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Targeting Opportunities

"Our goal," says Mr. Rizk, "is to improve performance, not just keep it up." It is a significant goal. As 1997 neared an end, Cali’s returns appeared to be increasing by the 50% level the company achieved in the two previous sears, Mr. Lefkowitz reports.

Looking ahead, the new company expects to see a significant part of its growth in the markets opened up by the merger. "In my opinion, in addition to our core market, the Southeast and Southwest offer great opportunities, as does the West Coast," says John J. Cali.

Mack-Cali's four Arizona properties total more than 484,000 square feet. "In general, our properties are all suburban office buildings and in Arizona they are part of campus developments," he continues. "Our tenants include American Express Travel-Related Services, which has consolidated in the Phoenix area. We also did a built-to-suit for Honeywell’s R&D division."

   
  

Shaded areas represent major holdings.

Mack-Cali also owns 17 properties, totaling 2.5 million feet, in Texas, including 862,000 square feet in Dallas, 700,000 square feet in Houston and 692,000 square feet in San Antonio. The Dallas properties include Tri West Plaza, a 365.000-square-foot, 17-story office tower in the north end of the city, a section where growth is being driven by the financial services and energy industries. In Houston. where NASA and the Texas Medical Center are important employers. Mack-Cali’s properties include Katy Plaza, a six-story, 112,000-square-foot asset. The company also owns two buildings at St. James Place with of total of 174,000 square feet of office space.

William Mack sees all of the markets in which the new company has a significant presence getting stronger at a time when Mack-Cali will he negotiating numerous lease renewals. "Westchester is earlier in its recovery than the rest of Metropolitan New York." he says. "but it is coming on strong. New Jersey is strengthening on a daily basis, and its rents are going up. The suburban Philadelphia market is also strengthening. The Southwest is improving and, since we leased much of our space in that market in the early 1990s, we should expect substantial rent increases as leases turn over."

The new company also has big plans for its core market in northern New Jersey. "While we still do not see a rash of spec development anytime in the near future," says Brant Cali, "we do see several markets tightening." He adds that class A office buildings along the Jersey City waterfront are 97% occupied. "The next phase of our master plan for Harborside will be Harborside IV. We also plan to build the American Financial Exchange nearby."

At 600 feet and 42 stories high. American Financial Exchange will be New Jersey’s tallest building. Work is underway to reinforce the bulwarks that will support the tower, although no anchor tenant had been announced as of mid-December.

Mark Ravesloot, senior director of Jones Lang Wootton USA, Harborside Financial’s leasing agent, says only about 26,000 square feet of space in Harborside I, II and III was vacant or had the potential of becoming vacant as the year ended. Four tenants — Bankers Trust, Dow Jones Telerate, the American Institute of Certified Public Accountants and the Dean Witter Trust Co.— now occupy 65% of the three-building asset.

"We’re really focusing all of our efforts right now on new development." Mr. Ravesloot says. "We are working with architect Cohen Peterson Fox to work up a new master plan for future development in four smaller buildings. We’re finding strong demand from tenants in the 100,000-to-200.000 square-foot range. So we’ve broken it down to buildings that can range from 600,000 square feet to 1.5 million."

The American Financial Exchange, which would he just to the north of Harborside, is being planned with a parking site and ferry dock. It could add as much as 1.3 million square feet of office space to the Mack-Cali portfolio in one of the company’s hottest markets, its own backyard.

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