New Jersey is struggling to redefine itself in an increasingly post-suburban world, one in which yesterday’s office complexes — with their acres of parking lots — don’t meet the needs of today’s cutting-edge companies and their employees.
For the state’s planners and real estate developers who are trying to stay ahead of this transition, the situation offers a mix of opportunity and challenges.
One project that presents both — possibly to an unprecedented degree — is the transformation of the shuttered Fort Monmouth army base and its 1,126 acres of Monmouth County shore land into a hub for living, working, and creating in the 21st century.
When the Department of Defense announced that the base would close in 2005 as part of its Base Realignment and Closure program, the surrounding communities predicted an economic disaster. Indeed, 5,600 direct jobs were lost or transferred out of state — many of them belonging to scientists and engineers.
But three years after the base finally closed in 2011, the agency charged with privatizing and overhauling the property is seeing early signs of success in its drive to convert Fort Monmouth into a planned community unlike any the state has seen.
If the agency succeeds, in 20 years the fort will be entirely owned by private operators who’ll build and manage four independent housing developments, four town centers, three tech-industry campuses, two hotels, a spa, a golf course, a healthcare and education facility, hundreds of acres of contiguous green space, and other retail, dining, and recreational amenities.
Following a state-approved master plan to transform the parcel, the Fort Monmouth Economic Revitalization Authority (FMERA) is touting the completion of new building that will serve as part of a world headquarters for a relocated data-management company, along with the conversion, sale, and agreement of sale of several prominent on-base facilities.
But three years into a 20-year plan, 14 buildings remain on the market, and real estate agents working on the properties acknowledge that despite the location’s many assets, office space can be a hard post-recession sell.
Working in cooperation with the communities of Tinton Falls, Eatontown, and Oceanport that host the former base, FMERA officials say they’re on their way to reclaiming or even doubling the jobs that were lost or transferred when the base closed. Using tax incentives allocated in the New Jersey Economic Opportunity Act of 2013, they intend to attract $1.5 billion in investment by clearing 70 percent of existing buildings and spending $50 million on infrastructure upgrades.
Their goal: 1,585 housing units; 300,000 square-feet of nonprofit, civic, government, and educational space; 500,000 square-feet for retail; and 2 million square-feet devoted to offices, research, and other commercial uses. By targeting firms that specialize in cutting-edge information and communications technologies, the FMERA is hoping to capitalize on the county’s exceptionally high income level, its educated workforce, and the fact that young college graduates like to live, work, and play in the same area.
However, filling all that office space might present a challenge. Though the fort technically lies within the Edison labor market, which houses the state’s main tech corridor, Monmouth County suffers from a 13 percent office-vacancy rate, not including the under development Bell Labs site in Holmdel or the fort itself. With these buildings added to the calculations, the vacancy rate climbs closer to 30 percent.
“The need for office space is at all-time lows,” said of Paul Giannone, executive vice president of Cushman & Wakefield of New Jersey, master broker of the project. “Capital flows are starting to fund office space again but there’s a change in thinking. Companies want to reduce their per-person footprint to save money, and they’re looking to give easy access to mass transit and local amenities.”
Lucky for Fort Monmouth marketers, the property sits just a quarter-mile from the NJ Transit Little Silver station on the North Jersey coast line to New York and in proximity to a new Garden State Parkway exit and the beach. They’ll also retain 40 percent of the fort as contiguous green space — another draw for the contemporary singles and families they hope will inhabit the new housing and workspaces.
“It’s almost like a city unto itself,” said David Nuse, deputy executive director of the FMERA.
In 2012, the New Jersey Economic Development Authority agreed to buy half of the fort from the army for $1 and hired staff to form the FMERA and manage all aspects of the redevelopment. In exchange, the agency will share its sales profits with the military branch and phase itself out once it sells off this portion of the property’s facilities and land. The FMERA is under contract to buy the remaining acreage from the army at fair market value early next year.
The FMERA operates on a planning and administrative budget funded almost entirely by a grant from the federal government, with a small portion coming from the state. As it processes sales, the expectation is that it will be able to fund its own operating budget and the demolitions that don’t get subsidized by developers.
In addition, the state is letting the agency keep 50 percent of sales tax generated by onsite businesses for further redevelopment use. The arrangement won’t last forever, since the agency will close once it completes its business.
Until then, it can incentivize investment under two Economic Opportunity Act programs that assign extra provisions to the state’s only closed military base. Plus, the municipalities themselves are free to offer their own incentives.
The FMERA’s biggest success so far? Completion of the first phase of a $100 million construction project that will house the relocated CommVault data-management company’s new world headquarters. Once crews finish the 650,000 square-foot facility, the data-management firm hopes to employ 2,500 workers at the site.
Though Oceanport leaders complained about CommVault’s short-distance move from Oceanport to Tinton Falls, the mayor of Tinton Falls says he’s thrilled that he and company executives easily negotiated an 18-year graduated tax-abatement program.
“Every part of this plan just seemed to fall into place for us,” said Mayor Gerry Turning.
Though the FMERA had anticipated building housing and retail first and then following it up with small tech companies and business incubators before attempting to secure corporate anchors, the CommVault project and the decision of the J.F. Kiely Group real estate firm to set up corporate HQ in historic Russel Hall, puts the agency ahead of schedule. Kiely will also lease office space to other firms and is negotiating to buy and upgrade the on-site pistol range and open it to the public.
“This is a once in a lifetime opportunity to develop 1,100 acres in the heart of Monmouth County,” President John Kiely said.
So far, several other entities have viewed this proposition with promise. The AcuteCare system of intensive-care clinics is renovating the former Patterson Army Hospital in Oceanport, which had been slated for demolition, for use as a nursing home and a federally funded outpatient hospital for the elderly in early 2015.
Elsewhere at the fort, Monmouth County has opened a public rec center and outdoor pool, and Tinton Falls is opening a school. The HovWest Land Acquisition firm has an agreement to convert a 64-acre parcel known as “Howard Commons” into 275 townhomes (including 20 percent that will be designated as “affordable”), retail, and public recreation.
Additionally, the FMERA has awarded contracts to operators for the marina and waterfront restaurant, as well as to developers who will market historic officer housing and promise to build housing for homeless veterans.
In 2013, Cushman & Wakefield held 150 site-familiarization tours and meetings with investors, developers, and employers. The FMERA also sponsors periodic public driving tours. At the end of the year, the FMERA hosted the New Jersey Technology Council’s Data Summit and Expo to showcase the property to more than 225 tech professionals from the Northeast.
The FMERA is soliciting RFPs for additional walkable residential communities, a Main Street-style live-play “lifestyle center,” and two tech campuses. It also touts Princeton University’s desire to test driverless vehicles on a potential future course. Further, it’s looking to interest buyers in a fitness center, firehouse, chapel, and school and approximately one dozen other buildings. Additionally, the 20-year plan calls for a conference hotel near the golf course, a medical education campus and a boutique hotel and spa.
Members pledge to keep the golf course open during and after the transition period. On October 1 the agency will host the first of three auctions to liquidate assets like furniture, building materials, and mechanical and electrical equipment from the buildings it plans to demolish.