Several New Jersey cities are receiving high marks for their ability to attract and grow technology-based companies, and as the state’s economy continues to rebound, their prognoses are even better.
“Cities that will have more traction going forward are those on a main rail line,” says Jim Barrood, president and CEO of the New Jersey Tech Council. “Mass transit is critical, especially for the younger generation.” Noting such cities as Jersey City, Hoboken, Newark, New Brunswick and Princeton, Barrood says, “they all have young, smart populations who are either commuting to, working in or living in those cities.”
Another factor comes into play: “They all have universities, and a lot of people who come out of a university want to stay in the area,” Barrood says. “If those areas have the jobs – which they do, and more jobs are coming – that creates a cycle whereby they become hubs.”
High-tech infrastructure is yet another factor, notably fiber loops and high bandwidth. And the real estate community, which provides the workplaces for growing high-tech companies, is taking note. “As connectivity remains a top priority for New Jersey companies, owners of recently developed and newly constructed properties often seek Wired Certification,” says Matthew McDonough, managing director at Transwestern. “It is a designation provided by WiredScore that identifies commercial buildings with the fastest and most reliable Internet connections.”
While the so-called Hudson Gold Coast and other cities have been getting the most ink, the city seen by many as the rising star as a tech hub is the state’s largest city, Newark.
“With billions of dollars in real estate development under construction and in the pipeline, Newark is undergoing a resurgence,” says Aisha Glover, senior vice president, manufacturing, business development and technology, Newark Community Economic Development Corp. “The city of 280,000 people is the largest in New Jersey and sits at the heart of one of the wealthiest regions in the country. With enviable assets that most urban centers can only wish for, Newark boasts an international airport that handles 35 million passengers a year and two train stations that provide 24-hour access to Midtown and Lower Manhattan on the busiest passenger rail line in America. It’s also home to the third busiest port in the country, feeding a transportation and tech-driven logistics industry in a heavily utilized industrial corridor. Seven major highways, including three interstates, expand the reach of businesses located in the city to 1.7 million residents in the region.”
Glover adds that Newark is home to corporate giants like Panasonic, PSE&G, Audible.com, Verizon and Prudential and has also become “fertile ground” for small businesses and start-ups like Websignia, Expresser App, Blast Chat and Phone.com.
Moreover, she notes Newark is a college town with more than 50,000 faculty, students and staff across five institutions of higher learning that rank among the country’s leading technical and engineering programs.
“The university base is significant,” concurs Kathleen Coviello, director of technology and life sciences for the New Jersey Economic Development Authority (EDA), citing Rutgers-Newark and the New Jersey Institute of Technology (NJIT). The latter “has the largest incubator in New Jersey, and we have funded several companies located there.”
One of those companies is, again, Phone.com, a self-service communications platform for entrepreneurs and small businesses that is “collaborating with the City of Newark on providing their service,” Coviello says.
Some of the “big guys” provide a foundation for Newark as a tech hub, notably Panasonic, “which has an innovation center on the ground floor of its building,” Coviello says. She notes, as well, that Newark is one of those cities that “has seen an explosion of meetups” – gatherings to promote growth from within. “The Brick City Meetup has tremendous attendance,” she says.
Another contributor: “The Rutgers Business School donated a floor to the Newark Venture Partners initiative as co-working space,” Coviello says.
“As an accelerator for startup tech companies, Newark Venture Partners manages an early-stage investment fund that provides capital as well as company-building services and a collaborative state-of-the-art 25,000-square-foot accelerator workspace with gigabite-plus fiber to the desktop, lightening-fast Wi-Fi and ultra-high bandwidth,” says Chip Hallock, president and CEO of the Newark Regional Business Partnership (NRBP).
Speaking of Newark Venture Partners brings another rising star into play, notably the aforementioned Audible, Inc., which has established its headquarters in Newark. Don Katz, founder of the seller and producer of spoken audio entertainment, information and educational programming on the Internet, was a driving force behind its formation.
In terms of bandwidth, “from everybody I’ve talked to, including people at Audible, Newark has some of the highest bandwidth and cabling in the state,” Hallock says.
And speaking of Audible, located at One Washington Park, which also houses the accelerator and the Rutgers Business School, “it has grown tremendously, from 150 people when it moved here in 2007 to upwards of 800, now,” Hallock says. Add transportation hubs in the form of the Broad Street and Penn stations, and downtown residential growth, and “we’re creating a vibe,” he says.
Meanwhile, 2 Gateway is a Class A office building located in the heart of Newark’s “Billion Dollar Triangle” – Newark’s culture-entertainment-sports trifecta that includes the New Jersey Performing Arts Center, the Prudential Center, and Red Bull Arena (in nearby Harrison). It is the first building in New Jersey to earn the Platinum certification from WiredScore for its best-in-class infrastructure and connectivity. The building has also been awarded the US Environmental Protection Agency’s (EPA) ENERGY STAR label for its superior environmental protection. Moreover, 2 Gateway Center provides an innovative Incentives Concierge Program and mobile app, through which brokerage professionals and companies can obtain free, customized analysis of the cost savings for prospective tenants under the New Jersey Economic Opportunity Act of 2013.
“Newark has a surplus of dark fiber,” says Kevin Collins, managing director of C&K Properties. “Since it was being underutilized, the city launched a pilot program that 2 Gateway is participating in, where the building is connected directly to the city’s fiber infrastructure allowing 2 Gateway to offer tenants the highest bandwidth for the lowest cost in the market. Especially with today’s need for high speed Internet and fast communications, Newark and 2 Gateway’s infrastructure ensures a responsive and reliable connection for its tenants. This is especially important for technology companies dealing with extremely large files, along with high-frequency traders.”
Going forward, “we’re working on a game plan to grow the city’s technological hubs,” adds Scott Blow, chief business development officer for the Newark Economic Development Corp. “We’re working closely with NJIT, Rutgers and Audible to accomplish that.”
Noting NJIT’s incubator, “one of our biggest challenges is once those businesses are nurtured and grow, they leave Newark. Our mission is to keep them in the city,” Blow says. Another challenge is stopping “leakage” in the form of major companies spending money – up to a billion dollars – outside of Newark. “We’re rolling out a vendor development program for businesses that would like to do business with the city and major stakeholders.”
On the Gold Coast, meanwhile, EDA’s Coviello notes that “our team is spending a lot of time in Jersey City.” Transportation is key, of course, including the Grove Street PATH station, and one of the driving factors has been growth of co-working space. One of the entities funded by EDA was Indiegrove, which offers affordable co-working and shared office space, along with meeting rooms, all within walking distance from the PATH station.
“Jersey City sets itself apart because it provides the live/work environment that a lot of these younger generation tech companies, particularly start-ups, want,” says Dan Johnsen, director, Cushman & Wakefield. “When you mix that live/work environment with the available tax credits and the ability to save some money by being on this side of the Hudson River, it creates the ultimate formula for a tech startup.”
At the same time, “WeWork and Regus-type space ultimately is incubator space for tech companies,” Johnson says. “These companies believe in their concepts and products, yet have no idea what the future holds and don’t feel comfortable signing a longer-term lease. There are locations within Jersey City that will allow these tech start-ups to ultimately mold themselves in an office suite environment.”
Besides WeWork, a co-working operator with a national footprint that will create a technology incubator within its facility with the help of a $59-million Grow New Jersey tax credit, other tech-based players in Jersey City include Sungard Data Systems, approved last October for a tax credit under Grow New Jersey, which is bringing in 75 jobs. Meanwhile, Fusar Technologies was incubated in TechLaunch, an accelerator that the EDA helped launch.
“We’re seeing a big influx of companies moving from New York City to Jersey City, utilizing the tax credits offered by New Jersey and the cost savings of being in New Jersey as opposed to New York,” Johnsen says. “And with the transportation options – PATH, the bus system and the ferry – it is very easy for people who don’t live in Jersey City to access Jersey City.”
As is the case with Newark, Jersey City has its own meetup. The Jersey City Startup Meetup has more than 950 members, according to Coviello.
Nearby Hoboken similarly has a meetup, NJ Tech Meetup, which city spokesman Juan Melli says is “the largest technology meetup in New Jersey. Several factors have helped forge Hoboken’s emergence as a tech hub, among them transportation. “Hoboken is the most transit-dependent city in the country, with 56 percent of residents commuting to work by public transportation every day,” Melli says.
Then there’s the university presence in the form of Stevens Institute of Technology, which provides a talented workforce. With the various factors in place, “several redevelopment plans have recently been approved that will create significant new commercial space, including incubator and accelerator space,” Melli says. Already in place: Mission 50 has shared workspace used by startups.
And e-commerce startup Jet.com opened its headquarters in Hoboken last year. Competing with Amazon, Jet.com has grown to hundreds of employees in a very short time and has raised hundreds of millions of dollars in venture capital, notes EDA’s Coviello. “It located in Hoboken because of the convenience of the location and the urban-centric environment that its employee base is looking for.”
Another tech player in Hoboken is NICE Systems, a provider of software solutions, which has been approved for a Grow New Jersey tax credit and is expected to create 200 jobs.
In New Brunswick, meanwhile, pharmaceutical giant Johnson & Johnson has long set the tone for the city’s development as a science and tech hub. At the same time, “we consider Rutgers a partner in almost anything we do,” says Chris Paladino, president of the New Brunswick Development Corp. (DEVCO). “Given its merger with UMDNJ, the medical school infrastructure, the biotech infrastructure, the engineering school and the computer science component, we not only have extraordinary opportunities for people to partner with Rutgers and create synergistic relationships, but what we find most intriguing is that almost everyone we talk to, particularly in the tech sector, are most enthusiastic about access to the workforce.”
Businesses are recruiting, on a regular basis, “Rutgers engineering, math and computer science students … the 22-year-olds who are looking for lifestyle, convenience and affordability,” Paladino says. “It is not a ‘build it and they will come’ scenario as in other places. New Brunswick has the restaurants, a variety of housing, cultural venues and access to the train station.”
The train station is about to grow in importance. Site preparation will start shortly for a 1.6-million-square-foot project called The Hub at New Brunswick Station. It will be a mix of 200,000 square feet of retail, 600,000 square feet of residential, and 800,000 square feet of office, lab and tech space. It will also feature underground parking and direct access to the Northeast Corridor platform, according to Paladino. In short, it will be another destination for tech-based and other companies.
In terms of its technology infrastructure, New Brunswick has a fiber loop, and The Hub at New Brunswick project will include co-generation capabilities and combined heat and power (CHP), “where we’ll be able to provide our own thermal and produce our own electricity on-site,” Paladino says.
One newcomer to New Brunswick’s tech scene is YipTV, which streams television programming over computers and other devices. “We’re working with the company, and we continue to look for companies that want to grow,” Paladino says.
With its hand in the fire in Newark and New Brunswick, Rutgers is also a key player in Camden. In addition to Rutgers, the educational base in the city and surrounding Camden County also includes: Rowan University; Camden County College; Cooper University Hospital, a teaching hospital and biomedical research center; MD Anderson Cancer Center; and Lady of Lourdes Medical Center and School of Nursing.
The city also offers transportation access, bandwidth and state and local economic incentives. PSE&G last year unveiled a plan for $55 million in electric and gas infrastructure upgrades to support the city’s economic growth.
“These ‘meds’ and ‘eds’ and all of these other assets are attracting new businesses – and a lot of high-tech companies to the city,” says Louis Cappelli, Jr., Camden County freeholder director. “The vibe in Camden is very good. The city is making a real comeback with Millenials, businesses and expanded educational opportunities.”
One of the first companies to relocate in Camden was WebiMax, an Internet marketing operation that established its headquarters on the city’s waterfront and now has 70 employees. “The Economic Opportunity Act of 2013 played a significant role in attracting a company like WebiMax,” Cappelli says, noting that the same holds true for decisions by Lockheed Martin; DioGenixm, a molecular diagnostics company; Subaru; and power plant supplier Holtec to establish a presence in the city.
“The Act, and efforts by the city and Camden County to work together to do whatever is necessary to attract businesses, is paying off,” Cappelli says. “Our initial success in attracting companies like Holtec and WebiMax will result in the attraction of more high-tech companies, because the spin-off from both of these companies will be significant.”
Rounding out the list of New Jersey cities that have emerged as hubs for technology-based companies is Princeton. Princeton University provides the educational focus, of course, and one of its graduates helped cofound Tigerlabs, an incubator facility with co-working space just outside the university gates.
The community also benefits from meetups, specifically the Third Friday Meeting, a group of high net-worth investors, many of them people who have sold their companies and are looking to invest in something new.
Also on the investment front, Edison Venture Partners recently moved its headquarters back into Princeton, its original home. With the help of a $2.5-million limited partnership with the EDA, the firm has launched its newest fund, Edison Partners VIII, with a specific goal of investing in technology-sector businesses. Under the leadership of Managing Partner Chris Sugden, the fund will invest in 20 to 25 growth-stage technology businesses in financial, healthcare information and marketing technology, and enterprise 2.0, focused mainly on mobile, security and business operations software, according to Coviello.
Other places to keep an eye on: “Stay tuned for Fort Monmouth in Eatontown and Tinton Falls, where CommVault has already established its headquarters, and the Bell Works project in Holmdel, both of which could develop into high-tech hubs,” Coviello says. “That’s a longer-term scenario, but I believe we’ll be seeing great things there as well.
“The terrific news for New Jersey is that we have a lot of different options for entrepreneurs and what a company wants to build,” she concludes. “This is a very interesting time for tech entrepreneurship in New Jersey. I’ve been in this role at the EDA for 10 years now, and I’ve never seen so much activity.”