Improvements at 30 Montgomery, a 313,000-square-foot office tower renovated by Onyx Equities, called for building a new conference center and other improvements. — Courtesy: Onyx Equities
By Joshua Burd
As a crowd of several hundred looked on, Adam Popper asked for a show of hands.
“How many people have an iPhone?” he asked the attendees, before proceeding to ask how many had checked their email during the panel discussion that was taking place in front of them.
Popper explained his reason for inviting the audience participation.
“The iPhone is 10 years old, which means that your institutional tenant that signed a 10-year lease — when they moved into that space 10 years ago, their IT department had not approved the use of an iPhone,” said Popper, a senior vice president with Columbia Property Trust. “Everyone — you, your customers, their employees — are all working completely differently than they did 10 years ago. So how do landlords adapt to that?”
It was among the most pressing questions recently as industry experts gathered for the Jersey City Summit, a conference that drew some 700 attendees to the Hudson waterfront. With the office building known as 70 Hudson as a backdrop, a panel spoke about the changing makeup of office users and what landlords must do in order to compete for those tenants.
First and foremost, they said, owners should take note of changes in how those tenants are using their space.
“When you’re talking about new uses, it’s really about density and leveraging the ability to get more people on the floor in a comfortable manner,” said Peter Bronsnick, senior vice president with SJP Properties. “And that is something you can achieve when you build and design efficient buildings.”
With the increase in density, Bronsnick said air quality and modern HVAC systems are as critical as ever. He also cited the importance of shared spaces such as huddle rooms and other areas that allow for flexibility throughout the workday.
The panelists also pointed to the evolving array of amenities that landlords must offer in order to distinguish themselves and cater to firms whose employees are spending more of their time in the office. Jonathan Schultz, co-founder of Onyx Equities LLC, said “you can just name it and it’s been asked for” in commercial spaces — from yoga studios to doggie daycare.
“To me, it’s almost like office buildings are becoming more of the mindset of what a hotelier would think,” Schultz said. “That service level is going to be required in the future, because … (tenants) definitely have more people in their space today, which means that more upkeep, more maintenance, more services are going to be required internally.”
Popper, who oversees the Northeast for Columbia Property Trust, went as far as to say that building owners must provide concierge-style services.
“We have to stop going to the document and saying, ‘Well, what does the lease say?’ ” Popper said, later adding: “Amenities are more than just checking boxes and having a roof deck, having a conference center or having coffee service. It’s literally listening to your tenants to solve their problems. The one who solves the problem is going to be the winner in this aggregation of tenants and attracting tenants.”
Offering additional amenities will inevitably require a bigger footprint, Schultz said. But landlords can find a middle ground in submarkets such as the Hudson waterfront, he said, noting that, “in cities, it’s easier because a lot of the amenities can be on the outside.”
Moderated by Alexis Lazzara, of counsel with Connell Foley LLP, the panel was one of several presentations at the Jersey City Summit on Oct. 31. The conference highlighted the surging development and investment pipeline in the state’s second-largest city, touching on everything from office and retail to the area’s emerging neighborhoods.
Jersey City and the Hudson waterfront submarket are now attracting a more diverse tenant mix, the panelists said. According to Bronsnick, the submarket has evolved beyond simply a hub of back-office operations for large financial institutions. Today, that mix includes companies such as Omnicomm, a marketing communications firm that leased some 80,000 square feet last fall in Jersey City, as well as tech users.
And Bronsnick said the attraction continues to be not only lower rents than Manhattan, but access via the PATH system, ferries and other modes of transportation: “The ability to get here … (is) what differentiates Jersey City from some of our competing markets in Brooklyn,” while also appealing to companies that draw from New Jersey’s western suburbs.
Commutability is especially critical as corporations increasingly focus on recruiting and retention, said Tim Lizura of the state Economic Development Authority. He pointed to a major financial services firm that recently decided to move a large part of its operation out of Midtown and ultimately opted to cross the Hudson River.
“They did a census of where their folks were living and what they could pay their folks,” said Lizura, the authority’s president and chief operating officer. “And they realized they couldn’t really be in the city anymore. They had people in the suburbs, so the company wound up going to Hoboken.
“There are all kinds of conversations that happen, but it is largely centered around: ‘How do I recruit the workforce?’ ” Lizura said.
Popper, whose firm owns the 19-story tower in Jersey City known as 95 Columbus, said tenants in Jersey City now include both institutional users and entrepreneurial companies looking at smaller spaces. And he believes that’s due to a change in how the market views the area.
“I think everyone in this room has to think about Jersey City as no longer a Jersey market and much more as a submarket of the city,” Popper said, referring to New York City. “I think that Jersey City is a neighborhood that is no different than Chelsea, Flatiron, NoMad and Park Avenue South, and I think that people gravitate to specific neighborhoods and no longer to just big swaths of submarkets.”
At the event, which was moderated by Connell Foley Managing Partner Phil McGovern, the panelists said that change is also tied to the city’s surging residential pipeline and the creation of neighborhoods along the waterfront. And they said they expect the office submarket to benefit from not only the growth of the blocks around them, but the continued growth of Manhattan.
“We’re really trying to create some synergy between Hudson Yards and some of the higher-end assets across the river,” Bronsnick said, referring to the 18 million-square-foot, master-planned development on Manhattan’s West Side. “And Jersey City and the waterfront tend to be the beneficiary of the strength of Manhattan.”
