Real estate has proven to be a solid career alternative for a good many individuals who were seeking a brave new world professionally. How about when global corporations make the move to dabble in real estate?
It's an interesting question that was amplified in late May when Honeywell International—primarily a maker of aerospace, building control and safety products (I happen to own a very reliable Honeywell humidifier)—became directly involved in the redevelopment of a contaminated site in Jersey City, N.J.
That might appear to be a radical departure from corporate competencies, but when you think about it most global conglomerates already have a site selection/real estate component in place to begin with. So, it was not uncharted waters for the Morris Township-based technology and manufacturing conglomerate when it said in May that it was partnering with the city of Jersey City on a plan to redevelop an old industrial dumping ground into a sprawling new neighborhood—called Bayfront—on the shore of the Hackensack River.
This collaboration was revealed in a report by The Wall Street Journal in late May. For starters, Honeywell International has engaged in real estate ventures previously—namely, the Inner Harbor in Baltimore and one in El Segundo, Calif.
What is radical is that Honeywell International had bumped heads with the city of Jersey City in the past—that's not uncommon to occur with large employers and city officials surrounding various and sundry matters—economic, environmental and social. To dramatize this alliance, though, The Wall Street Journal reported that “not long ago, city officials and Honeywell International were at war over the fate of more than 100 acres of chromium-contaminated land on the city's gritty western edge. Now they are development partners.”
Wow, that's a sea change of impressive proportions. They're talking about up to 8,100 residential units, one million square feet of office space and 20 acres of parks and plazas. But as it was pointed out in the report, this effort “is still far from reality. Ground won't break until 2016 at the earliest, and no one expects the project to be finished before 2040,” The Wall Street Journal reported
One point made about why Honeywell International would want to become immersed in this effort is that, by virtue of putting on its “real estate hat” enables the corporation to “oversee the redevelopment to make sure it's done responsibly,” WSJ reported.
One major point on the wish list is to integrate a transportation-oriented component to Bayfront. And why not: This city is located in a densely-populated region, sitting in the shadow of New York City and in close proximity to the Holland Tunnel. It screams TOD, and that's the case: The NJ Transit authority has begun an environmental assessment of a crucial element of a plan to extend a light rail system 3,700 feet to connect Bayfront to the rest of the region's public transit. NJ Transit indicated in late May, as reported by WSJ, that it is behind the project. “An extension of the light rail to this area would both support the development and address traffic congestion along Route 440,” a nearby highway, spokeswoman Nancy Snyder told the newspaper.
It was pointed out that Bayfront's success is uncertain. Transit authorities say the Light Rail extension would cost about $213 million, and would cost the city and Honeywell more than $80 million to move two large facilities to make way for the project. To date, Honeywell has spent $500 million to clean up the site and will have to spend an estimated $50 million in addition, the newspaper report stated.
Environmentalists see the project—should it ever be completed—as a boon not only for the city but for the Hackensack River, a neglected body of water with a history of heavy pollution.
We have witnessed other examples of global conglomerates, such as oil companies, mass merchandisers and auto manufacturers, that have a strong desire to become actively involved in controlling the destiny of a crucial redevelopment effort. Participating in redevelopment provides not only control of destiny but it adds a “halo effect” for large corporations to bask in their corporate responsibility and overall community outreach, vigilance. Honeywell's image in the Jersey City community should be better enhanced as as a solid citizen and community steward—if it was not already.
Real estate involvement is a refreshing change from the trend that has seen many property owners wash their hands of such involvement. We know of unscrupulous property owners who vanish from a property they once owned and inhabited, leaving an actual and legal mess in its wake. All this does is make third-party do-gooders much more vulnerable to liability when they enter the picture to try and revitalize a blighted property.
Honeywell International should be applauded for having a strategy that's a radical departure from what other global corporations do. In fact, while they say there are three underpinning priorities to real estate: Location, location, location—there might be another three: vision, vision, vision.