Tim Greiner and Frank Recine
By Joshua Burd
New Jersey’s office market is having perhaps its best year since before the recession.
For all of the landlords and service professionals who are reaping the benefits, brokers with Newmark Grubb Knight Frank have as much to celebrate as anyone else.
Consider this: A team based in the firm’s Rutherford office has had a role in five of the 10 biggest office leases to date in northern and central New Jersey. That includes the largest — Allergan’s 431,495-square-foot lease at 5 Giralda Farms in Madison, where NGKF represented Lincoln Equities Group and saw the payoff to an owner that repositioned a suburban campus.
It’s a strategy that others will continue to emulate in the near term, according to the brokerage team.
“We’ve seen landlords spend a lot of money, so they’re bullish on the market,” said Tim Greiner, an executive managing director with NGKF. “And I think we’re poised to be successful on four or five of those next year, with how they’re being positioned.”
“We think activity is going to keep coming strong.”
Greiner and fellow Executive Managing Director Frank Recine lead the team of seven that has closed more than 2.2 million square feet in transactions. Real Estate NJ spoke with both recently to discuss the market, the makeup of the team and their approach to leasing.
Real Estate NJ: We’re really seeing the benefit to those owners that have spent the money to modernize older buildings — even on a speculative basis. Are there still Class B buildings in good markets, where landlords who may not have jumped on board yet are now catching on to this strategy?
Frank Recine: It’s even the older A product. You have buildings that are considered A product due to the amenities in the building, and even if you look throughout Bergen County — if you look at the Class A assets — I would say three quarters of them have probably gone through some type of capital improvement program and upgraded either the amenities or the systems in the building. So even those A buildings that might not have done anything over the past five or six or seven years are going to have to play a little catchup to the more entrepreneurial landlords that are spending money in the buildings.
Tim Greiner: There are still opportunities out there. I think some companies just don’t have the resources, either human capital or actual dollars, to reinvest. And you still have a bunch of assets that are working through the distressed debt cycle. You still have a number of buildings that are still working through that process and it’s still going to be a couple of years before that process catches up.
You can have a Class A building with securitized debt and the landlords just can’t do anything with it — they can’t restructure the tenant, they can’t invest capital because, frankly, they’re under water with their debt. Until that plays out, you’re going to see that building stay in limbo. There are a couple tenants we represent and we’ve just got to wait until that process plays itself out before we can actually do anything. And there’s a lot of those still out there.
RENJ: Let’s talk about the Allergan deal. You represented ownership in a large, suburban office lease. How did that deal come together and why did it work in that location?
TG: It was an old Pfizer building that was surplus real estate. So Lincoln bought it at the right price, well below replacement cost. Some of the issues we addressed there early on were negative perceptions on the parking: We were light on parking and that, frankly, goes against all of the trends we’re seeing in these deals, where people need a lot of parking in suburban space.
It didn’t appear to be in the main stream. It wasn’t in a downtown environment — it was a bucolic, 50-acre setting. Those two things really were against the general trends in our marketplace, so we really put together a team where we helped tenants re-envision what that building could be like and really highlight the fact that it’s between two dynamic downtowns and that that bucolic setting added some benefit. So, although it’s not necessarily what everybody is looking for, we really played up the wellness theme. It hit home with the pharmaceutical industry that you could be in a really cool, open air, bucolic environment and we played up the idea that that’s good for employees’ health and wellness.
But some of that was luck. … (Allergan) was going through that merger (with Pfizer) that fell apart, and they found themselves almost in an immediate need for new headquarters space. And we were competing, really, with one other product that could accommodate a tenant of that size in the marketplace. So part of it was being ready when that tenant was ready themselves and making sure we had the parking issue addressed and that the building could accommodate what they saw as a future headquarters.
RENJ: How did you address the parking issue?
TG: Early on in the process, we had the mayor of Madison and the other landowners at Giralda Farms get on board with the ability to do the first above-grade structured parking in that park. All of the other structured parking is actually buried beneath the land, and everything there is relatively small surface lots. So we had to show to a tenant that wanted to move fast that we could actually deliver, and the town of Madison was really helpful in that process.
RENJ: You give plenty of credit to your team, which also includes Blake Goodman, Brendan McBride, Jamie Ragucci, Harrison Russell and Colleen Maguire. How did this team come together and when did it click like this?
FR: When I came over to Newmark about 10 years ago … it was myself and Blake Goodman who initially partnered up. Then, shortly thereafter, Tim joined Newmark and it just kind of happened organically, to be honest. We picked up a couple of big agencies, we were working on a lot of projects together. And we were four individuals who were working really well together, and it got to the point where, when 80 percent of your business is with the same folks, we kind of just sat down and said, ‘Let’s formalize this and let’s put a little structure behind it.’
Almost four year ago now is when we really put some structure to it. And over the past two, two and a half years, we’ve seen a tremendous benefit from that.
RENJ: You mentioned that this structure comes largely from a consultant you brought in, given that you’re both brokers, rather than business managers. How does that help run your team?
TG: With this consultant, every month we get together, we lay out our individual and team goals and review them with each other and track where we are. We actually monitor who’s bringing in what business and how we’re doing on numbers of meetings, numbers of leads and where we are in the deal flow — really a much more structured process than anything I’ve ever seen in this business.
FR: You can kind of envision it as we’re almost running a company within a company, so the benefit of it is we’re running a small company as a team, and then we have the benefit of the resources of Newmark. We have the global reach behind us and the tremendous service lines behind us, but we still look at it as almost a full corporation within the organization.
TG: And we leverage off of everybody in the company, so we do work with all of the other brokers in our office. We partner with them in almost every other transaction, so we’re not as siloed as you might think, as most brokers are.
RENJ: Is this the year when you’re really seeing the results of that approach?
TG: Some of those agencies, we were working on for four or five or six years. One of them we were on for 15 months, the others we had taken out of the ground, so we were able to focus on the right agencies so that when the market was hot like it was this year, we were in the right place at the right time.
FR: And part of the process is learning when to say no. As a broker, you want to work on everything, but it’s not always right to work on everything. So (with) those checks and balances as a team to say no and to really dedicate your time and resources to the select clients that you do want to work with, you put more into it versus trying to work on requirements that, at the end of the day, may not make sense for you or the client.
RENJ: Do you feel like there is anything different about the way your team is structured or functions, relative to competitors?
TG: There’s not a lot of teams that’s say, ‘We’re a team of seven and every nickel that comes in the door gets split seven ways.’ Most brokers who are teams are fighting over those dollars that come in the door. It’s not a secret. There’s nobody really structured like this.
FR: The one fallback for me is really the level of trust and respect amongst the individuals. When you level the playing field and everyone is a partner, is really marching to the same beat and has the same goals in mind — and you take the financial component out of it … you tend to build a synergy.
And what’s interesting, as we have these meetings once a month with the consultant, part of it is goals and part of it just avoiding frustration and figuring out what’s working and not working. It’s like a family: As long as you keep the lines of communication open, things are going to work better. It doesn’t mean we all agree on things — there’s plenty of times when Tim and I are butting heads — but at the end of the day, if you can keep an open mind and respect what the other person is saying, everything else around you is going to kind of fall into place. That’s how I’ve seen it and why it’s been so successful.
A year to remember
Newmark Grubb Knight Frank’s banner year in New Jersey comprises assignments for both landlords and tenants and a deal list that includes five of the 10 biggest office leases of 2016. Lincoln Equities Group’s lease of 431,495 square feet lease to Allergan at 5 Giralda Farms in Madison (represented ownership);
- Onyx Equities’ and Rubenstein Partners’ lease of 330,000 square feet at 211 Mount Airy Road in Basking Ridge to Daiichi Sankyo (represented ownership);
- SJP Properties’ and Matrix Development Group’s 337,552-square-foot expansion and lease extension at 2 Riverfront Plaza Newark to Panasonic (represented tenant);
- SJP Properties’ 135,000-square-foot lease at 121 River St. in Hoboken to Marsh & McLennan (represented tenant);
- Dividend Capital Diversified Property Fund’s lease of 105,000 square feet at Plaza 10 in Jersey City to Mizuho (represented tenant)