Park Avenue at Morris County in Florham Park — Courtesy: KBS
By Joshua Burd
An affiliate of KBS has sold a six-building, 1.19 million-square-foot office park in Florham Park for more than $300 million, in a transaction arranged by CBRE.
The private equity real estate firm announced Tuesday that its KBS Real Estate Investment Trust II has closed on its sale of Park Avenue at Morris County, a well-known complex off Route 24 and Columbia Turnpike. A private buyer purchased the campus for $311 million after a high-profile, multimillion-dollar renovation and improvement project over several years, which added everything from new mechanical systems to a soccer field to a car wash service.
The project brought occupancy at the complex to 89 percent at the time of the sale.
“KBS’ business objectives align closely with those of our tenants — a core value that drives our ability to deliver environments today’s top companies want to call home,” said Marc DeLuca, KBS’ regional president for the Eastern U.S. “We consistently go above and beyond physical attributes in order to deliver the onsite conveniences and services that help our tenants attract and retain talent in a competitive marketplace such as Florham Park.”
Jeffrey Dunne and Jeremy Neuer of CBRE represented KBS in the sale at 100-600 Campus Drive, while also procuring the buyer.
“KBS’ decision to acquire this premier Northern New Jersey office campus was due in part to the strong absorption and tenant demand in the area,” said Dunne, a vice chairman with the firm. “The average lease term for tenants at this property is 10 years, which indicates a high level of satisfaction with the space and the landlord.”
The deal comes more than a decade after KBS, which is based in Newport Beach, California, acquired the complex in two phases. Its improvement plan included adding a fitness facility with indoor and outdoor spaces and personal training, basketball and volleyball courts, a soccer field and modernized lobbies.
The upgrades were particularly focused on 100 Campus Drive, which serves as the hub for the park’s amenities. Other renovations include new roofs and HVAC units, updated elevators, a conference center and a dedicated on-site concierge and security service.
KBS also touted its focus on improving the property’s food and beverage offerings, which called for upgrading the buildings’ cafeterias, adding a coffee and wine bar in the lobby and implementing a food-delivery service and an interactive mobile app with nearby dining options.
Other additions include an electric car-charging stations and shuttle service that brings tenants to and from the Madison train station, downtown Morristown, The Mall at Short Hills and Newark Liberty International Airport. KBS has also introduced services for shoe shining, car washing and dry cleaning, while building a 7,000-square-foot building occupied by a prestigious private daycare and preschool facility.
“These improvements added tremendous value to the asset,” said Shannon Hill, a senior vice president and asset manager for KBS. “Though we purchased this property during the economic downturn, through strategic upgrades we were able to maintain its prestige in the industry and attract several blue-chip tenants during our ownership.”
The tenants that have signed or renewed leases at the office park include prominent consulting, legal, financial, and services firms, according to a news release. They were among the leading drivers of activity in a submarket that has averaged nearly 650,000 square feet of leasing activity annually over the last five years, according to CBRE.
“Properties in Northern New Jersey are sought out because of its steady office submarket that draws in office executives based on nearby high-end housing and close proximity to Morristown, a millennial hub, in addition to easy access to New York City,” Neuer said. “Pockets of the market with transportation hubs, like Florham Park, are especially attractive to office tenants and are a magnet for attracting large corporate users.”
Bruce Fischer, Howard Chu, and Steven Fleissig of Greenberg Traurig LLP represented KBS as legal counsel on the sale.
“It has been very exciting to watch how this project has been transformed since its purchase,” said Fischer, Greenberg Traurig’s chair of the West Coast real estate practice and co-managing shareholder of the Orange County office, who led the Greenberg Traurig team and represented KBS when the company first purchased the office park. Fischer further noted that Greenberg Traurig moved into its space in the office park in 2015.
