NJ Backs $101 Million Teterboro Development
June 13--The contaminated site of a former aircraft parts factory in Teterboro would be transformed into a complex of restaurants, big box stores and light industrial buildings under a $101 million plan backed by New Jersey with a $19 million tax break Tuesday.
The 55-acre development, on the former Honeywell International property on Route 46 near Teterboro Airport, is envisioned by the developer as an "intermodal transport hub," including two large retail anchor sites and two smaller stores.
The New Jersey Economic Development Authority (EDA) approved the $19 million grant Tuesday under the state's Economic Redevelopment and Growth (ERG) program. It enables a developer to get tax credits equal to 20 percent of the project cost, providing the EDA determines that the project would not go ahead without state help.
An outline of the plan released by the EDA -- called Teterboro Landing, by developer Catellus Teterboro, LLC -- said it would create 776 new full-time, permanent jobs and 327 construction jobs.
The retail and restaurant components -- no tenants have been identified -- would be about one-fifth of the size of Garden State Plaza in Paramus.
Tim Lizura, EDA's senior vice president of finance and development, said the fact that the project would turn a brownfield into usable property is key for his agency.
"This site has been talked about being developed for a long time," he said. "Whenever you can put a very difficult to be developed site back into productive use, that's a big deal."
He said the contamination and the poor market conditions at present were the main factors in persuading his agency that the project should get state support. The ongoing cleanup is expected to be completed by 2015.
"It's a very well located property," said Jon Hanson, founder of the Hampshire Real Estate Companies in Morristown and prominent Bergen County developer. "Other than this site, there's no available land in Teterboro."
But the redevelopment faces challenges, he added. He said his company looked at the land about five years ago, but ultimately decided that the environmental costs were a risk "greater than we were willing to take."
In addition, he said, the developer faces an economy that, while improving slowly, is "not robust."
Construction, which would need approvals from the New Jersey Meadowlands Commission, is expected to begin in July 2013, and the first part of a three-phase construction project could be completed by June 2014. Catellus expects the entire project to be completed in October 2016.
The proposed development would be adjacent to Teterboro's NJ Transit station and would include 2,462 parking spaces, of which 100 would be for commuters.
Teterboro town manager Nicholas Saros said the town welcomes the tax revenues and other benefits the complex would bring to the tiny borough, which has about 60 residents but 130 businesses.
"It's going to provide a tremendous amount of employment in the area," Saros said. "We're delighted that they're cleaning up that property, and that it will be an environmentally safe piece of property."
The retail component of the project, as described by the EDA and a Catellus prospectus, would be similar to other medium-size shopping plazas that are typically described as "power centers." Those centers include one or more freestanding big box stores, such as a Walmart or Target, along with smaller retail stores and free standing restaurants clustered around a common parking lot.
Real estate brokers said the transportation links -- a rail line, an airport and highways 46, 17 and 80 nearby -- make it a prime piece of property.
"Teterboro is the best location in New Jersey," said Charles Klatskin, a managing director with Jones Lang LaSalle who has long been active in industrial real estate in the Teterboro area. "You can go any which way you want and get out quickly."
The developer is a subsidiary of Catellus Acquisitions Co., a national real estate development firm that focuses on mixed-used development and is owned by TPG Santa Fe Holdings, LP.
In 1938, Bendix Aviation built a factory on the site that became one of the area's largest employers. During World War II, the government operated a foundry on the site to make war-related goods. The plant became so closely identified with Teterboro that the town changed its name for a time to Bendix. Honeywell closed the plant in 2008.
Prologis, of San Francisco, bought the site from Honeywell for $33 million in 2007, and is responsible for the environmental remediation, which is expected to cost about $46 million. The owners originally proposed a massive warehouse for the site before shifting to a mixed use development in 2010.
The state Department of Environmental Protection has said the soil and groundwater are contaminated by PCBs, coolants and lubricants used to make aircraft parts.
The names of the two retailers interested in the anchors spots in the project -- two stand alone stores of approximately 150,000 square feet each, about the size of an average Costco -- have not been revealed. According to the EDA, two retailers have signed letters of intent to lease the spaces.
Chuck Lanyard, president of The Goldstein Group, a retail real estate brokerage firm based in Paramus, said the Teterboro project could be "a good fill-in location" for retailers like Walmart or Target that want to supplement existing stores in the area. The Teterboro location is a bit underserved in terms of retail, he said, because "there is a bit of a void in that corridor between Clifton and Secaucus, and south of Paramus."
Restaurants could also do well in the area, Lanyard said, "because there is a lot of daytime population to support that," such as local workers looking for lunch spots."
Email: [email protected]. Staff Writers Kathleen Lynn and Joan Verdon contributed to this story.
Copyright 2012 - The Record, Hackensack, N.J.