High-Tech Hub For Industry a Site Selection Special Feature by Dillon Karsian

After all, the electric light bulb and the theory of relativity were conceived here, as were the transistor and advances in fiber optics, spawning a new age of communications. Even today, 3,000-plus patents are awarded in New Jersey yearly.

Relatively small in area (only Connecticut, Delaware and Rhode Island are smaller), New Jersey has nearly eight million residents. The most densely populated U.S. state, with more than 1,000 persons per square mile, New Jersey is a veritable economic powerhouse. Yet it still lives up to its designation as the Garden State: Two-thirds of New Jersey remains open space, with plenty of land earmarked for new industrial and residential development. In topography, New Jersey is a microcosm of the United States, spanning plains and forests, mountains and seashore -- 127 miles of Atlantic coastline.

Anadigics, a leader supplier of gallium arsenide integrated circuits, took advantage of New Jersey's business development incentives to enlarge its operations. Photos above and below: wafers and integrated circuits are tested in Anadigics' state-of-art lab.

Surprisingly, New Jersey remains little urbanized; its mostly suburban and rural communities promote a small-town lifestyle. Of 569 municipalities, only four in the northeastern tier opposite New York City exceed 100,000 population: Newark, Jersey City, Paterson and Elizabeth. Only 14 other communities are larger than 50,000. Trenton, the state capital, for example, has 88,000 residents.

New Jersey's post-recession recovery continues to gain momentum. This year should produce even better statistics to reflect the state's economic power as the fastest growing in the mid-Atlantic region -- befitting its ranking as the nation's eighth largest state economy, with a work force of about four million.

New Jersey residents enjoy the highest per-capita personal income in the USA, save in Connecticut, by virtue of the state's science-based, high-tech industries. And the outlook is bright: New Jersey's economy should grow by 4.6 percent in 1997.

Better Business Climate

Helping fuel this growth is state government's numerous incentive programs designed to retain expanding local firms and induce outsiders to relocate to New Jersey. At the state level, New Jersey competes with its Pennsylvania and New York neighbors, and many of the state's 21 counties offer various incentives as well. Add in custom utility rate plans to reduce energy costs, and the benefits for businesses that relocate or remain in New Jersey grow.

Gov. Christine Todd Whitman earned national recognition for pushing a 30 percent cut in personal income taxes and a host of pro-business initiatives. New Jersey's better business climate is protected by the state's Department of Commerce and Economic Development, headed by Commissioner Gualbarto Medina. Abetting those efforts since 1974 is the New Jersey Economic Development Authority (EDA).

The EDA is the state's financing agency for economic development, and its programs are called aggressively competitive in the area of loans, loan guarantees and tax-free and taxable bond packages. In the first nine months of 1996, the EDA pumped nearly $500 million in loans and guarantees into the New Jersey economy, priming investments totaling more than $700 million

"These EDA-backed projects are creating 7,500 construction jobs and nearly 2,500 permanent jobs," says Medina. "And they will help keep 5,000 jobs here in New Jersey." EDA Chairman Anthony Coscia reports that strong figures "underscore renewed confidence in the New Jersey economy."

Coscia said effective partnerships with the private sector are making capital more available and affordable. "The EDA has positioned itself to react quickly, both to counter financial gaps resulting from market changes and to help businesses take advantage of new opportunities for growth," he says. The state's business development strategy already is paying substantial dividends. Two new programs are giving companies additional financial incentives to operate in New Jersey. The Business Employment Incentive Program (BEIP) allows direct grants for up to 10 years tied to a portion of state income taxes withheld from new employees. Wage and other job criteria vary by location. BRAG, the Business Relocation Assistance Grant program operated by the state commerce department, provides relocation assistance to firms creating at least 25 full-time jobs. Businesses relocating to New Jersey as well as in-state companies moving to larger quarters may be eligible.

Bristol-Myers Squibb Co. operates research facilities in Princeton, N.J., part of the pharmaceutical industry that is New Jersey's economic superstar.

New Jersey's largest utilities, Public Service Electric & Gas Company (PSE&G) and GPU Energy, offer rate and service incentives to new business customers. Last year, for example, PSE&G helped three dozen expanding or relocating firms that created a total of 5,500-plus jobs.

Incentives Fuel Growth

One of the first companies to take advantage of the state BEIP grants was the 24-hour news, talk and information network MSNBC. The Microsoft-NBC joint venture expanded to $50 million facilities in North Jersey, creating 375 new jobs while maintaining nearly 800 others.

Paired with the grant is an NBC and Microsoft commitment to provide $500 million over five years to fund their venture, which includes both a cable and interactive news division. EDA is issuing up to $150 million in bonds, with proceeds to purchase machinery and equipment for MSNBC, as well as make improvements to the Secaucus facility in Hudson County. PSE&G is providing special pricing and services.

Another recipient of business development incentives is Anadigics, a leading supplier of gallium arsenide integrated circuits used in cable and satellite TV, and in fiber optic and wireless communications. BEIP benefits and GPU Energy rate incentives encouraged Anadigics to enlarge its operation in Warren Township in Somerset County last summer.

An abandoned, contaminated electronics factory was remediated and is being renovated by Anadigics, a $35 million-plus project to accommodate 250 new high-tech jobs that will pay an average $34,000 per year. The semiconductor manufacturer was courted by Colorado, New York and Ohio, but chose New Jersey for the incentives and labor pool, explains facilities manager Craig Phillips.

"Expanding our facilities is essential to fulfill our goal of becoming a worldwide supplier of radio frequency and microwave solutions using gallium arsenide integrated circuits," says Anadigics President Ronald Rosenzweig.

"Anadigics is clearly a leading-edge, high-technology company whose growth captured the attention of other states," notes GPU Energy President Dennis Baldassari. "Our ability to offer more than routine energy services helped make Anadigics' expansion in New Jersey possible."

Look Who's Expanding

State and utility incentives also helped convince Barnes & Noble Inc., the nation's largest bookseller, to locate its new $32 million, 340,000-sq.-ft. warehouse and distribution center in South Brunswick, Middlesex County, over several out-of-state sites.

Other recent expansions aided by EDA incentives include Coopers & Lybrand L.L.P., one of the world's leading professional services firms, and AT&T spin-off Lucent Technologies, which includes the renowned Bell Laboratories. Coopers & Lybrand added 650 jobs -- average salary: $63,000 -- at new offices on the Hudson River waterfront in Jersey City. Four hundred jobs are transfers from Manhattan.

Lucent will develop high-technology centers in Piscataway and Eatontown totaling nearly a quarter-million square feet and operated by a staff of 750 specialists, two-thirds of those new hires. At Piscataway, Lucent will develop and manufacture cellular phones and other digital wireless products. Bell Labs design engineers and product managers based in Eatontown will develop new generations of telephones and telephone answering systems. Lucent is due a $500,000 training grant from the state.

Curtain Going Up In New Jersey New Jersey's Performing Arts Center is due to open Oct. 18.The last great performing arts center to be built in this century, the New Jersey Performing Arts Center (NJPAC), designed by architect Barton Myers, is scheduled to open Oct. 18, 1997. Developers hope it will rival New York's famed Carnegie Hall. The $180 million first phase of NJPAC, nearing completion on a 12-acre site on the Newark riverfront, includes Prudential Hall, a 2,750-seat, all-purpose theater; Victoria Theater, a 500-seat playhouse, two restaurants and other amenities. The NJPAC will join dozens of performing arts theaters across the state that host a myriad of ballet, opera and orchestra performances. In addition to the high-brow side of New Jersey, there are multiple opportunities for recreation that include pro sports and horse racing; hunting, fishing, hiking, golfing, even snow skiing; the New Jersey State Aquarium in Camden, the Liberty Science Center in Jersey and 60 other museums. Who could forget Atlantic City, home of the Miss America Pageant and 13 hotel/casinos? Its white sand beaches are part of New Jersey's 127-mile coastline, and make the Jersey shore ideal for swimmers, sun-worshipers and salt-water anglers. If shopping is your idea of fun, New Jersey's the place, with two dozen retail centers larger than 1 million square feet. --Dillon Karsian

"Selecting New Jersey as the site for these centers was easy," explains Carly Fiorina, president of the Consumer Products unit of Lucent Technologies. "We know this state. We know its people, the caliber of its schools and universities and its transportation facilities. And, importantly, this is a state that makes it easy for business to do business." In recent months, a wide range of companies have opted to expand or locate in New Jersey, primarily in the state's central and northern sectors. Among them: Bayer's Consumer Care Division, which occupied a new $28 million headquarters in Morris Township, creating 200 new jobs. Bristol-Myers Squibb's new 162,000-sq.-ft. North American Shared Services Center at Nassau Park in West Windsor in the Princeton area will be staffed by 550 employees -- 200 of them transferred from outside New Jersey. PSE&G assisted in clinching the lease deal by helping finance infrastructure improvements to the building through an affiliated company. Akcros Chemicals America is constructing a plant in New Brunswick to manufacture ultraviolet and electron beam curing chemicals -- environmentally friendly, solvent-free industrial coatings, inks and adhesives. The British company's U.S. operation combines businesses that have supplied North American industry for more than 60 years. An international air cargo center of nearly 300,000 square feet being built at Newark International Airport is due to begin operations in early 1998 with 440 employees. The $42 million complex, which received $32 million in EDA bond financing, will be anchored by Scandinavian Air Systems and Virgin Atlantic Airways.

During 1996, Newark International completed its state-of-the-art monorail passenger shuttle, and opened a new $120 million international arrivals building, nearly doubling the capacity of the old terminal.

Exporting Growth

Gov. Whitman actively champions international trade, and New Jersey is a leader in both direct foreign investment in the state as well as in exports. Her zeal moved New Jersey into fifth place nationwide with $2.7 billion in direct foreign investment in 1994, up from $57 million in 1993. More than 1,300 foreign companies are located in the state.

New Jersey is the ninth-largest state in exports, which are expected to reach $21.6 billion in 1996, and increase to $23.7 billion in 1997. Products exported to 204 countries include pharmaceuticals, chemicals and allied products, industrial machinery, computer equipment, electronics components, agricultural products and primary and fabricated metals.

Gov. Whitman led 90 business and academic leaders on trade missions in Israel and France in 1996, which could boost foreign investments and exports further. Israel, the state's sixth largest trading partner, imported New Jersey goods valued at $740 million in 1995, including transportation equipment, industrial machinery, electronic equipment and fabricated metals.

France was New Jersey's 10th largest importer, with goods valued at $565 million in 1995. Leading exports were chemicals and pharmaceuticals, transportation equipment, instruments and related products. Canada is the largest trading partner, followed in descending order by Japan, Korea, the United Kingdom, Germany, the Netherlands, Mexico and China.

Be Kind to Business

In addition to enacting a 30 percent personal income tax cut, the Whitman administration's pro-business, pro-economic growth agenda has lifted the tax burden from 380,000 low-income taxpayers altogether.

State officials have continued a broad, collective effort to earn a business-friendly label for New Jersey. Recently, specific initiatives have:

• Eliminated the sales tax on Yellow Pages advertising.
• Cut business taxes by a total of $140 million. Included was the elimination of the corporation tax surcharge of 0.375 percent.
• Restructured the corporation business tax formula to keep New Jersey competitive with other states.
• Enacted the region's lowest corporate tax rate for small business.
• Established a sales tax exemption for broadcast equipment.
• Enacted a property tax deduction for income-tax return filers.
• Produced tort reform to cut down on frivolous lawsuits and unreasonable punitive damages.
• Increased Urban Enterprise Zones, which offer tax and job incentives, to 27.
• Finally, helped spark a net increase of nearly 150,000 private-sector jobs. The state's unemployment rate, though down, still hovers in the 6 percent range -- higher than the national average.

High Tech Courted As with any state seeking blue-ribbon industrial development, high-tech firms are prized in New Jersey. Annual R&D outlays increased 15 percent in four years, and are expected to surpass $7.6 billion in 1996, reports the Research and Development Council of New Jersey. The New Jersey Commission on Science and Technology continues to encourage the in-migration of biotechnology and other high-tech companies. The commission already has sponsored 12 advanced technology centers, including those for biotechnology medicine, food, ceramic research, hazardous substance management and computer aids for industrial productivity. While New Jersey seeks new high-tech companies, it already ranks fourth among the U.S. states in such ventures, with more than 140,000 scientists, technicians and engineers. In fact, the state accounts for about one-quarter of all privately sponsored R&D in the USA. It was the birthplace of the nation's first R&D lab, created by Thomas Edison in Menlo Park. New Jersey has deep strength among biotechnology and R&D leaders, including Johnson & Johnson, Hoffmann-La Roche, Schering-Plough, American Home Products, Bristol-Myers Squibb, Warner-Lambert, Sandoz, Bell Laboratories/Lucent Technologies, Allied-Signal, Colgate Palmolive, Wyeth-Ayerst, Ciba Pharmaceuticals, Bellcore, National Starch & Chemical, Rutgers University and the University of Medicine & Dentistry of New Jersey.

Matrix on Road to Success Volkswagen's distribution center in South Brunswick, N.J., reflects the warehouse-consolidation trend. Matrix Development Group continues to follow the road to success -- which, for the Cranbury,N.J.-based firm, happens to be the New Jersey Turnpike. For the past 15 years, Matrix has focused on developing its 900-acre light industrial park, CenterPoint, at exit 8A. More recently, Matrix has been working on its 553-acre Northeast Business Park at exit 7A . Still further south, in Mount Laurel in Burlington County, is the developer's latest venture and site of one of New Jersey's major deals during 1996. Matrix will build a campus facility for Okidata, consolidating operations from six locations. New Jersey is benefiting from the trend by industries to consolidate warehouse space. Matrix delivered a build-to-suit, 325,000-sq.-ft., high-tech parts distribution building for Volkswagen, reports Matrix official Paul Rubincam. VW chose to give up somewhat obsolescent space at four facilities along the East Coast from New York to Florida, and to occupy slightly smaller but more functional space to serve the same region, he said. --Dillon Karsian

Sometimes called the nation's medicine chest, with good reason, the state hosts one of the largest concentrations of pharmaceutical companies -- more than four-score brand name and generic drug producers. This superstar of New Jersey's economy, the nation's pharmaceutical core, continues to grow, largely ignoring general business cycles.

With approximately 120,000 workers, the chemical industry is New Jersey's largest manufacturing sector, producing about 10 percent of the nation's plastics. In R&D alone, chemicals are a billion-dollar industry; chemical products sales exceed $30 billion annually.

The Garden State also plays a stellar role in telecommunications and electronics. AT&T's far-flung, multifaceted operations across New Jersey-- 50,000 employees in nearly 20 million square feet of space -- have developed concepts and products to pioneer today's information age. The regional phone company Bell Atlantic is now installing a fiber-optics cable network to serve business and homes throughout the state.

Economic Essentials

Education is critical to any thriving economy, especially true in New Jersey's science-oriented, high-tech environment. The state's colleges and univerities are among the nation's finest, including Princeton, Rutgers, Stevens Institute of Technology, New Jersey Institute of Technology, Fairleigh Dickinson University, Seton Hall University and the University of Medicine & Dentistry of New Jersey -- the nation's largest university in the health sciences.

It's no wonder that the region flanking U.S. Route 1 from Rutgers University in New Brunswick in the north to Princeton University in the south is New Jersey's very own high-technology valley. To name just one, the David Sarnoff Research Center, which conducts pioneering studies in advanced video technology, optoelectronics, solid state physics and communications, is located along this highway, along with a number of other high-tech research ventures.

Another factor critical to New Jersey's success as an economic giant is location. The major corridor state in the Boston-Washington megalopolis has one-quarter of the nation's markets and consumers within a day's drive.

New Jersey has the transportation requisites: an integrated network of local, state and interstate highways, deepwater ports in the northern and southern sectors, Newark International Airport in the NY-NJ metro area and Atlantic City International at the casino capital in the south, some three dozen smaller public and private aviation facilities, plus more than 400 heliports and helistops (landing sites) scattered across the state.

Newark International is a dominant international gateway for a quarter-billion passengers and a half-million tons of air cargo yearly. Ten minutes north of Newark and only six miles from Manhattan is Teterboro Airport, one of the busiest general aviation airports in the world. Many of the region's business and manufacturing companies regularly use Teterboro's air transport services. Mercer County Airport, near Princeton's high-tech corridor, records a healthy 180,000 landings and takeoffs annually on three runways.

Ports for Global Markets

Deepwater ports in North and South Jersey enhance the state's stature as a global marketer. The complex at Newark/Elizabeth is one of the world's largest containerized cargo ports (2,200 acres) and the nation's busiest in terms of tonnage moved -- more than 12 million per year. Nearby Port Jersey in Bayonne (500 acres) handles the bulk of foreign cars entering the country as part of the complex's Foreign Zone status, one of four in New Jersey.

South Jersey's Delaware River ports also move millions of tons of general and containerized cargo. Camden, the largest, with 11 deep-water berths, is a major East Coast lumber terminal. It also ships steel and ferrous scrap metals. The port's immediate proximity to Interstate 676 and rail transport are important advantages. The region includes the smaller ports of Paulsboro, Gloucester City, Florence/Roebling, Salem and Bridgeton.

Quick access to the NJ Turnpike, traversed by some 200 million vehicles yearly, bolsters growth of seagoing port cargo volume and passenger traffic for Newark International Airport. At Atlantic City International Airport, the 44-mile Atlantic City Expressway heads westward toward Delaware River communities. The north-south, 173-mile Garden State Parkway, whose annual traffic volume exceeds 300 million vehicles, is one of the nation's most heavily traveled highways.

With more highways and railroad track per square mile than any other state, people and products move within, through and beyond New Jersey to reach 60 million people and markets in a dozen states overnight. This is a catalyst for attracting industry.

And because the state serves as a major East Coast warehouse/distribution center, New Jersey is home base for trucking firms. More than 400,000 trucks transport freight daily within and through New Jersey.

Survival of the Fit

Like its closest neighbors, New Jersey has evolved into an information-based, service economy. Its manufacturing sector now employes fewer than a half-million workers -- less than 13 percent of the state's work force. Most of the transformation -- from factories to offices, laboratories, and warehouse/distribution facilities -- took place during the past two decades, with the '80s bringing the most radical physical changes to the Garden State's landscape.

New Jersey's economic power became more evident in that period, as the state experienced substantial (and continuing) growth from within, while exhibiting no real dependence upon New York City for business and back-office relocations. The 1980s fairly vibrated with real estate development. Office construction began in earnest in Bergen County, which faces Manhattan, abetted by companies leaving the Big Apple for the "Joisey" suburbs. The exodus saw commercial growth move westward into Passaic, Essex and then south into Union County. Hudson County's office boom arrived later in the decade, when denizens of lower Manhattan's financial district crossed the Hudson River to occupy gleaming commercial towers in Jersey City and Weehawken. The office development craze intensified, and the westward push continued with office complexes also springing up along major state roads in Morris County, while bypassing rural Sussex in the northwest and ignoring verdant Warren, very lightly touching Hunterdon and impacting Somerset. Middlesex and Mercer counties, traversed by the U.S. Route 1 high-tech corridor and the NJ Turnpike, received a good share of the era's speculative office construction, particularly the Greater Princeton region. Monmouth also saw some limited activity. And Trenton got virtually none except for some privately executed, publicly sponsored redevelopment projects. Little affected by the rolling tide of office building were the southern counties of Ocean, Atlantic and Cape May in the east, and Burlington, Camden, Gloucester, Salem, and Cumberland in the Delaware Valley. Actually, Burlington, the largest in land area at more than 800 square miles, reaches from east to west, spanning the state from the Atlantic to the Delaware River. New Jersey's office construction surge faded as the decade closed. The state had approximately 200 million square feet of a vastly overbuilt product, three-quarters as rental space and more than 25 percent vacant. That volume translates to more office space than the metro markets of Boston, Philadelphia, Washington, D.C., Atlanta, Dallas and Denver. Only New York, Chicago, San Francisco and Los Angeles are larger. How Does Industry Grow? The industrial development of the 1980s -- primarily light manufacturing and warehouse/distribution buildings -- was considerably more orderly. Again, it began in Bergen -- the state's most populous and wealthiest county. There was heavy activity in the North Jersey meadowlands in parts of Bergen, Hudson and Essex counties, then spreading around.

Prosperity New Jersey: Public-Private Partnership "Prosperity New Jersey is not just another commission, formed and forgotten." So reports James T. Prior, editor-in-chief of New Jersey Business. The statewide public/private partnership was created by Gov. Christie Whitman to bring together top leaders of industry and government, as well as education, labor and the environment, to create and implement strategies to make New Jersey a place where companies can grow. Finn M. Caspersen, chairman and CEO of Beneficial Corp. of Peapack-Gladstone, and state Commerce Commissioner Gualberto Medina were named co-chairs to represent the private and public sectors. "Caspersen, an outspoken champion of commerce, wasted little time in getting the wheels of progress turning," Prior reports. "The governor wanted to allocate $5 million to Prosperity New Jersey, but Caspersen said $1.5 million was enough for the fiscal 1995-96 year," says Prior. "It's $1 million for 1996-97." "We did not want to be dependent on a state subsidy," Caspersen told journalists. "We need independence. Our job is to be the voice of the free market." Caspersen says the State of New Jersey needs to promote itself and pay more attention to the needs of business, counter corporate raids by other states and capitalize on its assets. "When was the last time you heard about the Route 1 High-Tech Corridor?," he asks rhetorically. Now, Steve J. Kukan, area development chief for Public Service Electric & Gas for more than a quarter-century, has taken over as executive director of the 100-member Prosperity New Jersey. He is one of the state's most knowledgeable private-sector executives in the areas of economic development and state government. The group now also comprises another 45 business leaders called Business Ambassadors, and is headed by Thomas Bracken, president and CEO of CoreStates NJ National Bank, and Stan Gale of Gale & Wentworth. Members of Prosperity New Jersey have conducted their first Town Meeting, a forum in which Mercer County business executives discussed their problems and potentials with senior-level staff from 10 state agencies. Similar meetings are planned for every county. --Dillon Karsian

Industrial complexes rose along highway corridors in Central New Jersey, south along the New Jersey Turnpike and down the Delaware Valley. New Jersey has some 750 million square feet of all types of industrial facilities, with a current vacancy rate of about 8 percent.

Successful industrial complexes total tens of thousands of acres along Route 130 in Burlington County, through Camden County and I-295 along the Delaware River in Gloucester County. Burlington's freeholders (governing body) have initiated efforts to develop a South Jersey Food Distribution Center on 660 acres at the turnpike and Route 30.

Cumberland County, which covers nearly 500 square miles and has plenty of available space served by rail, is undergoing some commercial and industrial expansion. Agribusiness is complemented by such household names as Progresso Foods, Pillsbury and Owens-Illinois. New Jersey's glass manufacturing industry remains the county's economic base. Durand Glass and Wheaton Industries are major producers.

Across the state, in Atlantic County, the growth of the hotel/casino industry promotes an influx of companies to serve those firms. The economic base comprises fine china production, agriculture, yacht building, glass, plastics, pharmaceutical research and tourism. The Atlantic Economic Alliance manages a half-dozen business parks in the region, where the gaming industry last year provided 45,000 jobs and generated revenues of $4.6 billion.

The 1990s have seen real estate begin to recover. Development of both office and industrial facilities has begun again, but predominantly on a build-to-suit, not speculative, basis. Industry leaders expect increasing demand and decreasing supply of Class A space to promote new construction in 1997. SS

-- Dillon Karsian is a Hackensack, N.J.-based business, financial and real estate writer and a former president of the National Association of Real Estate Editors.