-- Trades Illustrate Accelerating Trend Involving Suburban Office Repositioning Plays --
The Parsippany, N.J.-based investment sales team at Colliers International Group Inc. (NASDAQ:CIGI, TSX:CIG)saw a busy end to summer, closing nearly 1.2 million square feet in northern New Jersey office property dispositions during the past month. This includes two former corporate property trades in Morris County, representing a special servicer; both illustrate the accelerating trend of investors purchasing vintage buildings for repositioning purposes.
Headed by Jackie Chesler, Richard J. Madison and Jonathan Schlussel, the team in August orchestrated the $7.6 million sale of Kemble Plaza I to Onyx Equities. Located at 340 Mount Kemble Avenue in Morris Township, the 387,000-square-foot, Class A asset is the former corporate headquarters of AT&T. The building sits 40 acres, just five minutes from vibrant downtown Morristown and right off I-287, proximate to multiple regional thoroughfares.
“Kemble Plaza I is one of only six buildings in Morris County with at least 125,000 square feet of contiguous available space, making it an ideal candidate for repositioning or redevelopment,” Chesler said. “Additionally, the Morris Township administration is forward-thinking and interested in examining potential re-uses, which added further appeal to the offering.”
In Pine Brook, the team arranged the $2.5 million sale of 34 Corporate Plaza to a private, New Jersey-based buyer. Located at 34 Maple Avenue, directly at an entrance to I-80, the 130,000-square-foot office building has a history of blue-chip tenancy, with previous occupants including Pitney Bowes and Echostar, among others; it is currently 14 percent occupied. The property has Industrial I-1A zoning, which has more than 25 permitted uses including office, medical use, nursing homes, assisted living facilities, laboratories, warehousing, wholesale distribution, and fitness centers.
“The permitted zoning along with exceptional highway access drew significant investor interest for 34 Corporate Plaza,” Chesler said. “Good things are happening in the Parsippany office submarket, which has seen over 300,000 square feet of leasing activity in five of the last six quarters. The availability rate has dropped nearly 5 percentage points in the last 18 months.”
Both properties sit in the heart Morris County, where affluent and well-educated demographics have attracted investors and corporate space users for decades. “Following many years during which investors largely targeted stabilized assets, we are seeing notably stepped-up activity involving Northern New Jersey’s aging and lower-occupancy inventory,” Chesler noted. “Developers are rethinking and repositioning suburban office buildings and campuses to accommodate a new generation of tenants or redeveloping them for alternate use. Many of these buildings have not seen a proper infusion of capital in some time, and they are being purchased, improved and maintained at a lower basis than neighboring competitive properties.”
Other recent Northern New Jersey office investment sales orchestrated by the Colliers team included Continental Plaza, a 650,000-square-foot, landmark corporate property in Hackensack, Bergen County.
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