Page 15 - Issue 45 Sept2020

REALESTATENJTM 13
Greiner said, noting that the deals have ranged from one to three years in length.
It remains to be seen if those firms become longer-term occupants in New Jersey. John Saraceno, managing principal of Onyx Equities, said the
renovations over past five to 10 years, he said. According to JLL research, substantially improved properties have leased at rents that are 20 percent higher, with vacancy rates that are 4 percentage points lower.
“It shows that our aging suburban asset class, where invested in, will get rewarded. Companies want to
be there,” said Greiner, who is based in JLL’s Parsippany office. “We have clients who are enacting that (hub- and-spoke model) right now and see suburban New Jersey as a great place to have outposts to attract labor — their existing labor pool who doesn’t
want to commute and future labor sources — so I do think suburban New Jersey is poised to do well in the next few months and the next few years.”
To Saraceno, one of the state’s top value-add investors in the office sector, that makes it all the more important
to continue upgrading an inventory that is 30 to 40 years old. With tenants’ growing focus on cleanliness, wellness and air quality, “obsolescence is going to be exacerbated” in the Garden State.
“That’s one of the wonderful outgrowths of what’s going to happen
here,” he said. “It’s going to force everybody to elevate their game and I think that’s a good thing for the state — and that will lead to that hub-and- spoke concept really taking hold.
“And there will be a decentralization. New York will still be the anchor, but we’re going to have a lot of benefits as that spoke mentality continues to be expanded in the state ... If we do this right and we continue to offer product that allows New York companies and their employees to want to be here — and we can offer them a safe, secure and enjoyable experience — they’re going to come.”
John Saraceno
post-COVID office shift could take longer to play out than what occurred after the Sept. 11 terrorist attacks. Without a vaccine and with building
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occupancy still limited, “clearly we’re going to be talking about this in March of 2021 as we did in March of 2020 when we shut down.”
But he noted that “the big companies learned a lot in 9/11.”
“One of the things they learned is that those that ran out of New York and went to the suburbs, either to live or to work, two years later were being economically punished to try to get back in,” Saraceno said, “because the reality was their employee base and their recruitment was still better in an urban environment than it was in a suburban environment.”
He also balked at the idea that
new college graduates will want
to start their career in a suburban office park, as opposed to the city. He pointed to Facebook’s recently signed, 730,000-square-foot lease at Manhattan’s iconic Farley Building, despite allowing employees to work from home through next July.
Still, the so-called hub-and-spoke model could equate to a more permanent trend. Greiner said some of New Jersey’s young professionals had already started to drift from the city, even before the pandemic, with an eye toward raising families and sending their children to school.
“My gut is those folks had a mindset that they were ready to move anyhow,” he said. “If the talent continues to migrate west into the suburbs, then employers will follow.”
He noted that Newark could also thrive in the current marketplace, given its accessibility by car and its connectivity to Manhattan. But New Jersey’s suburbs are perhaps equally well-positioned. The state has a growing number of office buildings that have gone through significant