VOLUME 26 NUMBER 20 OCTOBER-DECEMBER 1996 OFFICE 101 HUDSON JERSEY CITY, NEW JERSEY PROJECT TYPE A 1.2 million-square-foot Class-A office tower with ground-floor retail built to the specifications of its major tenant. The building is the first project in Colgate Center, a master-planned, mixed-use community on a prime waterfront location that offers spectacular views and is well served by transit. It was designed to meet the special power, HVAC, and space planning needs of its target market the technology-driven operations and technical support divisions of major financial services firms. SPECIAL FEATURES Focus on building infrastructure 45-foot clear spans with 100-pound live loads throughout Eight-inch raised floors throughout À la carte building services Part of an approved master plan DEVELOPER LCOR Incorporated 101 Hudson Street Jersey City, New Jersey 07302 201-451-3300 ARCHITECT Brennan Beer Gorman/Architects 515 Madison Avenue New York, New York 10022 212-888-7663 ENGINEERS Jaros, Baum & Bolles (MEP) Severud Associates (Structural) GENERAL CONTRACTOR Morse Diesel
GENERAL DESCRIPTION Conceived and built during a difficult time for office development, 101 Hudson carefully targets the technology-driven operations and technical support divisions of financial services companies users with special space and building infrastructure needs. The developer, LCOR Incorporated, ascertained these needs through its office development experience and six months of discussions with a space search team from Merrill Lynch. The tallest building in New Jersey, 101 Hudson rises 42 stories. It is the first development in the 42-acre Colgate Center, a master-planned, mixed-use business district on the Jersey City waterfront where Colgate-Palmolive manufactured consumer products into the 1980s. The 15-year master plan calls for six million square feet of office space, along with more than 1,200 residential units, 300,000 square feet of retail space, a hotel, and a marina. When the development of 101 Hudson started, the Jersey City office market had a vacancy rate of 35 percent. Completed in 1992, the building was fully leased about 18 months later at rents that met the pro forma. THE SITE The views from Colgate Center are among the most spectacular in the world. The Statue of Liberty and Ellis Island are clearly visible to the south, and it looks as if the World Trade Center would span the Hudson River if it were to topple westward. The public transportation network serving the site is similarly impressive; the World Trade Center is three minutes away by PATH subway. Before Colgate closed on the site, it secured zoning in accordance with a master plan created by Brennan Beer Gorman/Architects, who also designed 101 Hudson. The company then demolished the existing manufacturing structures in conformity with a state-approved site cleanup plan. The city street grid was extended to the waterfront to link the development to the Paulus Hook neighborhood to the west, a recently gentrified residential area that had housed many of the workers at the Colgate plant. The master plan emphasizes high standards of design, the preservation and re-establishment of view corridors, and open space particularly along the waterfront. Colgate-Palmolive had been the city's largest employer. To attract new jobs, the waterfront was designated a state urban enterprise zone (UEZ), and 101 Hudson was able to qualify for a tax abatement that fixes real estate taxes at 2 percent of the construction costs for a 15-year period, providing a significant marketing advantage. Furthermore, tenants in the building can qualify for unemployment tax breaks, hiring tax incentives, and a waiver on sales taxes on the purchase of goods and services used on site. THE DEVELOPMENT PROCESS In 1988 LCOR offered a contract on the site with closing set for the end of 1989 in order to secure a major tenant and financing. The developer began meeting with Merrill Lynch's project team in early 1989. At the weekly or biweekly meetings, Merrill Lynch explained its requirements, and the developer refined the schematic design to meet them. As the design and basic economics of the project evolved, Merrill Lynch evaluated locations throughout the metropolitan region. Finally, the securities firm decided to pursue a New Jersey location, and among the alternatives was 101 Hudson a building that had been designed to its specifications. In August 1989, Merrill Lynch made a commitment to lease 600,000 square feet half the building. LCOR had only five months to close the deal with Colgate. It put together a traditional financing package that included equity from the State Teachers Retirement System of Ohio and debt in the form of a construction miniperm loan from the Bank of Montreal and Tokai Bank. Merrill Lynch required occupancy of its space by January 1992, which meant an aggressive construction schedule. Ground was broken in January 1990. To meet the schedule, Merrill Lynch completed its tenant installation while LCOR completed the core and shell. The building came in on time and on budget.
DESIGN The 75,000-square-foot site was large enough to allow the architects to give Merrill Lynch the large floors it wanted. The developer carried the base building specifications it had negotiated with Merrill Lynch through to the upper floors. 101 Hudson was designed from the inside out for users with high-energy and other nonstandard requirements. Slab-to-slab heights are generous 13'10" giving most of the building nine-foot ceilings over eight-inch raised floors. The live load on clear spans is a high 100 pounds per square foot. Column-free, 45-foot clear spans from the core to the outside wall on all sides are the rule accommodating the wall-to-wall installation of 15-foot square, four-workstation modules. Notched corners bring more light into the interior, an important consideration for open offices, and provide extra corner sites for closed offices. The deep clear spans were made possible by incorporating a dedicated circulation corridor in the core. Two oversized freight elevators handle the heavy pallets of paper that Merrill Lynch continually moves in. Uninterrupted power supply is a major concern for high-tech office space users. 101 Hudson's electrical system provides seven watts per square foot as the building standard, with riser capacity of up to 11 watts. Emergency generators are similarly high powered, and battery farms are installed on the mechanical floor (the 15th). Electricity is delivered to the building by dual feeds, providing redundancy. The electric utility, Public Service, supplies the electricity from its most state-of-the-art substation, which also incorporates redundancies. Building standard cooling is delivered through fan rooms on the floors, while oversized chilled water piping designed to handle 11 watts per square foot provides supplemental cooling. The building is also equipped with two domestic water feeds and nine fiber optic feeds from three vendors. The exterior design uses rich materials and textures for the first 50 feet of the building and then makes a subtle transition to precast concrete. The award-winning precast spandrels have a distinctive, molded chevron pattern. A grand entrance and lobby announce that this is a Class A building. Parking is located on four levels above the lobby. MARKETING Except for some of the small tenancies that took space on the multitenant floors, most tenants actually need the advanced power and communications capabilities that the building offers. These include Lehman Brothers, which leased 400,000 square feet; Prebon Yamane, a currency trading company; other trading operations; a compensation consultant; and a communications company that has installed a switching station to service the New York metropolitan area. Occupancy costs are a major selling point for 101 Hudson. Construction methods, measurement standards, and operating procedures combine to make rents highly competitive. In addition, the Jersey City UEZ offers incentives sales and real estate tax abatement, lower utility rates, and employment benefits that make the financial package even more attractive. MANAGEMENT 101 Hudson provides its tenants gross services while using a net lease concept. To the extent possible, each tenant has separately metered chilled water and electricity. Each tenant has an industrial cleaning contract. A work-order system allocates expenses directly to each tenant for its use of staff services. EXPERIENCE GAINED Tenants seeking technologically advanced infrastructure have found considerable built-in value at affordable prices at 101 Hudson. LCOR has become the development manager for Colgate Center and is planning a new 430,000-square-foot office building that will incorporate the same technology and infrastructure. Providing building services à la carte goes a long way toward eliminating friction with
tenants over service charges. Spending more money on the exterior would have raised rents but not necessarily have added value. By adding a granite base to a well-designed precast, non curtain wall tower, the developer was able to construct a building that is both attractive and durable. Everything that was done for Merrill Lynch made it easier to lease the rest of the building. Every element of the design was driven by a specific user need. There are no frills or gimmicks for their own sake, and the result is an outstanding, highly functional and efficient building.
PROJECT DATA LAND USE INFORMATION Site Area: 1.79 acres Gross Building Area: 1,506,000 square feet Net Rentable Area (NRA) Office: 1,200,000 square feet Retail: 20,000 square feet Typical Floor Area Typical low-rise floor: 54,000 square feet Typical mid- and high-rise floor: 28,000 to 32,000 square feet Building Height: 42 stories Floor/Area Ratio: 15 Parking: 850 spaces OFFICE TENANT INFORMATION Percent of NRA Occupied: 99% Annual Rents: $28 $32 per square foot for full-floor tenants Average Length of Lease: 5 15 years Typical Terms of Lease: Net lease, with gross services Tenant Sizes Merrill Lynch: 600,000 square feet Lehman Brothers: 400,000 square feet Most other tenants: one full floor (32,000 square feet average) or two floors Multiple tenants: floors 36 and 37 RETAIL TENANT INFORMATION Percent of NRA Occupied: 25% Number of Tenants: 2 Average Tenant Size: 2,000 square feet Annual Rents: $25 $40 per square foot Average Length of Lease: 5 10 years DEVELOPMENT COST INFORMATION Site Costs Acquisition $27,300,000 Site improvements 1,400,000 Total $28,700,000 Construction Costs Superstructure $61,000,000 HVAC 13,500,000 Electrical 8,200,000 Plumbing/sprinklers 4,000,000 Elevators 10,200,000 Fees/general conditions 16,900,000 Finishes 7,200,000 Graphics/specialties 1,200,000
Other 3,700,000 Total $125,900,000 Tenant Improvements $23,500,000 Soft Costs Architecture/engineering $3,900,000 Project management 1,600,000 Leasing/marketing 10,900,000 Legal/accounting 3,500,000 Taxes/insurance 4,300,000 Title fees 400,000 Construction fees and interest 28,600,000 Other 1,800,000 Total $55,000,000 Total Development Costs $233,100,000 DEVELOPMENT SCHEDULE Planning Started: February 1989 Anchor Tenant Obtained: August 1989 Site Purchased: December 1989 Construction Started: January 1990 Initial Occupancy: January 1992 DIRECTIONS From Newark Airport: Exit airport and follow signs to New Jersey Turnpike/Holland Tunnel (Route 78, New Jersey Turnpike Extension). Take Exit 14C, Grand Avenue. At the first light, turn right (Montgomery). In one-half mile, Montgomery crosses Hudson Street; the entrance to 101 Hudson is on the southeast corner. From the World Trade Center, Hoboken, and the Newark Amtrak station: Take the PATH train to Exchange Place. 101 Hudson is across Montgomery. Driving Time: Approximately 15 minutes in non-peak-hour traffic. The Project Reference File is intended as a resource tool for use by the subscribers in improving the quality of future projects. Data contained herein were made available by the Development team and constitute a report on, not an endorsement of, the project by ULI - The Urban Land Institute. Copyright 1996, 1997, by ULI - the Urban Land Institute 1025 Thomas Jefferson Street, N.W. Ste. 500w, Washington, D. C. 20007-5201
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