Big office buildings in New Jersey look to reinvent themselves
What do you do with a big, isolated office building that no one wants anymore?
It's a question being asked around New Jersey as giant office parks — built along highways when the suburbs boomed in the second half of the 20th century — sit empty or half-empty while corporations shrink their footprints and younger workers look for a more urban, transit-friendly buzz.
In northern Bergen County, for example, A&P;, Mercedes-Benz USA, Hertz and Pearson have left or soon will leave offices built in the 1970s and 1980s, when corporations headed out of the cities for greener suburbs.
"There was a whole movement toward beautiful, idyllic campuses, but the workforce today wants to be in an urban hub," said Andrew Merin, vice chairman with Cushman & Wakefield, a real estate firm with offices in East Rutherford.
As a result, "each of these properties is going to have to invent its own future," said James Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers.
Some of these properties are destined for the wrecking ball — including the former Pearson building in Upper Saddle River, owned by Mack-Cali, New Jersey's largest office landlord, which is fighting to build housing on the site.
Others will be redeveloped. The most striking example is the ambitious, multimillion-dollar renovation of the old Bell Labs in Holmdel into Bell Works, a mixed-use property that aims to turn the landmark building's giant atrium into an indoor Main Street with an "urban" vibe.
Whatever their fates, it's clear that many of the state's large, 30- or 40-year-old buildings will no longer function as home to a single corporate user. And, experts say, municipal officials who depended on those corporations — and their big property-tax payments — need to make another plan.
"Towns and cities have to understand that the days of these very large office complexes are over, and have been over for the past seven or eight years," said Brian Wahler, president of the New Jersey State League of Municipalities and the mayor of Piscataway. "The onus is on local officials to come up with a game plan. You can't just hope that the economics will take care of itself, and think that just because there's a large site, somebody will want to buy it."
Mayor Roger Fyfe of Montvale agreed. When Mercedes-Benz USA announced earlier this year that it was leaving the borough to move to the Atlanta area, "we knew that we had to start reinventing ourselves," he said. "We can't just sit back."
A&P;'s July filing for bankruptcy protection also raises questions about the future of the 217,000 square feet the supermarket company leases in Montvale. In nearby Park Ridge, Hertz has left a 226,000-square-foot building to move to Estero, Fla.
In Montvale, Fyfe said, the answer so far has been to accept adaptive reuse of unused or underutilized buildings. The biggest recent step in that direction was the purchase of a former Toys "R" Us building on Summit Avenue by Memorial Sloan Kettering for a cancer treatment center. That, Fyfe said, has energized the entire market, with talk of doctors' offices and possibly a hotel in the area.
Most municipal leaders, however, generally resist one type of adaptive reuse: residential. Though developers would love to build housing on these large corporate campuses, towns generally oppose it because of "the burden it puts on the school system and services," Merin said. Upper Saddle River and Mack-Cali, for example, are battling in court over the real estate company's proposal to replace the old Pearson building with rental housing.
Reinventing these corporate boxes is more challenging in the farther reaches of the state. Two prime examples are the former BASF building in Mount Olive and the former Merck headquarters in Whitehouse Station. Both are about 900,000 square feet; both were built in the early 1990s, about 50 miles from New York City. The BASF building has been empty since 2003, when the company moved to a smaller space in Florham Park. The Merck property — described by Hughes as one of New Jersey's finest office buildings, a $550-million "palace" designed by prize-winning architect Kevin Roche — has been on the market since the pharmaceutical giant moved to Kenilworth, about 18 months ago.
Cushman & Wakefield, which has the Merck listing, first sought a single corporate user for the site. But the brokers couldn't find a corporation that needed that much space, Merin said. He is now talking to developers about ways to preserve the landmark building while finding new uses for both the structure and the 440-acre property.
The construction of the Merck and BASF buildings came at the tail end of a trend that saw corporations move into the suburbs during the second half of the 20th century. Both residents and corporations left urban areas as cities struggled with crime and troubled schools. But now, Hughes said, New Jersey is in "a post-suburban era," as young workers gravitate to walkable, transit-friendly areas.
"The outer edge of the metropolitan area is contracting, while the core is growing — a fundamental reversal of a 50-year trend," Hughes said. When the publishing company Pearson left Upper Saddle River earlier this year, for example, it moved to Hoboken. Panasonic moved from Secaucus to Newark. To be sure, not all companies want an urban location. And as millennials get older and have children, they might warm to the idea of living and working in the suburbs, with their excellent schools.
"Not everybody needs to be in Manhattan," said Jose Cruz, a commercial real estate broker with HFF in Florham Park. Some suburban offices, he said, will attract tenants by adding amenities such as day-care and fitness centers, restaurants and even housing.
Hughes predicted that some underused, obsolete buildings will be knocked down, and others will be bought by investors, gutted and modernized for the needs of today's companies.
Ralph Zucker, who is leading the Bell Works project as head of Somerset Development in Holmdel, said that reviving underused properties "requires community buy in" to the idea.
"The community has to recognize that you cannot just sit there and wait for that building to be reoccupied," said Zucker, who also is redeveloping the old Curtiss-Wright industrial site in Wood-Ridge. "It can be done, but it requires municipal leadership to make it happen. … Municipalities should go ahead and say, 'Let's put together a plan we can live with.' "
