Home  Sustainable Land Development Today July/August 2007
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Public-Private Partnerships Opens Opportunities |
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Written by Steve Gaze
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Wednesday, 01 August 2007 |
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Military bases now able to lease property and maximize land use options.
The development and partnership agreement for the U.S. Army’s Picatinny Arsenal, Morris County, New Jersey, is a great example of enhancing land use by branches of the U.S. Department of Defense. It allows military bases to maximize the use and value of their excess real estate.
The lease agreements between the Army and InSitech, Inc., and in turn between InSitech and Advance Realty Group, through its Forge Technology, LLC affiliate, set the stage for initial work that could see some 1.1 million square feet of developed space, said the U.S. Army’s Picatinny Arsenal/ Armament Research, Development, Engineering Center (ARDEC) Chief of the Asset and Technology Capitalization Office, David Banashefski. The deal is a 50-year ground lease for a $200 million development of the Picatinny Applied Research Campus (PARC)
When completed, it will be a model for other bases throughout the country on how to lower operating costs by leasing existing and new space to companies that can benefit from resources already present with the military facility.
InSitech, Inc., a non-profit corporation, is a partnership intermediary representing the business interests of Picatinny by assisting the Armaments Research, Development, and Engineering Center in developing technologies that have military and commercial application, said President and Chief Executive Officer of InSitech, Timothy Teen.
He said that InSitech is focused on speeding the development of dual-use technology that will support the warfighter and provide a beneficial economic impact to society.
Banashefski explained that InSitech is the main lease holder for the PARC and that under the agreement Forge Technologies will develop the land. The PARC will be located on 120 acres of Picatinny land that is along the Parker Road corridor, near the main gate of Picatinny.
The Enhanced Use Lease is the first of its type on this large a scale to be signed within the Army, said Banashefski, who serves as the site director for the project.
Demand is expected from government contractors at Picatinny, as well as research universities, communications, electronics, nanotech and emerging technology companies worldwide. Tenants will have access to Picatinny’s $1.5 billion of high technology equipment, over 64 laboratories, and intellectual assets, some of which only exist at Picatinny Arsenal.
Named the Picatinny Applied Research Campus (PARC), ground was broken on Phase I of its research campus in earlier this year. Phase I is the development of 100,000 square feet of office/lab space within the boundaries of the base’s high security enclosure.
“We believe that this is an exceptional opportunity to provide technology transfer among varied enterprises in a real estate environment specifically designed to meet the unique needs of high technology tenants,” stated Gregory N. Senkevitch, COO of Advance Realty Group, a leading Northeast U.S. owner and developer of Class A office properties. “We expect demand to come both from firms that already have a presence at Picatinny, as well as national and international companies and research organizations that want to take advantage of both the technology transfer opportunities and one-of-a-kind technology infrastructure that Picatinny offers.”
To help ensure Picatinny keeps 100 percent of the rental value, payment will come in the form of in-kind services, rather than cash dollars, explained Banashefski. Otherwise, if the funds came in a cash form, they would first go to the Army and less would filter back to Picatinny.
The in-kind services will be used to cover base operations, maintenance and repairs, which will take some of the burden off the installation and the taxpayers, Banashefski said.
As part of the initial lease signing for buildings 352 and 353, Forge Technologies deposited $1.7 million into an escrow account at the Picatinny Federal Credit Union for the Army’s use as in-kind services, said Banashefski.
In addition to the traditional Defense Department-type tenants, Banashefski said planners envision the PARC will also welcome non-traditional tenants, such as those involved in
Homeland Defense and high-tech fields that still have Picatinny-mission relevance, such as nanotechnologies, sensor technologies and acoustics.
Within the 1.1 million square feet of space, planners envision about 40 percent lab area, 50 percent engineering and office space and 10 percent high-tech manufacturing and final assembly, said Banashefski.
All the tenants will be involved in one way or another with the Picatinny mission, said Banashefski.
Future phases of PARC call for the development of over one million square feet on an additional 120 acres at the United States Army base. Anticipated demand is expected from government contractors at Picatinny and from its main tenant, ADREC, as well as research universities, communications, electronics, nanotech and emerging technology companies worldwide.
“This deal makes use of Picatinny Arsenal’s non-excess land to augment our R&D mission through collaboration with the commercial sector,” explained Picatinny commander Major General Paul Izzo. “It also creates income for the base, as the arsenal could reap $500 million in services during the 50-year deal and revenue sharing agreement with InSitech and Advance.”
The overall PARC development plan includes one- to three-story build-to-suit and multi-tenanted buildings with labs, office space and multi-purpose space for high tech, defense and academic tenants and users. The PARC design also includes landscaped open space and pedestrian and bicycle pathways.
PARC tenants will have access to the amenities of Picatinny Arsenal, which include food services, recreational fields and an 18-hole golf course. In addition, Advance’s plans for PARC include videoconference capabilities, meeting rooms, an auditorium, and classrooms. These amenities will help spur formal and informal collaboration between employees and government workers, further enabling the exchange of information among various tenants and groups in concert with the concept of technology transfer envisioned by Advance and InSitech.
Ironically, there has been such high demand for this space by government contracted and non-contracted companies that Advance is considering beginning Phase 2 much sooner than anticipated. Already 30,000 square feet for Phase 1 and 70,000 for Phase 2 has been tentatively reserved for pre-qualified organizations.
“When completed, the PARC will be a state-of-the-art, high-tech campus like no other in the country,” said Teen, president and CEO of InSitech. “It will offer significant ‘technology infrastructure amenities’ in a collaborative manner that will foster innovation. As an outstanding example of a public/private partnership between Advance, InSitech, and the United States Army, it will operate as a world-class enhancement to Picatinny’s mission.”
The congressional defense committees will notice the benefit of this arrangement too.
“The military is always working to modernize. Plus bases are looking to reduce operating and maintenance costs,” said U.S. Rep. Rodney Frelinghuysen (R-11th Dist.), a member of the House of Representatives appropriations committee. “This agreement just may become a model for other bases.”
In fact, one other project in the country is similar to this and it – a joint venture between the U.S. Air Force, Eglin Properties, LLC., and Hunt Development Group at the Eglin Air Force Base in Florida – has followed the groundbreaking partnership at Picatinny.
About the Players
Picatinny Arsenal
Picatinny Arsenal is located on approximately 6,500 acres of land with access from New Jersey State Highway Route 15, a mile from a full interchange on Interstate 80 in Morris County. Picatinny has a distinguished history in armaments and munitions development and production dating back to the Revolutionary War. Today, the installation employs over 4,000 full-time government and contractor personnel. Over 1,600 of Picatinny’s government employees are engineers and/or scientists. Picatinny has approximately $1.2 billion invested in state-of-the-art, cutting edge technological equipment and $115 million in new research and development facility projects in the planning stages or under construction. Many of the technologies support research applications across a broad range of business, industry, government, and university endeavors. Picatinny has also become a key player in the Homeland Defense/Homeland Security effort.
InSitech
Headquartered at the U.S. Army’s Picatinny Arsenal in Morris County, New Jersey, InSitech is an integral driver in the Army’s transformation strategy, and Picatinny’s base optimization plan. Representing the business interests of Picatinny/ARDEC as their partnership intermediary, InSitech is focused on accelerating technology exchange, licensing, and commercialization opportunities, through business combination with the government, university, and private sectors.
Advance Realty Group
Advance Realty Group is an owner and developer of office, flex, industrial, retail and multifamily properties. With 5.5 million square feet of operating properties and a development portfolio consisting of eight million square feet of commercial projects and 9,400 residential units, Advance is one of the leading real estate owners in the Northeast and is headquartered in Bedminster, New Jersey. SLDT
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