May 24, 2011 – (RealEstateRama) — The first quarter of 2011 has seen a dramatic resurgence in the Newark office market, especially in the central downtown district. We have seen companies moving here from Manhattan and the other New York boroughs, including Staten Island, as well as from the New Jersey suburbs. In particular, there has been a great deal of activity involving new leases in the 5,000- to 8,000-square-foot category.
In general terms, some of the activity involves companies relocating within Newark, with some of them expanding and others downsizing for economic reasons. But at least 50% of the activity we have been seeing involves companies moving in from outside the city.
While this heightened activity has been seen throughout Newark’s downtown, our own properties provide some good examples of this trend. Our office properties include the newly acquired 570 Broad Street; the 250,000-square-foot, 21-story Military Park Building at 60 Park Place, which our firm acquired in 2007, located near the New Jersey Performing Arts Center; the 160,000-square-foot, 10-story Fireman’s Insurance Company Building at 10 Park Place, acquired in 1990; and the first Newark property our firm acquired, in 1986, the 100,000-square-foot Robert Treat Center adjacent to the Robert Treat Hotel at 50 Park Place.
For some companies, the decision to move to Newark is directly tied to transportation. For example, a real estate company headquartered in suburban Livingston, N.J., decided to relocate to the Military Park Building because many of its employees live in Manhattan and, utilizing the PATH light rail system, found it much easier to commute.
Law firms continue to expand and take space in Newark, because the city is a center of commerce and business, and law firms require proximity to their clients. Our firm, for example, has recently added four new law tenants to our properties, including Jasinski PC, which leased 7,500 square feet at the Military Park Building. Each of these four practices was also drawn by the Newark CBD’s proximity to the city courts, law schools, and transportation infrastructure.
Nonprofits constitute another category that has been actively taking space in Newark. Nonprofits play an important role in the city, serving the community in diverse and valuable ways. Most recently, Somerset Christian College, which has its main campus in Zarephath, N.J., in suburban Somerset County, opened its first Newark facility, leasing 7,000 square feet at the Military Park Building. SCC joins such other recent non-profits at the building as The Against All Odds Foundation, the Neighborhood Assistance Corporation of America, Playworks, TEAM Charter, and The Wight Foundation.
And because Newark is a key center of commerce, companies in that category continue to find a home here. Recently, for example, Ecuadorian-based fruit importer Pacific Group Holdings, known for its Bonita Bananas brand, leased 5,000 square feet in the Military Park Building, for its U.S. headquarters. The company, relocating to Newark from Staten Island, was moved by the Port Authority of New York/New Jersey for their docking purposes.
While new development in general, post-recession, has been sparse everywhere, some important non-office developments in Newark are expected to be catalysts for new office, retail and other development in the Broad Street area. Both are hotel projects: Courtyard by Marriott will open a new hotel—the first new hotel in downtown Newark in 39 years—right outside the Prudential Center Arena, which itself has been a major catalyst for the city. And Indigo Hotel has proposed a boutique 100-room property just two blocks away.
While hotel occupancy and rates were down immediately post-recession, they have rebounded and the new hotels will be welcomed additions as the City of Newark is increasingly becoming a destination. Both new hotels are the result of efforts by the Brick City Development Corp., the City of Newark’s development arm, which continues to successfully bring projects to Newark.
The government of the City of Newark has been instrumental in addressing quality of life issues that have made Newark more welcoming as a place to do business, and the rebound in the office market bears that out. And the State of New Jersey has provided key incentives that have improved the business climate, with the state’s Transit Hub Tax Credit being of particular benefit to Newark. Our firm, for example, has a 3.5-acre transit hub site available right across the street from the Broad Street Train Station, with direct access to Manhattan, a site that is drawing considerable interest.
The old real estate axiom, “location, location, location” is certainly borne out by Newark. The city’s key location on the East Coast corridor is further buttressed by its transportation infrastructure, including key hubs Newark Liberty International Airport and Newark Penn Station, and that is paving the way for the current rebound in the city’s office market and its business climate in general.
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Media Contact:
Evelyn Weiss Francisco
evelyn (at) caryl (dot) com, (201) 796-7788
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