(Editor’s note: Jordan on Business is a new weekly column focusing on business, development and workplace issues in New Jersey.)
As soon as COVID turned the economy upside down, struggling office tenants started putting commercial real estate owners under severe stress. They wanted to renegotiate leases, downsize or even opt out of leases. As a result, many landlords now face rent shortfalls and lenders suddenly have been exposed. The vicious cycle has roiled the industry, hitting hotels, malls and retail spaces hardest.
The bad times again have proven that timing and circumstances are everything in the commercial real estate business. They can mean the difference between winning or landing in bankruptcy court.
Prism Capital Partners is arguably one of New Jersey’s big winners of the past year, building on a timely gamble four years ago when it purchased the former Hoffman-LaRoche headquarters on 116 acres off Route 3 in Nutley and Clifton. In its heyday, the Swiss pharmaceutical company had 10,000 employees on campus.
Prism renamed the property ON3 and started marketing the sprawling site to science-industry users, leasing the entire 1.45 million square feet of existing and under construction laboratories and office space to big-name tenants. Today’s lineup is impressive: Quest Diagnostics; the Japanese drug maker Eisai Co.; Hackensack-Meridian School of Medicine; Seton Hall University; the biotech Modern Meadow; and Ralph Lauren. Prism says as many as 6,700 workers will be based there by the end of the year, and most tenants are life science companies that have survived the pandemic.
Leaders at Prism want to take ON3 to the next level, expand it into a 24/7 village of luxury apartments, hotels, retailers and restaurants within walking distance of the offices and laboratories. This is just the sort of development the state and its municipalities need at a moment of rising office vacancies and falling tax collections that threaten everyone.
But officials in Nutley are publicly feuding with the developer and neighboring Clifton over traffic concerns. Nutley wants to pump the brakes on ON3 and installed a barrier to block traffic from the Clifton side of ON3. Clifton and the developer have filed a lawsuit.
Concerns about traffic congestion and future school spending are archetypal objections to growth, and they are emblematic of the patchwork of local control over development in New Jersey.
“Everybody cries about the impact on their schools and they cry about the impact on their traffic. Those are the two big issues,” said Eugene R. Diaz, a Prism principal partner. “Everyone comes out waving their flags and throwing their pitch forks out there. They just don’t get it.”
ON3 generates a king’s ransom in tax revenue for Clifton, which has 56 percent of the ON3 land in its borders, while Nutley is home to the rest. Route 3 was a dirt road when Hoffman-LaRoche made the site its American headquarters in 1929. The plant was shut in 2012 and sold to Prism four years ago.
Diaz said for too long, parochial local zoning and planning boards have stifled high-density development that would make the state more competitive – and livable.
“People want to be able to walk to work. They want things close,” Diaz said. “You build greater density and you have lower peak-hour impact. You have fewer cars on the road because at lunch people walk to their apartments or stay after work for drinks or dinner.”
Critics successfully have embraced traffic and school spending as tools to muffle developments over the years in Morristown, Woodbridge and the Meadowlands. In fact, those are the core anti-development complaints in just about all 565 New Jersey municipalities.
As a result, New Jersey has been slow to embrace “new urbanism,” the high-density, mixed-use developments that are the rage among millennials in other parts of the country. These transit villages of shiny corporate offices surrounded by trendy retail and low-rise luxury apartments are common along commuter rail lines in the Maryland and Northern Virginia suburbs that ring Washington, D.C.
Officials in Clifton, Nutley and Prism have taken out the long knives.
“While Clifton would see most of the tax benefits of the development, Nutley would receive a disproportionate share of the traffic,” Nutley Mayor Mauro G. Tucci said in an open letter to taxpayers. “The new vehicle traffic would place a significant burden on Nutley.”
Diaz fears the potential of ON3 could go the way of MetroPark. Built in the early 1980s, it includes several offices, parking garages and a single hotel at a New Jersey Transit and Amtrak rail station. The Woodbridge Planning Board would not approve housing or other significant retail venues. As a result, MetroPark’s expansion stalled.
Compare that to Reston, Virginia, which is the same size as Woodbridge and also launched a redevelopment in the 1980s. Reston’s included a large number of apartments and condominiums, retail outlets and restaurants that transformed the town, founded in 1964, into a thriving destination in high demand today.
Similarly, Morristown’s downtown office market experienced increased demand after the city eased its opposition to apartments and condominiums. Office rents there today average $40 a square foot, which is 25 percent higher than the Northern New Jersey average, according to a new Newmark Knight Frank market research report.
Deloitte, the accounting firm, recently leased 110,000 square feet at M Station, a new commuter rail development on Morris Street.
“New Jersey is in global competition for businesses, talent and where people live. The state’s got great benefits, but a lot of negatives,” Diaz said. “It needs significant benefits to overcome.”
George E. Jordan writes a weekly column on business and development in New Jersey. He may be reached at george@griotmediaworks.com.
"story" - Google News
February 22, 2021 at 06:21PM
https://ift.tt/2ZBsipX
An unlikely real estate success story amid the pandemic | Jordan on Business - nj.com
"story" - Google News
https://ift.tt/2YrOfIK
https://ift.tt/2xwebYA
Bagikan Berita Ini
0 Response to "An unlikely real estate success story amid the pandemic | Jordan on Business - nj.com"
Post a Comment