The Newark Regional Business Partnership’s annual Real Estate Market Forecast included an expert panel of developers and professionals. — Courtesy: Harold Banks/Prudential Financial. Head shots courtesy of NRBP/Sean Sime
By Joshua Burd
There’s no disputing that commercial real estate in Newark is on the radar of global investors, following last year’s $165 million sale of the iconic Panasonic tower to a Kuwait-based fund.
But Kevin Collins believes the blockbuster deal also sent a message to local operators.
“I think the real benefit is to other property owners who now see that the market recognizes that valuable real estate can be located in Newark,” said Collins, managing partner of C&K Properties. “And it is an incentive to continue to invest in your properties and upgrade them.”
The sale of the 337,500-square-foot, 12-story office building, which is less than four years old, was among the successes highlighted Tuesday at a forum hosted by the Newark Regional Business Partnership. A panel of owners and experts weighed the impact of the sale and the promise of Newark’s construction pipeline, as the city enjoys new momentum and recognition for a series of recently completed, high-profile development projects.
Those new projects include the state-of-the-art, 44-story Prudential Financial tower on Broad Street, which opened in 2015 and played host to the NRBP’s annual real estate forecast on Tuesday. Only a block north is the rehabilitated Hahne & Co., a historic building that reopened in late January as a mixed-use complex with 160 apartments and retailers anchored by Whole Foods.
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Jon Cortell of L+M Development Partners, which spearheaded the Hahne’s rehab, said “we feel substantively that the work we have celebrated so far is only part of the story.” The firm is now turning its focus to 540 Broad St. — another two blocks north — where it plans to convert the former home of New Jersey Bell to 265 mixed-income apartments, offices and ground-floor retail space.
“We think that with New Jersey Bell, we better enable the extension of this cultural district,” Cortell told a crowd of more than 300, noting that the project will help connect the different neighborhoods within downtown Newark. “By extending from Hahne’s northward, we are doing a job of bringing in the institutions that are there and may further the enterprise.”
Cortell, L+M’s vice president for development, added that “there is obviously a great deal here and I think the record shows so far that people are seeing it.” He said nearly 50 percent of the market-rate units at Hahne’s have been leased, a sign of the demand for high-end apartments in the city.
That bodes well for One Theater Square, Dranoff Properties’ long-awaited, 22-story luxury residential tower near the New Jersey Performing Arts Center. Julia Gustadt, chief investment officer for the Philadelphia-based developer, agreed that it is a source of confidence for the firm after breaking ground on the $116 million project last fall.
“We’ve always believed in the product and we’ve always believed … in the ability to attract residents to Newark,” Gustadt said. “I think that Hahne’s is really proving that story, and that certainly helps us.
“And I think when you look across what other options people have — particularly along the Gold Coast — rents continue to go up,” she said. Gustadt added that the project will offer apartments that are comparable to a high-rise in Jersey City, Hoboken or Manhattan, but “at a little bit better price (with) all of the other amenities you have in Newark that are here that you get to enjoy.”
RELATED: One Theater Square: The right project at the right time
One Theater Square, which will include 245 rental units and 12,000 square feet of retail space, is one of several new projects in the city’s pipeline after an earlier wave of construction that included the Panasonic and Prudential buildings and Hahne’s. The pipeline now includes a host of residential projects, moderator Frank Giantomasi said, raising the prospect that Newark can recuperate a portion of the population it lost after the late 1960s.
“I think this is going to be a change and I think a lot of good things are coming,” said Giantomasi, a member of Chiesa Shahinian & Giantomasi PC. “So I’m very bullish on Newark.”
Among the other high-profile projects still to come is Mulberry Commons, a plan that calls for redeveloping the surface lots around the Prudential Center into a sprawling park and mixed-use development that links to Newark Penn Station. Those plans include Ironside Newark, a project in which Edison Properties, one of the lead developers of Mulberry Commons, is converting a 110-year-old warehouse into office and commercial space.
RELATED: With a new name, mixed-use park around Prudential Center moves forward
It’s why Michael Sommer, Edison’s executive vice president of development, said the recent positive events for other Newark developers and owners are “good news for all of us as far as I’m concerned.”
“We like all this conversation about high-rise residential and about more density in the downtown and about numbers hopefully approaching 300,000 again,” Sommer said. “Capital follows talent, so from an office perspective, we love the idea of that migration back to the inner core.”
Jennifer Carrillo-Perez, of counsel with Connell Foley LLP, said the variety of the construction in both geography and asset type was especially noteworthy. That range includes office, residential and higher education, she said, adding that it was “not only in the downtown core, but within the neighborhoods.”
“The excitement is there,” said Carrillo-Perez, a native of the city. “Newark isn’t trying to find its voice — it’s actually just expressing it. We always have had an identity and now we are just reintroducing it to the world.”
The prospect of bringing new residents to Newark is one that could even benefit the industrial market, a sector that is typically separated from the heart of the city because of its reliance on Port Newark-Elizabeth and Newark Liberty International Airport. But William Waxman of CBRE pointed to the new distribution centers under construction in the city for Fabuwood, a cabinet maker, and HelloFresh, the meal kit delivery service.
“What I’m hearing with all this new development is quality labor — not just bodies, but attracting quality labor to this Newark community,” said Waxman, an executive vice president with CBRE. “And for somebody like HelloFresh, that’s very important. If they’re unable to attract the types of workers that they need, they’re out of business, so it’s great to hear this.”
