A rendering of the proposed Harborside 4 tower within Mack-Cali Realty Corp.’s office and residential complex in Jersey City. — Courtesy: Mack-Cali Realty Corp.
By Joshua Burd
Mack-Cali Realty Corp. has taken the wraps off its plans for a new 1.2 million-square-foot office tower that it hopes to build in Jersey City under a joint venture with SJP Properties.
After alluding to the plans in recent months, the company offered new details about the partnership on Monday as it announced its leasing activity for the third quarter. The new building will be known as Harborside 4, transforming what is now a parking lot within the company’s office and residential complex along the Hudson waterfront.
The developers will require anchor tenants in order to break ground.
“We chose SJP, who will be an equity partner in the proposed venture, because Steve Pozycki, the founder, is a master builder with an unmatched record of building iconic structures on time and on budget,” Michael DeMarco, Mack-Cali’s president and chief operating officer, said in a prepared statement. “The project only gets built if we achieve substantial preleasing at our desired rates. We believe tenant demand is there today, as is our ability to finance and add an additional equity partner, if necessary.”
SJP has developed some of the state’s most iconic office buildings in recent years, including Panasonic’s three-year-old North American headquarters and Prudential Financial’s new tower, both in Newark. The developer is also behind the three-building, mixed-use complex in Hoboken known as Waterfront Corporate Center.
Mack-Cali and SJP are now soliciting tenants for the site, which is across Hudson Street from Harborside buildings 1, 2 and 3 and adjacent to building 5. Nearby, Mack-Cali and Ironstate Development are building a 769-unit residential tower known as URL Harborside.
For Mack-Cali, the joint venture comes after more than a year of refocusing its efforts on the Hudson waterfront, where it owns 4.3 million square feet of office space. The real estate investment trust recently relocated its headquarters to Harborside 3 from its longtime suburban home in Edison, and it has announced plans to spend $50 million to $75 million to transform its footprint in Jersey City.
But Mack-Cali has already seen success along the waterfront, which was highlighted Monday as it announced its latest leasing results. The company signed new leases at Harborside 2 during the summer with Omnicom, a global advertising and marketing firm, and Zurich American Insurance for a total of more than 144,000 square feet.
And the Hudson waterfront represents the tightest submarket in the state. Average asking rents in the submarket were $36.10 per square foot to end the quarter, according to Newmark Grubb Knight Frank, while availability fell to 12.2 percent from 12.8 percent.
All told, Mack-Cali inked 62 leases during Q3, totaling 664,490 square feet for its office and flex commercial holdings, according to a news release. Nearly 299,000 square feet or 44 percent of that activity came from new leases.
At quarter end, its core, flex, and waterfront properties were 90.3 percent leased across 19.8 million square feet.
The company’s overall percentage leased when including non-core assets was 87.7 percent through September, up 1 percentage point Q2. Mack-Cali also said its Q3 leases reduced 2017 expirations by almost 100,000 square feet to 2.9 million square feet.
Mitchell Rudin, Mack-Cali’s CEO, said the company executed 218 leases totaling 2.5 million square feet through the first nine months of this year. That total includes 830,000 square feet of new leases.
“We are pleased with the significant leasing momentum we’re seeing across our portfolio, particularly along the Hudson River Waterfront, where occupancy achieved 95 percent,” Rudin said, later adding: “We continue to be focused on core markets and key properties with an eye toward transforming these assets with first-class amenity packages.”