A rendering of Ironside Newark — Courtesy: Edison Properties
By Joshua Burd
When it comes to Newark, Dudley Ryan’s pitch to potential tenants and investors is noticeably shorter than it has been in years past.
He points to the fact that the city has seemingly broken through what he calls “the perception barrier.”
“People — from corporations to institutions and individuals — they’re starting to get it,” said Ryan, a broker and senior vice president with CBRE. “They accept it. So we don’t have to spend that first 10, 15 minutes explaining what’s going on. We can get right into what may tailor to their interests more than some other asset.”
The recognition is a long time coming for Ryan and anyone else who does business in Newark, which has benefited from being a finalist for Amazon’s second headquarters project. That means the city is enjoying not only a surge of new private-sector investment, but also a level of interest that is helping to break the stigma that has plagued it for decades.
That optimism was on display last week during a panel discussion hosted by CBRE, where experts took stock of the recent momentum and what is still to come. The city has captured two of the state’s largest, most high-profile office deals over the past year — with commitments from Mars Wrigley Confectionery U.S. and Broadridge Financial Solutions — while a growing pipeline of apartments is poised to bring new living opportunities.
It all promises to make Newark more than just a commuter hub.
“That thinking of ‘How do we continue to just get people into Manhattan?’ I think is now finally turning a corner, where the desire to live and work in the same place is undeniable,” said Aisha Glover, president of the Newark Community Economic Development Corp. Speaking in a room high atop Newark’s 2 Gateway Center, she said the city is now in line to continue building both its workforce and its residential base.
“We have more and more corporations moving in and we have this live-work environment — with more amenities also coming in the picture — where finally we will be able to create that kind of all-inclusive environment that we want right here in the city,” Glover said.
There’s no understating the benefits of being shortlisted as a finalist for Amazon’s HQ2 project, the panelists said, noting that it has raised Newark’s profile tremendously and will bring benefits regardless of the company’s final selection. Glover called it “a golden opportunity” for the city to capitalize on that recognition.
But the recent commitment from Mars Wrigley has also rippled through the state. The iconic candy company said late last year that it would move to downtown Newark and is now slated to occupy more than 100,000 square feet at Ironside Newark, Edison Properties’ adaptive reuse of a historic warehouse on Edison Place and McCarter Highway.
Since then, developers have appeared increasingly confident in the city’s corporate cachet. Jeff Babikian, executive vice president with CBRE, pointed to the Edison site along with recently unveiled plans by SJP Properties and Lotus Equity Group, which both involve large office components.
“You’ve got … three very qualified developers that have tied up sites and are spending a lot of money to spec not the development, but everything it takes to attract the next wave, the next tenant, because they see it now,” Babikian said. “They’re not spending money today to make money seven years from now. They’re spending money today to make money in the next three years.”
Those projects have led to Newark drawing an increasing number of weekly tours, he said. And it goes hand in hand with a change in the perception that has long held the city back.
Babikian and other panelists said venues such as the Prudential Center, New Jersey Performing Arts Center and the Red Bull Arena in Harrison — the so-called billion-dollar triangle — have gone a long way toward driving that change. The impact of those venues will be magnified as new residents move into the city and add to the nighttime population around the downtown.
“It’s all about that slow momentum of getting people comfortable with coming into town,” said Jeremy Neuer, an executive vice president with CBRE. “And if they can come at night, the daytime is easy.”
Last week’s panel, moderated by CBRE Senior Managing Director Jeff Hipschman, brought together experts from the real estate services firm, highlighting everything from Newark’s infrastructure to its residential construction pipeline. Below is a sampling from the rest of the discussion.
Neuer on how Newark can benefit from shifts in transportation
“The city is poised to really change more efficiently than any other of our markets, when you talk about driverless cars or ride-sharing — Uber, Lyft,” he said, noting that the majority of ride-share trips start or stop at a mode of transportation.
“So if we keep going in that direction, parking will become less and less of an issue, the cost to park will become less of an issue, because people are just going to be coming here in different ways. We’ll see people using an Uber pool coming from the suburbs, not having to worry about where to park and how much it’s going to cost — because, once you take the driver out of Uber, the cost goes down.”
Cheryl Hardt, CBRE first vice president, on the city’s growing residential pipeline
“Housing has become the lifeblood of not only the CBD, because when Mars comes here and other companies look here, they want to know if their employees can live here as well,” she said. “That’s a very important concept. Everyone is looking for that live-work-play.”
She noted, for instance, that the 160 apartments at the newly rehabilitated Hahne & Co. building are fully leased and that the 245-unit One Theater Square project is coming online soon. She said it was critical for the city to keep its focus on growing that pipeline.
“We’re increasing our inventory. And that’s a good thing because, when you speak to investment people, the runway for multifamily demand is so hot, so there’s tremendous opportunity,” Hardt said. “And that’s probably one of the reasons you’re seeing so many inquiries about it because it’s not only here in the central business district, but in the neighborhoods throughout the city.”
Jon Meisel, CBRE senior vice president, on the importance of Newark’s vast network of high-speed, affordable fiber
“It’s just a very robust network, which means that corporations have endless supply of bandwidth,” Meisel said. “And on a more localized level, when companies are moving now and because of the change in the industry, companies are taking their servers out of their space and they’re putting them in third-party providers.”
He noted that companies such as Broadridge, which leased more than 160,000 square feet at 2 Gateway last year, put their servers with a third-party provider. That makes the robust fiber infrastructure all the more important.
“They need access, they need large pipes, they need that information flow to move,” Meisel said. “And especially since folks are going to the cloud, that’s another form of taking your information out of your office and putting it remote, so you need to get there, you need redundancy like we’ve been talking about. You need the bandwidth and you need something reliable. And that’s what you get here.”