Eugene Diaz (left) and Edwin Cohen, principals of Prism Capital Partners, at the ON3 campus in Nutley and Clifton — Photo by Jennifer Brown for Real Estate NJ
By Joshua Burd
Amid continued demand for high-end research and development space, Prism Capital Partners is planning a new ground-up laboratory building at its ON3 campus in Nutley and Clifton.
Executives with the firm say they have all but completed designs for the speculative, 150,000-square-foot building, which would come as part of its plan to redevelop the former Hoffmann-LaRoche property. The campus is already home to the Hackensack-Meridian School of Medicine at Seton Hall University, while it has landed commitments from several high-profile office tenants, but Prism now sees an opportunity to draw additional R&D users.
Eugene Diaz, a principal partner with Prism, alluded to the plans earlier this month during Sax LLP’s annual Real Estate Industry Update event, which was held at the ON3 campus. The developer has already leased up 500,000 square feet of existing lab space at the site — which it acquired from Roche in fall 2016 — and he said there is significant interest in its plans for the new four-story, state-of-the-art building.
“We did not anticipate the level of R&D demand, not just on the campus, but in the state overall,” Diaz said. He noted that research spending nationally and globally came to a halt during the Great Recession, but that pipeline has since been refilled.
“Coming out of it, what nobody really foresaw was this unleashing of a capital reinvestment cycle,” he added. “And that includes a significant amount being directed into research and development efforts.”
He also pointed to the fact that, over the past two and a half years, tenants have absorbed close to 2 million square feet of lab space in the Garden State. That means “New Jersey is fairly well-positioned,” Diaz said, especially when you consider the state’s heritage as a hub for research and innovation and the fact that Gov. Phil Murphy has placed an emphasis on growing industries such as technology, life sciences and biotech.
Building new lab space is significantly more expensive than a typical office building, but Diaz said Prism is benefiting from the existing infrastructure at ON3. For instance, the property came with a central utility plant with a 10-megawatt cogeneration facility, allowing it to offer multi-redundant heating, cooling and electricity and create a more efficient design for new lab space.
He believes those savings will add to the appeal of a site that already has a burgeoning cluster of research and life sciences.
“The calculus for us being able to deliver a high-quality lab building at the ON3 campus — because of the bio-ecosystem that’s there and the mechanical and utility infrastructure — is a significantly better economic proposition than anywhere else,” he said, later adding: “It allows us to produce a better building, more efficiently, at a lower cost.”
Diaz said he hopes to see the project break ground in summer or fall 2019.
The Bloomfield-based firm acquired the site in fall 2016, about four years after Roche said it would vacate its home of more than 80 years and sent shockwaves through its two host communities. But Prism has made quick and significant progress since then, attracting tenants such as Ralph Lauren Corp. and Modern Meadow, while celebrating the opening this summer of the new Hackensack-Meridian School of Medicine at Seton Hall University.