Merck’s headquarters and research campus at 2000 Galloping Hill Road in Kenilworth spans more than 1.9 million square feet — Courtesy: JLL
By Joshua Burd
A year after announcing plans to vacate its Kenilworth headquarters, Merck & Co. has officially placed the nearly 2 million-square-foot office and research campus on the market for sale.
The pharmaceutical giant has tapped JLL to seek a buyer for the site at 2000 Galloping Hill Road, with plans to lease back the property through at least 2023. In conjunction with the offering, the company joined borough officials late last month to express its commitment to exploring potential redevelopment and expansion plans by a new owner.
Merck is leaving the 108-acre campus as part of a plan to consolidate its New Jersey facilities and bring its employees under one roof at its iconic complex in Rahway.
“The borough looks forward to engaging with prospective buyers at the appropriate time to assess site redevelopment opportunities and to identify ways in which the town can support creation of even greater long-term site value for the owner and the community,” Kenilworth Mayor Linda Karlovitch said recently, according to a statement posted on TAPinto.net. “Such cooperative efforts will be undertaken with a view towards continuation of the (science-, technology- and manufacturing-based) professional employment opportunities that have been a part of the campus DNA throughout its history. However, we seek the highest and best use for the property. This will provide our community with stability into the future.”
Located just off the Garden State Parkway in Union County, the campus includes office and life sciences facilities across five buildings, according to JLL. The largest among them is a roughly 1.14 million-square-foot structure with state-of-the-art labs, a renovated cafeteria, a fitness center, an auditorium, office space and structured parking.
JLL noted that Merck has invested heavily in improvements over the past five years, including the replacement of two power substations, upgrades to the chiller plant, renovation of office space and upgrades to the fitness center and health center.
The brokerage team also pointed to 25 acres of vacant land on the campus, which provides “an opportunity to expand the current use or to reposition for alternative uses.” What’s more, Merck will retain the option to the extend the lease for a 232,000-square-foot office building on the site for another one or two years beyond 2023, as it will for all or a portion of the flagship 1.14 million-square-foot complex.
Members of JLL’s Morristown-based investment sales team — including Dan Loughlin, Jose Cruz, Kevin O’Hearn, Michael Oliver, Steve Simonelli and Grace Braverman, along with Jon Mikula of the firm’s debt and equity group — are leading the assignment.
“The campus is a rare large-scale investment opportunity, combining significant in-place net lease income and development potential,” JLL wrote in its offering materials. “The secured campus is located just off of Exit 138 of the Garden State Parkway, minutes from major distribution highways, an international airport and one of the nation’s leading port terminals, providing ideal opportunity for pharmaceutical or life sciences manufacturing, production, research and office use.”
Merck, which has shifted its headquarters several times in recent decades, absorbed the Kenilworth property as part of its 2009 acquisition of Schering-Plough Corp. The company moved its front office there around six years ago after vacating its iconic complex in Readington, which came as part of an effort to cut costs and reduce its real estate footprint.
It’s now set to return to Rahway, a site that previously housed its headquarters until 1992.
“Merck is committed to working with the Kenilworth community and its public officials in an effort to sell the campus to an owner who will seek to redevelop and enhance the campus for future successful deployment,” said Shefali Shah, Merck’s global lead for real estate, according to TAPinto.net. The company has said it expects no changes to the day-to-day operations at the site or the timeline of the consolidation process as a result of the recent listing.