Harborside Plaza 3 in Jersey City — Courtesy: Mack-Cali Realty Corp.
By Joshua Burd
Michael DeMarco recalls arriving at the Harborside complex in Jersey City during his early days with Mack-Cali Realty Corp.
One thing was noticeably absent.
“There wasn’t a stick of furniture downstairs, there wasn’t a stick of furniture outside,” said DeMarco, the company’s president and chief operating officer. “When we showed up, it was just barren, so the first thing we did was start buying patio furniture — literally, by the truckload.”
It may not have seemed like a baby step at the time, especially with the expense of buying tables and chairs for 300 people. But it was just the start of Mack-Cali’s plans for its 4.3 million square feet of office space in Jersey City — a valuable asset that the company has vowed to focus on as it charts a course to the future.
Keeping that focus just got a lot easier. Last month, the real estate investment trust moved its headquarters to Jersey City from its longtime home in Edison, taking up space in a 27,000-square-foot, fourth-floor office in Harborside Plaza 3.
In an interview this week, DeMarco said the new location will go a long way toward encouraging the company to embrace change. The organization has been known to do quite the opposite in past, he said, but he feels the move will help achieve that goal while also positioning it well going forward.
“Any time we want to hire a new employee now, our employee base changes, because I can get a kid who works in Hoboken, I can get a young woman who works out of Williamsburg or lives in Chelsea,” he said. “It doesn’t have to be people who are in that kind of Cranford-Clark-Middlesex County area.”
And DeMarco, who joined Mack-Cali in June 2015, has repeatedly touted the concept of “living above the store.” That becomes all too important when you consider Mack-Cali’s plans for Harborside: Last week, the company detailed plans to upgrade and transform many parts of the complex at a cost of $50 million to $75 million.
For instance, construction crews are gutting what was a management office on the ground floor of Harborside Plaza 3. The space, which faces the Hudson River and the Manhattan skyline, will instead be used for retail and restaurants.
But the most high-profile upgrades are expected to take place at Harborside 1, the oldest piece of the complex. An upcoming lease expiration with Deutsche Bank, which is the largest tenant in the 400,000-square-foot property, will allow Mack-Cali to transform part of the structure with floor-to-ceiling glass walls and make the improvements needed to support denser office requirements.
When it’s complete, Mack-Cali expects to deliver what is essentially a new building to the marketplace.
“The front door of the building is the closest thing to the PATH,” DeMarco said. “So we turned around and we said to ourselves, ‘How do we turn that into first-class space?’ ”
The company hopes to capture a market that is already trending in its favor. When DeMarco joined the REIT as president, coming in last year alongside CEO Mitchell Rudin, leases within Harborside were being inked for around $31 per square foot, he said.
Today, rents have risen to above $40 per square foot, DeMarco said, “which really changes our view toward how to market the space.” Mack-Cali is now working with other landlords in the area to form a special improvement district around the waterfront office buildings.
In the meantime, the company will continue to focus on the little things, as well as the type of big-picture thinking that will help Harborside thrive in the future. Achieving both will only continue to make Jersey City a viable option for tenants elsewhere in New Jersey and for those in Manhattan that may be pondering a move across the river.
“Brooklyn and Queens become much farther now, so we have a competitive advantage,” he said. “Relatively excellent transportation, good amenities, and if we can shape up the place to be a little bit nicer, people would love to be here.”