One Gateway Center in Newark
By Joshua Burd
As a real estate investor, John Saraceno says he has been “a frequent looker” in Newark over the past 25 years, believing the landmark Gateway Center was “the key to everything.”
But the prospect of owning part of the office complex was far less attractive without being able to control the indoor walkways that connect the four buildings and Newark Penn Station, he said. Ownership of Gateway has been disjointed for decades, with different levels of distress at each building, leading to a lack of consensus and a lack of improvements to the concourse.
Those days are over. On Thursday, a joint venture announced that it has acquired 1, 2 and 4 Gateway Center, allowing it to consolidate ownership of 1.6 million square feet of office space.
Saraceno’s firm, Onyx Equities LLC, is part of that group and is now spearheading the effort to modernize the network of pathways, part of a high-profile effort to overhaul the complex.
“No one has ever had enough mass in the Gateway Center to control the concourse,” said Saraceno, a co-founder and managing principal of Onyx. “We’re the first owners since it was built that has the ability to effectuate real change.”
The joint venture also includes Garrison Investment Group, Axonic Capital LLC, Taconic Capital Advisors and Prudential Financial. Terms of the deal were not disclosed.
For Onyx, the deal follows an announcement last May that it would take over management, leasing and construction oversight of One Gateway Center and take the lead in repositioning the 523,000-square-foot property. The Woodbridge-based firm was working on behalf of Axonic Capital and Taconic Capital at the time, but noted that the investment groups have since consolidated their ownership of 2 and 4 Gateway as a partner and creditor.
That has paved the way for Onyx to move from a management role to an ownership role and invest into the deal alongside Garrison Investment Group, Saraceno said.
“To us, all of the value is in improving the experience that you have when you enter the concourse,” he said, from heating and cooling to lighting and retail offerings. “Unless you get control of more than two assets, you can’t get to that point.”
The deal comes amid growing interest in Newark from developers, investors and large corporations. Mars Wrigley USA is set to anchor the nearby Ironside Newark project, a former warehouse that Edison Properties is rehabilitating as loft-style office space, while the city was named a finalist last year for Amazon’s coveted second headquarters project.
Gateway benefits from being directly adjacent and connected to Newark Penn Station and its location along McCarter Highway. Onyx and its partners now plan to spend anywhere from $30 million to $50 million over the next two years to improve the complex, including tenant spaces and building systems that Saraceno said have been neglected for 20 years.
But the most significant upgrades will come to the concourse and the streetscape around the office towers, he said. The owners are planning “a complete and total redo” of the 1,400-linear-foot concourse,” one that will offer more light and air, enhanced retail and “a much more attractive and comfortable experience.”
Some of the concourse’s existing retail space would likely be shifted outside. At One Gateway, for instance, plans call for extending the building façade to the curb to create a two-story retail environment with restaurants and retailers on the ground floor.
The project will look to reverse the historic design of the complex, which sought to allow commuters to get to work in Newark without ever stepping onto the street.
“I think that trend has changed and I think it’s changed forever — and we want to build on that,” Saraceno said, noting that ownership plans to make the spaces equally accessible from the inside of the buildings and the street.
“It will be completely and totally changed so that it is a modern representation of what an urban environment is in the state of New Jersey or, for that matter, anywhere else,” he said.
Undoubtedly, Onyx will draw on its track record and expertise from projects such as 30 Montgomery St., a 313,000-square-foot tower that it repositioned in Jersey City. The firm is also overhauling 340 Mount Kemble Ave., a 400,000-square-foot office building just outside downtown Morristown.
The common thread among the three projects is proximity to a central business district, he said, but “Newark takes that concept to a whole different level because, in my personal opinion, Gateway is the most significant urban asset in all of New Jersey.”