The Jersey City skyline
By Joshua Burd
After more than a year of watching tenants work remotely — and enjoying the freedom that comes with it — Jon Schultz doesn’t feel they’re inherently against going back to the office.
Instead, he said, much of it has to do with one simple question.
“Who wants to commute and sit in traffic?” said Schultz, a co-founder and managing principal of Onyx Equities. “We live in this matrix that we wake up every day and we get to work — sometimes it’s an hour or an hour and a half, depending on where you live — and we’ve gotten used to now not having that. And that’s a shock to the system, in a good way.”
Employers are now hoping to find a middle ground in the coming months, as they determine how best to bring workers back to the office. While that strategy is still taking shape, occupiers have already begun to weigh their post-pandemic options in places such as Jersey City, driving an uptick in building tours and the prospect of new leasing activity.
“Once the vaccination rates started hitting a mark where you started seeing cases drop, we’re seeing a lot of companies — small, medium and large — planning for what their future is going to look like,” said David DeMatteis, an executive director with Cushman & Wakefield. “And each week that goes by, that time horizon seems to be shortening, so we’re back to showing buildings three to four to five times a week, which is pre-pandemic levels down there.”
DeMatteis and Schultz spoke last week at the Jersey City Summit, which was hosted virtually, as they and other panelists debated the future of office usage along the Hudson waterfront and elsewhere. Tenants seem increasingly focused on taking a hybrid approach, they said, meaning there is still an opportunity for landlords with fundamentally strong buildings.
That makes owners such as Onyx Equities, a Woodbridge-based developer, investor and manager, no less bullish on the office sector despite the upheaval caused by COVID-19.
“We get inquiries from all types … and everyone’s trying to figure out their internal footprints,” Schultz said. “But I do believe if you buy the right asset at the right price and that you’re able to put the right amount of dollars into it, with the right vision, you will lease that space.
“Is it going to be exactly the rent you thought you were going to get, when you thought you were going to get it? Probably not, but if you have the right situation you usually end up doing OK. And we’re betting that that’s the case.”
Other Jersey City landlords, including Rob Naso of BentallGreenOak and Mahbod Nia of Mack-Cali Realty Corp., pointed to the focus on amenity-rich, mixed-use work environments that had become increasingly critical before the pandemic. That approach goes hand in hand with the optionality sought by employers as they look to draw their teams back to the office.
“I think landlords that can be incredibly flexible are going to win out in terms of being able to attract tenants,” said Naso, BentallGreenOak’s co-head of U.S. asset management and a key figure in the company’s $10 million overhaul of its Newport Tower property in Jersey City. The global investment manager is now in the midst of upgrading the 36-story, 1.1 million-square-foot building at 525 Washington Blvd., which it launched in conjunction with a recent 20-year, 150,000-square-foot lease renewal by French banking giant BNP Paribas.
Moderated by Philip F. McGovern Jr., managing partner of Connell Foley, the panel discussion also featured Aaron Price of TechUnited and Anthony Cammarata Jr. of Goldman Sachs. Both noted that the concept of a hybrid work schedule developed long before COVID-19, but is now on the table for many more companies going forward.
“The individual company culture will drive a lot of this,” said Price, the CEO and president of TechUnited, an industry association. “The tech industry has been ahead of this curve pre-pandemic, varied by company and culture, but it was not uncommon to have fully remote staff or significantly remote staff in the tech community. I think what the pandemic did here was accelerate the thinking … to make it safer for others to take a risk and feel like it was OK.”
Cammarata, Goldman’s managing director for real estate and corporate services, noted that “flexibility is not new to us,” adding that “our global workplace standard is based on flexible seating, it’s activity-based working and also based on people having the right tools to do their job when and wherever they are.” That has helped create a smooth transition for the investment bank, which has a significant presence in Jersey City, at its landmark 30 Hudson St. tower, ever since it first invited workers back to the office in June 2020.
Schultz believes the pandemic has also allowed small and midsized users to share in the benefits of having a distributed workforce, having been forced to transition to remote work. That could change their approach to real estate and hiring decisions.
“I think the cloud was the winner in this pandemic because medium- and small-size companies … did not have that optionality that the larger companies did have to recruit talent in other places,” he said. “And I think now that we’re all comfortable with this, the entire landscape of tenants now have a chance to be part of that.
“And everyone’s going to do it differently. There’s different industries, different departments within companies that feel they need to collaborate with each other more than not, and then there’s parts of companies that really don’t need it, so I think the cloud actually was amplified in a way that’s going to allow this to be a trend that sticks with us in the future.”