Incentive Program Enters Final Year, Drawing Concern from CRE Sector

“With the Grow New Jersey program set to expire in less than a year, the prospect of losing the incentive is already weighing heavily on the state’s commercial real estate market.

“The tax credit program has been vital to everything from attracting manufacturing firms to ambitious redevelopment projects at large vacant office campuses. And while there is still time for lawmakers to extend the program before it sunsets on July 1, 2019, stakeholders say the uncertainty is already working against New Jersey.

“Ted Zangari, who co-chairs the real estate department at the law firm Sills Cummis & Gross P.C., said businesses that are scouting new locations typically begin their search about 24 months before the expiration of their current lease or some other target date for moving. Such a company would likely narrow its search to a handful of sites about a year into that process, he said, but a business may not bother with a higher-cost state like New Jersey — where incentives are often needed to close the gap — if there is a chance that those programs won’t be available.

“Given that all Grow New Jersey applications must be filed by June 30 of next year, that prospect looms larger with each passing day that state officials do not address the issue.

“’From an economic development standpoint, that’s really playing with fire,’ Zangari said. ‘The sooner we can give certainty to companies, the better.’

“It’s why Zangari said that, ‘If we’re going to continue to be on the radar of companies that are evaluating multiple states and be in the game for those opportunities, it’s essential for the New Jersey Legislature and the Murphy administration to resuscitate Grow New Jersey as soon as possible.’ Otherwise, he said, ‘we will begin losing opportunities for those companies whose site selection decisions will not be made until next July or later.’”