KEARNY POINT: FROM SHIPYARD TO FULLY
INTEGRATED COMMUNITY
PHASES 3 & 4 REDEVELOPMENT PLAN
HIGHBRIDGE PARTNERSFRANK FARINELLA JR., ALEX KESZELI, SARAH ANN ROZSA, MATTHEW FANELLI, STEPHEN ALY, CHRISTOPHER BOYLAN
Strictly Confidential
Table of Contents• Kearny Point Overview
• Market Research
• Comparable Projects
• Phase 3 and 4 Development
• Construction Timelines
• Financials
• Investment Conclusion
• Appendix
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I. Kearny Point Overview
Kearny Point, a former site of American industrialism and home of the Federal
Shipbuilding and Drydock Company, is being transformed into an innovative
hub for modern workspace. Through its evolution, it is now seen as a place of
flexibility, invention and entrepreneurship, attracting tenants from various
industries.
Along with its history and future potential, Kearny Point will provide tenants of
all sizes the opportunity to be part of a developing ecosystem. From startups
and non-profits to industry leading companies, Kearny Point will provide space
for office, laboratory, artwork, hospitality, dining, and recreational enjoyment for
all of the employees in the community.
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II. Location
Kearny Point is centrally located, featuring easy access to the major population centers of Newark,
Jersey City, and Manhattan, while being conveniently located just 10 minutes from Newark Liberty
International Airport.
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II. Transportation
Kearny Point is located in close proximity multiple highways and local thoroughfares.
There is easy access to the New Jersey turnpike via the Lincoln Highway, in addition to
nearby connections to throughways such as Route 9, Interstate 280, and Interstate 78.
Along with vehicular transportation, there are multiple transit options in Newark and
Jersey City, including, New Jersey Transit Passenger Rail, Hudson-Bergen Light Rail,
PATH, and Hudson River Ferries. In addition, New Jersey Transit Bus Services are
available in the area, while new stops and expanded schedules will be added for the
future redevelopment of Kearny Point.
KPIP is working with NJ Transit to arrange a shuttle bus service that would link with the
Light Rail station at West Side and Claremont Avenue in Jersey City.
The redevelopment site will be pedestrian and bike friendly with walking paths as well as
designated bike lanes connecting all buildings and amenities.
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II. Greater Kearny Economy
With investments surpassing $1 billion over the next several years in Kearny, NJ, 10,000 new jobs will be generated,
accumulating millions in Local, County and State tax revenues. Since the site is deemed an opportunity zone, the redevelopment
of Kearny Point further encourages diverse economic growth, allowing its innovative atmosphere to attracts highly educated and
skilled workers.
Household Income
Kearny, NJ: $61,558
Hudson County, NJ: $63,808
USA Avg: $59,039
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II. Labor Pool
The surrounding workforce has increased dramatically in step with the revitalization
of Kearny Point. Individuals are moving to Kearny because of its opportunistic
environment. Dynamic spaces are attracting forward thinking companies and
entrepreneurs who value innovation.
The liveliness and of the area has created a neighborhood composed of both
families and a growing white-collar population. The recent influx of workers was
noted through a strong housing market and high population density. This is expected
to further increase as Kearny Point’s development will create thousands of jobs.
In close proximity to renowned colleges and universities, Kearny Point will benefit
from an increased talent pool, matriculating from STEM and business programs.
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II. Incentives
New Jersey offers numerous incentives that help promote economic growth and
opportunity for entrepreneurs, startups, as well as established companies, allowing
businesses to thrive. The NJ Ignite program provides grants that subsidize the rent of
early stage technology and life science companies in collaborative workspaces, while
the NJ Co-Vest Fund and NJ Founders and Funders program help propel innovative
opportunities with various grants. Lastly, the Grow NJ Assistance Programs offer tax
credits to businesses that create and help retain jobs in New Jersey.
Kearny Point is located within an Urban Enterprise Zone, which benefits include
reduced sales tax, tax-free purchases and financial assistance. The EDA also aims to
foster innovation by nurturing the development of new technology through matching
loan programs, tax incentives, and networking opportunities with the investment
community.
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II. SustainabilityThe development will seek LEED Campus Certification for phases 3 and 4 of development by implementing various sustainability initiatives and
practices including:
• Green Roofs – Reduces “heat island effect”, rainwater overflow collected into cisterns for reuse in the building's cooling system
• Greywater storage and irrigation utilization
• Bio walls – Allows for a vertical orientation aesthetic while reducing the need for expensive mechanical air filtration systems
• Sustainably Sourced Insulation
• Semco Chilled Beams - Provide superior indoor air quality; quiet operation, and no draft
• Solar Panels – Reduces campus power consumption
• View Dynamic Windows - Eliminates the need for blinds/shades and allows in abundant light without excessive heat and glare.
• Solar-and Wind-powered street lamps
• Permeable Asphalt – Reduces stormwater runoff rate and incidences of flooding
• EV Charging Stations
• Bike Storage and Designated Bike Lanes – Encourages sustainable transportation and healthy living
• Eco-Friendly Cleaning Products
• Plastic Bottle Restriction – Employers provide refillable containers to be used at filling stations, reducing plastic usage and on-site litter
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II. Sustainability
Sustainability is one of Kearny Point’s core values and focuses.
Why is sustainability important?
• According to the USGBC, “The new Class A office space is green; lease-up rates for
green buildings typically range from average to 20% above average.”
• According to the USGBC, “The overall vacancy rate for green buildings was 4%
lower than for non-green properties – 11.7%, compared to 15.7%”
• Happier and healthier employees lead to increased productivity, top talent attraction
and retention, less frequent sick days, and decreased medical costs
Philadelphia Navy Yard
The Philadelphia Navy Yard is located in the Southern part
of the city and provides new life to the historic site. The
1,200 acre site consists of 7.5 million sf with a total of 13
million sf in the masterplan. The campus consists of office,
research & development, industrial, and recreational space.
There are currently more than 13,000 employees from
companies such as GSK, Urban Outfitters, and Tasty Baking
Company.
The Brooklyn Navy Yard is currently undergoing a $2.5 billion
redevelopment of the 330 acre property. There is a total
development amount of 2 million sf, which will add close to
10,000 jobs by 2020. The property provides space for office,
laboratory, manufacturing, technology, and food service
tenants. The immense Yard has over 400 tenants, while having
a 90% retention rate. Tenants at the property include, Wegmans
Food Store, which will have a 79,000 sf store located in
Admirals Row & 399 Sands. Additionally, Steiner Studios, a
successful television and film studio, adding 180,000 sf.
Brooklyn Navy YardIII. Comparable Projects 11
IV. Phase 3 –Building 82
Building 82 will foster a collaborative environment for its varied tenant
base. The 120,000 sf space will hold flexible office space for start-ups and
smaller companies, art studios for the creative minds in and around
Kearny, along with industrial kitchen space. Building 82 will mirror Building
78’s creative energy. In this space, we will seek a partnership with 1776, a
company offering an advanced co-working environment for its tenants.
The 7 story building will consist of 30,000 sf floorplates (300 x 100),
accommodating tenants of varying sizes. There will be a podium parking
structure for the building, offering three levels of parking and a total of 276
spaces. In addition, there will be a service elevator for tenants to move their
supplies and equipment to their floor, along with 16 foot exposed ceilings.
Parking for Building 82 will be free of charge, a perk that small tenants and
studio space users will enjoy.
Rendering of Exterior
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IV. Building 82
30,000 sf of clean, health department certified commercial kitchen
space will allow chefs, restaurants, bakers, food artisans,
consultants, and culinary teachers to flourish at any stage in their
business. The space will include prep & packaging areas along
with bakery & studio space which is great for cooking classes,
team building events, and even pop up dinners.
30,000 sf of art studio/gallery space will create the ideal
environment for the creative energy at Kearny Point to flourish.
Artwork produced in the studios can be utilized around the
Kearny Point development site, adding character and a defining
touch. Artists and art viewers alike will enjoy the small café,
which will provide craft beverages and a la carte lunch items.
13Potential Kitchen Space Uses
IV. Phase 4 - Parking Structure
The parking structure for phase 4 of the development will be
impressive in size and scope. The podium garage will
establish a foundation for which the life science, office,
restaurants, conference center, and hotel will stand upon. The
445,000 sf garage will feature 1,369 spaces, all on one level,
with elevator and stair access to each building. The roof of the
structure will act as a green roof and space for Kearny Point’s
occupants to enjoy the outdoors. Featuring landscaping and
hardscaping on the roof, the garage acts as true ground level.
The parking structure will feature 5 entry doors, allowing
ingress and egress for employees and hotel or restaurant
guests. The sides of the garage will feature walkable ramps
leading up from the center of Kearny Point, allowing all
other employees on campus to enjoy the space. In addition,
there will be multiple terraces facing the Hackensack River,
offering breathtaking views from the property.
Ingress/Egress
Green Roof View
IV. Phase 4 - Office
The Phase 4, 12-story office space will provide tenants high
quality and luxurious amenities within the building. The high end
finishes and design will help bring talent to Kearny Point. A
partnership with Convene to occupy two floors of the space will
be beneficial to provide tenants with a vertically integrated
community atmosphere within the building.
The office will total 360,000 sf, offering larger tenants the
potential to occupy large portions of the 30,000 sf floorplate.
Additionally, the building will feature a service elevator to help
move tenants in efficiently. Class-A Philadelphia Navy Yard space
lends support for rents in $40-$45 psf range.
Rendering of Exterior
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IV. Phase 4 - Amenity and Conference Space
Located between the Office and Life Science building will be a large amenity
space with conference rooms. The upper level will feature amenities
including a 10,000 sf fitness center for use by all tenants at Kearny Point, a
5,000 sf quick service café, and 5,000 sf of open floor plan with multiple
seating arrangements for collaborative working and relaxation.
The lower level will include 20,000 sf of conference rooms varying in size,
allowing companies to use this space at their convenience. In the future, the
conference center has potential to provide ancillary income for the owners.
Each room will feature flat screen televisions, telecommunication services,
and noise proofing to allow complete focus.
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IV. Phase 4- Life Sciences
NJIT Tower will be a hub of research and breakthrough in the life
sciences community, catering to tenants performing chemistry
research, biology research, and analytical chemistry research. Within
the scope of NJIT’s 2020 vision, Kearny Point will offer undergraduate
students the opportunity to use this innovative space to further their
education. With a blend of 60% office and 40% lab designation on
each floor plate, companies will be able to take full advantage of their
square footage.
The Building will total 150,000 sf and feature two service elevators for
tenants to efficiently move equipment and products in and out of their
space. The quality and design of the space will allow for higher rents,
starting near $35 Psf. Rendering of Exterior
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IV. Phase 4 - Restaurants
The development of Kearny Point into a fully integrated ecosystem
goes beyond workspace. The inclusion of dining options of higher
quality than a typical cafeteria will provide employees and guests
fun and enjoyable food options. The two restaurants will total
10,000 sf and be centrally located between the office tower, life
sciences building, and hotel. In choosing restaurants to occupy this
space, we decided to include options that coincide with the
sustainable and environmental standards of Kearny Point.
Bryn & Danes will provide healthy, accelerated-service options,
while providing a relaxing atmosphere. Iron Hill Brewery will
provide a sit-down option, where employees can network and
share an after work drink.
Rendering of Exterior
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IV. Phase 4- Hotel
The introduction of a large quantity of employees at Kearny Point will
spark a need for hospitality services for guests and employees of
different companies. A hotel will be of major convenience by mitigating
time wasted traveling to and from an offsite hotel. The hotel anticipates
significant demand from tenants using the studio and shooting space
planned for phase 2 of the development.
The hotel will provide services such as a small fitness center, café and
bar area, along with a small business center. There will be a total of
125 rooms, averaging 325 square feet. The interiors of the rooms will
feature industry-leading amenities, such as a glass shower with
ceramic tiling, in-room check out, and laundry services. Potential hotel
developers include Hilton Garden Inn and Study Hotels.
Rendering of Exterior
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Examples of Select Service Brands
V. Phase 3 – Timeline
The construction timeline of Building 82 will start this year as the building is being turned over in possession. The total
duration from permits and approvals to completion of construction will be 30 months. With the inclusion of 12 months of
contingency time, maximum time to complete construction is 42 months. The construction period includes the completion
of the podium parking garage, followed by the completion of the collaborative office, commercial kitchen, and art studio
space.
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V. Phase 4 – Timeline At year end 2021, permits and approvals begin immediately, and are anticipated to take . The next phase will include the
demolition of the previous three industrial buildings, allowing for the completion of the parking garage. Once the parking
garage is complete, the office, amenity and conference space, life sciences, restaurant and hotel will be completed in that
respective order. Over the final three years of the project, landscaping of the green roof will take place, corresponding with
building completions. The total completion time of phase 4 is 60 months.
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VI. Pro Forma 22
3% of Potential base rent
7.5% of Potential base rent
1.5% of NOI
VI. Base Case Return23
VI. Sensitivity Analysis24
A sensitivity analysis was created, all else held equal, by adjusting
cap rates on refinancing and ultimate sale from 7.75% in the worst
case, 6.75% for the base case, and 5.75% for the best case.
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Appendix
Appendix – Site Renderings26
Appendix - Development Costs27
Appendix - Inputs and Assumptions 28
Appendix - Worst Case Return29
Appendix - Best Case Return30
Appendix – Product Costs Life Sciences
Appendix - Product Costs32
An adjustment factor of 12.5% was applied to
the gross number of spaces needed to
account for shared parking and increased
future utilization of public transportation.
Appendix – Product Costs33
Appendix – Relevant Market Information34
Q4 2018 Cushman &
Wakefield Report
CBRE 1st ½ 2018 Study