Hanover Crossroads, 107,000-square-foot shopping center developed by Key Properties LLC, is approaching the final stages of construction on East Hanover Road in the Cedar Knolls section of Hanover. Anchor stores T.J.Maxx, HomeGoods, Five Below and ULTA Beauty opened in mid-August. — Courtesy: Key Properties LLC
By Joshua Burd
When it came to location, there was no doubting the appeal of the shuttered Berlex Laboratories site in Hanover. The 43-acre parcel sat at the corner of two busy thoroughfares — Ridgedale and Hanover avenues — and in the heart of a densely populated pocket of Morris County.
It was everything else about the site that gave pause to a prospective developer back in 2004.
“We liked the area a lot and we liked being at the crossroads of Ridgedale and Hanover,” said David Schlussel, co-managing partner of Key Properties LLC. “On the other hand, you had this abandoned group of laboratory buildings that hadn’t been in productive use (since 1995). The site was run down, and we knew that this site had … certain environmental problems.”
But despite its concerns, Key Properties saw an opportunity that compelled it to acquire the site and move ahead with a redevelopment plan. Among other possibilities, the firm saw the potential to build a new retail center that could help spark the surrounding area.
The developer has finally unlocked that potential.
Following an environmental cleanup, a lengthy entitlement process and several hurdles along the way, Key Properties has marked the completion of a 107,000-square-foot shopping center known as Hanover Crossroads. The complex at 110 East Hanover Ave. became fully leased within 15 months of breaking ground — anchored by major tenants such as T.J.Maxx, HomeGoods, QuickChek and AutoZone — as other new retail projects have taken shape nearby.
What’s more, about a third of the former Berlex campus has been transformed into a 78-unit affordable housing community developed by Ingerman. And Key Properties is now looking to build a solar farm on the remaining acreage.
“This property sat fallow for 20 years,” said Schlussel, who leads the Teaneck-based family-owned firm with his brother Marc Schlussel. “To remediate a brownfield site and see it turned into affordable housing and a new shopping center is very exciting. Now we are setting our sights on adding green power to complete the site’s transformation.”
The property, located in the Cedar Knolls section of Hanover, is part of a changing corridor that now features a three-year-old, 78,000-square-foot ShopRite and a pipeline of additional retail development. Nearby, developers are planning a 180,000-square-foot shopping center anchored by a nearly 90,000-square-foot BJ’s Wholesale Club.
Of the former Berlex site, Schlussel said “it’s a dynamite location — and that we knew from the start” when a former partner introduced Key Properties to the campus in 2004. Although the firm’s principals had mixed feelings at the time, they saw a stretch of Hanover Avenue that was perhaps underserved when it came to modern retail space.
“We were looking at possible alternatives — not necessarily retail — because we liked the location a lot,” Schlussel said. “But in that process we really kept going back to retail.”
The firm acquired the property later that year and went on to secure a brownfield designation from the state Department of Environmental Protection. Working alongside Berlex — which was acquired by Bayer Healthcare in 2006 — the developer spent the next several years tackling a cleanup that included soil removal and installing caps on two parcels totaling about seven acres.
In the process, local officials began to take stock of what had become a cluster of obsolete lab and manufacturing complexes along Hanover Avenue, many of them with environmental concerns. The former Berlex site was among them, giving way to the municipality’s decision to subdivide and rezone the property in 2010 from office and industrial to retail and multifamily affordable housing.
Key Properties then sold the 16-acre residential portion to Ingerman, which completed the 78-unit, 100 percent affordable community now known as The Willows at Cedar Knolls in 2013.
Once the developer was ready to move forward with the retail component, Schlussel said “the response (from tenants) was really quite good.” An earlier version of the plan that called for a Lowe’s Home Improvement Store fell through in 2014. But over the past year, the firm and brokers with Welco Realty have attracted a roster that includes not only T.J.Maxx and HomeGoods, but also Five Below, ULTA Beauty and MedExpress, with the first tenants taking occupancy this past spring.
The developer then announced in mid-August that Hanover Crossroads was fully leased, thanks to commitments from Old Navy, IHOP and a yet-to-be-named Italian restaurant. It was a milestone for the project, especially in a time when operators have become more deliberate in their approach to new brick-and-mortar locations.
“I think that retailers in general are not expanding as aggressively as they had been several years ago,” Schlussel said, noting that “adding new locations is just a longer process” for tenants.
Key Properties has since started construction on the restaurant pad, which will be the final piece of the new commercial development. But the firm has also tried to think ahead when it comes to the design of the development. Namely, it provided several feet of clean fill between one of the caps and the parking lot that sits above it, enabling tenants to install underground utility lines or complete other improvement work without disturbing the capped area.
“The idea of establishing a cap well below the parking lots of the buildings wasn’t actually based on our experience in the past, but really just looking to the future,” Schlussel said. “Because one of the things you try to build into a project, in general, is flexibility … so you want to have a building that has some flexibility as to how you divide it.”
In the meantime, the firm is looking to go one step further in repositioning the 43-acre property. Local officials have granted preliminary approvals for Key Properties to install a solar farm on a roughly three-acre portion of the site. And while it still needs approvals from the EPA and final site plan approval, it sees the solar array as a productive use for a portion of the parcel that is bound by a low-occupancy restriction.
What’s more, the project could help defray power costs for the retail tenants at Hanover Crossroads. Schlussel also noted that generating clean, renewable energy would provide a fitting conclusion to a remediation and redevelopment effort that goes back more than a decade.
“We like the idea of being able to do something like that, and to have something … that also might have some economic benefit, along with the whole ‘brown to green’ (concept),” he said. “It’s not going to be a big money maker — it’s just not the nature of these types of projects, and we’ve never done one before — but we’re excited about it.”