Mack-Cali to Begin Office and Hotel Development at Harborside Financial Center in Jersey City
05/27/1999 Category: Leasing and Development
185,000 Square-Foot Office Building to Be Developed for Waterhouse Securities
Seven-Story Parking Garage Also to Be Developed
350-Room Hyatt Regency Hotel to Be Built on Hudson River Pier
CRANFORD, NJ--May 27, 1999--Mack-Cali Realty Corporation (NYSE:CLI) today announced that it will begin development of three projects totaling over 900,000 square feet at its Harborside Financial Center office complex on the Jersey City, New Jersey waterfront.
The projects consist of a build-to-suit, three-story, 185,000 square-foot, class A office building component above a seven-story, 440,000 square-foot, 1,100-car parking garage component; and a joint venture with Hyatt Hotels Corporation to develop a nine-story, 280,000 square-foot, 350-room Hyatt Regency Hotel. Total construction costs for the three projects are estimated to be $150 million.
Mitchell E. Hersh, chief executive officer of Mack-Cali, commented, "We believe the Jersey City marketplace is among the most dynamic in the country. As owner and operator of approximately 35% of the class A office space on the waterfront, we are thrilled to grow our presence through these transactions. The build-to-suit with Waterhouse Securities, one of the top firms in the financial services business, demonstrates our ability to respond to tenants' needs and is consistent with our strategy of controlled development. Our joint venture with Hyatt will be the first and only development of a full service hotel on the waterfront. With more office development on tap--along with our continuing efforts to finalize a joint venture for residential development on the north pier--we are confident Mack-Cali will continue to play a significant role in the development of Jersey City as a preferred corporate location."
Mack-Cali will immediately begin construction of the office building component for Waterhouse Securities, the country's third largest discount brokerage firm, headquartered in New York City. The new facility will house 185,000 square feet of corporate offices and a call center. Kohn Pedersen Fox is the architect for the new office development.
Waterhouse Securities has signed a 15-year lease for the entire office space. Mark L. Ravesloot, senior managing director at Insignia/ESG, acted as sole broker in the transaction.
David Berman, first vice president of Waterhouse Securities, commented, "Lower operating costs, fully redundant building operating systems and immediate accessibility to New York City make Harborside an excellent choice for a new high-tech facility for our growing company. We evaluated all the options along the waterfront and turned to Mack-Cali because of its excellent reputation for managing and developing premier office buildings, as well as the project's design flexibility to meet our specific needs. We are extremely pleased with Mack-Cali's responsiveness. We were able to complete this transaction from inception to final building design and lease execution in only two months."
The office building component will be built on top of a 1,100 car parking garage component, which will also be constructed by Mack-Cali. The garage will provide parking for the new office space and hotel, as well as for future projects at Harborside. In addition, the parking garage will also replace a portion of a parking lot that is being displaced as a result of the installation of the new Light Rail Transit System, which will have a dedicated station at Harborside starting in the summer of 2000.
The combined office and garage project is expected to generate an 11% unleveraged return to Mack-Cali.
In a separate transaction, Mack-Cali and Hyatt Hotels Corporation have entered into a letter of intent for a joint venture to develop a full-service Hyatt Regency Hotel, to be managed by Hyatt Corporation. The 350-room hotel will include approximately 20,000 square feet of meeting and conference facilities, full service restaurant and lounge, and a pool/health club.
The Hyatt Regency Hotel will be developed on Harborside's south pier, overlooking New York Harbor and directly across from downtown Manhattan. A perimeter walkway and a public park at the end of the pier will be included as part of the hotel project. Mack-Cali and Hyatt have completed the preliminary design of the hotel with Brennan Beer Gorman, world-class hotel architects.
Douglas G. Geoga, president of Hyatt Hotels Corporation, commented, "Jersey City's popularity as a location for business continues to increase, and, correspondingly, so will the city's attraction to business and leisure travelers. As the first and only full service hotel on the waterfront, we believe an enormous opportunity exists to serve both of these constituencies." There are 188 Hyatt hotels and resorts around the world. Hyatt Hotels Corporation and its subsidiaries operate 111 hotels and resorts in the U.S., Canada and the Caribbean. Hyatt International, through its subsidiaries, operates 77 hotels and resorts in 34 countries.
Harborside Financial Center is adjacent to the Exchange Place PATH station and is the site of a New York Waterway ferry terminal to midtown and downtown Manhattan. In addition, in 2000 Harborside will be the site of a dedicated stop on the new Light Rail System. Harborside is approximately one mile from the Holland Tunnel and one mile from the entrance/exit of the New Jersey Turnpike.
Mack-Cali purchased the 1.9 million square-foot Harborside Financial Center along with the development sites in 1996 for $292 million. Harborside's development sites, which include land adjacent to the existing office complex, as well as two piers extending into the Hudson River, is approved for 4.1 million square feet of office space, as well as additional hotel and residential space. After the projects announced today are completed, land for 3.8 million square feet of future office development will remain.
Mack-Cali Realty Corporation is a fully-integrated, self-administered, self-managed real estate investment trust (REIT) providing management, leasing, development, construction and other tenant-related services for its class A real estate portfolio. Mack-Cali owns or has interests in 253 properties, primarily office and office/flex buildings, totaling approximately 28 million square feet, located in 12 states and the District of Columbia. The properties, which are primarily located in the Northeast, enable the Company to provide a full complement of real estate opportunities to its diverse base of over 2,400 tenants.
Additional information on Mack-Cali Realty Corporation is available on the Company's website at www.mack-cali.com.
Certain information discussed in this press release may constitute forward-looking statements within the meaning of the Federal Securities law. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved. Forward-looking information is subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected. Among those risks, trends and uncertainties are the general economic climate; the supply of and demand for office, office/flex and industrial/warehouse properties; interest rate levels; the availability of financing; and other risks associated with the development and acquisition of properties, including risks that the development may not be completed on schedule, that the tenants will not take occupancy or pay rent, or that development or operating costs may be greater than anticipated. For further information on factors which could impact the Company and the statements contained herein, reference should be made to the Company's filings with the Securities and Exchange Commission including quarterly reports on Form 10-Q, current reports on Form 8-K, and annual reports on Form 10-K.