a near 20 percent vacancy rate. The borough is balking.
Having that site remain vacant will not benefit Mack-Cali or Upper Saddle River.
I interviewed quite a few developers for my article, and it is universally believed that New Jersey, with its more than 500 towns each enjoying home rule, is one of the toughest — if not the toughest — state to win approval for a project.
"In New Jersey, approvals are granted at the local level so everything is site by site, case by case," said Michael Allen Seeve, president of NAIOP, the commercial real estate group. "There is no other state like New Jersey where municipalities enjoy this much control over land use."
I was a witness to this process when I briefly covered municipal government in Montclair, where developers were routinely raked over the coals by not only the Township Council but long lines of very opinionated residents.
So how do you get a zoning and planning approvals in the Garden State? You need to listen, and be patient and flexible when it comes to dealing with local governing bodies. That's what I was told. Some of the projects I heard about took seven years to more than a decade to become realities.
KABR Real Estate Investment Partners LLC has just purchased the former Jersey Journal building in Journal Square, Jersey City, with an eye to turn at least part of the space into multifamily housing.
KABR approaches such projects gingerly with cities and towns, said partner Adam Altman.
"It's a marathon, not a sprint," he said. "The right project warrants the patience."
Yes, patience is indeed a virtue that needs to be practiced.
"Our experience with towns is if you go in there with a viewpoint toward compromise and really understanding, then most towns are reasonable," Altman said.
"Nothing happens overnight," he added. " You can't be a bull in a china shop and run in and expect them to change overnight … We've had a tremendous experience with Ridgefield Park, as an example. We've said, 'What works for you guys? And now let's use that as our starting point.'"
Somerset Development has also succeeded in securing the necessary approvals for adaptive reuse in both Wood-Ridge and Holmdel. In Wood-Ridge, Somerset was the redeveloper for part of the Curtiss-Wright factory site that is now mixed use, including retail and multifamily.
Somerset is also redeveloping the former Bell Labs campus in Holmdel, a 2 million-square-foot building on 472 acres.
So what's Somerset's secret sauce to success with towns? Early on, it seeks buy-in from not only municipal officials but local residents, said vice president Thomas Michnewicz.
In Holmdel, for example, Somerset invited town folk to an open house at the Bell Labs building where it laid out its plans — as well as a spread of food.
"We deicded to take our message to the people," Michnewicz said at a recent real estate conference. "What we found is there were a ton of people in town that wanted the ratables. They wanted their tax bills lowered."
Holmdel had expected about 500 people to show up to see its proposal. It got 2,000. Plans for the site, which will be anchored by a wellness-fitness center, are moving ahead.
What's the worse-case scenario – the "nuclear bomb," as Seeve called it — that can happen when government bodies and companies can't see eye-to-eye on the reuse of a property? Look at Connecticut.
Last month Pfizer Inc. rocked state and local officials when it announced that it planned to raze a vacant 750,000-square-foot research site in Groton, Conn. That will translate to a loss of more than $2 million in local taxes.
According to a Connecticut newspaper, a Pfizer official cited "the substantial operating costs associated with maintaining an empty facility" as one reason for tearing down the building.
Seeve suggested that to coax towns to be more amenable to adaptive reuse, real estate companies need to provide examples of where rezoning has worked, such as Wood-Ridge.
"Nothing sells like success," Seeve said.