The daylong Jersey City Summit in Jersey City included an office panel featuring (from left) David Blumberg of 601W Cos., Jeff Gural of GFP Real Estate, Brian Lindenberg of Ares Management, David DeMatteis of Cushman & Wakefield, Jay Biggins of BLS & Co., Anthony Cammarata of Goldman Sachs and Robert Baker of Scarinci Hollenbeck, its moderator. — Courtesy: Jersey City Summit
By Joshua Burd
If there were ever a time for optimism — specifically for Jersey City’s embattled office market — it may as well come after a blockbuster 548,000-square-foot lease.
That bullishness was evident in late May at the annual Jersey City Summit, where panelists were largely upbeat and confident that the submarket was due for a major uptick after several challenges in recent years. Bank of America’s high-profile lease at 525 Washington Blvd. is evidence of that, they said, while noting that the city’s booming residential pipeline will support a new paradigm of companies meeting their employees where they live.
“I think you’re going to see over the next year that Jersey City is really going to re-establish itself as the financial service head of New Jersey,” said David DeMatteis, a broker and executive managing director with Cushman & Wakefield, who noted there were “a lot of other deals buzzing around right now” after Bank of America’s lease late last year.
“There are going to be a number of long-term commitments, and it’s going to be back on track.”
DeMatteis, part of the leasing team behind the BofA deal, was among seven panelists who discussed the office market during an event that drew more than 1,300 registered attendees. He said that, while vacancy across the Hudson waterfront is 26 percent, that total obscures the health of individual areas such as Hoboken and Newport with rates of just 1.5 percent and 15 percent, respectively.
Vacancy near the Exchange Place PATH station is 34 percent, DeMatteis said, but that’s due in large part to the sprawling Harborside complex being “in limbo” as Veris Residential Inc., formerly Mack-Cali Realty Corp., was in the midst of selling off several buildings. That’s now set to change under the ownership of 601W Cos., which acquired buildings 1, 2, 3, and 5 last year and is preparing to launch a major update of the nearly 3 million-square-foot portfolio.
“What’s happened over the last four years has been a game of tug of war between employees and employers,” said David Blumberg, a managing director with Manhattan-based 601W. The firm now aims to help its tenants lure workers back to the office with the addition of a fitness center, a conference center, a new bar within Harborside’s vast atrium and a rooftop deck with sweeping views of New York City.
Renderings of those amenities were on display throughout the Harborside complex on May 29 as the property played host to the Jersey City Summit.
“We believe that, long term, the office market is very viable,” Blumberg added. “It obviously took a hit over the last few years, and our position on the types of buildings that tenants want to go to … is primarily around amenities.”
He and other panelists also cited the impact of the development boom that has brought tens of thousands of new apartments to Jersey City in recent years, especially downtown. Jay Biggins, a site selection expert with Biggins Lacy Shapiro & Co., said that dovetails with the “amazing sea change” that began during the COVID pandemic, whereby many workers no longer want to endure long commutes after getting a taste of remote or hybrid work schedules.
“If it’s a mixed-use market, the residential is really what brings the 24/7 life to the streets and supports the amenities,” said Biggins, an executive managing director with Princeton-based BLS. “And it makes the office leasing job fundamentally easier than if you’re having to commute here.
“Part of what we do is corporate site selection and looking for the right locations — and access to employees is always at the top of what (a company) wants,” he added. “So if you can deliver a vibrant mixed-use community with residential, retail and office all in proximity, that’s the holy grail for success.”
Moderated by Robert Baker, a partner with Scarinci Hollenbeck, the panel also included Anthony Cammarata of Goldman Sachs, Jeff Gural of GFP Real Estate and Brian Lindenberg Ares Management. The discussion covered everything from trends in amenity spaces to the prospect of converting struggling office buildings to residential uses, an idea that was largely dismissed as too costly or not practical from a design standpoint.
Instead, speakers focused on what they said are brighter days ahead for Jersey City’s stock of mostly Class A office buildings. One key, Blumberg said, is that the city has transitioned from its days as a back-office destination and is increasingly drawing interest as a primary location for companies. That’s due in large part to the growing residential population and a construction pipeline that’s still robust.
The panelists pointed to upcoming projects by New York real estate giants that recently crossed the Hudson River. Among them are the Related Cos., which acquired a vacant 1.34-acre parcel at Harborside 4 where it plans to build 750 apartments, and Tishman Speyer, which recently broke ground on a two-building 1,941-unit project at 50 and 55 Hudson St.
Meantime, LCOR has acquired a two-acre development site west of Harborside that is slated for 624 luxury rentals.
“If you just walk around, within a five-minute walk of here, there are thousands of apartments going up,” Blumberg said, adding: “Jersey City has been exploding over the last decade on the residential side. And, from our vantage point, that’s tomorrow’s workforce.”
Blumberg also said it was critical to remember the value that Jersey City still offers for not only apartment renters, but corporations. He noted that “the best office buildings in New York City have eclipsed $200 a foot in rent,” roughly four times what a tenant will pay for top-tier space in Jersey City — in a location that’s only a five-minute train ride to Lower Manhattan.
DeMatteis, meantime, said Jersey City has emerged as “a natural 15-minute city” in which residents can walk to work and a host of dining, nightlife and cultural amenities. That includes the Newark Avenue pedestrian plaza that was closed to vehicular traffic a decade ago and is now a walkable hub of bars and restaurants.
The appeal of an active, mixed-use setting was also evident when Bank of America toured what’s known as Newport Tower, he said. He noted that the 1.1 million-square-foot property owned by BentallGreenOak “had the distinct advantage” of being attached to the Newport Centre mall, while also having street-level retail space and being surrounded by residential buildings.
“That really came to fruition when we did the Bank of America deal last year,” said DeMatteis, who represented ownership alongside C&W’s Robert Rudin, Mina Shehata, Dirk Hrobsky, Karl Helgessen, Jan Randall Dausend and Christina Magill. “Tenants want to feel that they’re in a vibrant area and that there are things to do.”
That’s a sign of things to come for the Harborside and Exchange Place neighborhoods, he said.
“The downtown we know here is really going to start to wake up, and the employee base that’s going to work in all of these buildings and that does work in these buildings is now living here versus commuting from the other side of the river like they used to,” he said. “So I think that’s critical to the future of this market.”
