Birch Group Buys New Jersey Portfolio for $255M

The off-market deal is the latest in a series of major office dispositions by the seller.
51 JFK Parkway

On the heels of picking up a three-building ensemble in Morristown, N.J., for $77 million, The Birch Group has closed on one of the largest recent commercial transactions in New Jersey. Mack-Cali Realty Corp. pocketed $255 million for a four-property, 843,300-square-foot Class A office portfolio in Northern New Jersey.

The off-market deal marks Birch’s first investment in the Short Hills submarket and includes buildings at 51, 101, 103 and 150 John F. Kennedy Parkway. After retiring the financing and transaction costs, the deal will release $100 million of net proceeds, slated to pay down Mack-Cali’s unsecured corporate debt. The sale aligns with the firm’s ongoing strategy of reducing its suburban New Jersey office footprint. In late March, Mack-Cali sold its Metropark portfolio in Edison, N.J., in a $254 million trade with Opal Holdings.  

Cushman & Wakefield, which worked on behalf of the seller in closing the transaction, will handle leasing for all properties. At 80 percent occupancy with 22 tenants, the portfolio’s current roster includes Citibank, Bank of America, Morgan Stanley and Wells Fargo. 

Strategic location

The Short Hills assets are situated at the junction of the Morris Turnpike and Route 124, 3 miles northwest of Interstate 78. Manhattan is 20 miles to the east.

150 JFK Parkway

The portfolio includes:

  • 51 JFK Parkway, 260,750 square feet;
  • 101 JFK Parkway, 197,196 square feet;
  • 103 JFK Parkway, 123,000 square feet; and
  • 150 JFK Parkway, 262,354 square feet.

The property at 103 JFK Parkway is fully leased, with the occupancy of the other buildings ranging from 51.5 percent to 98.4 percent.

Short Hills is one of the most prestigious suburban locations in the state, boasting above-average rents and high occupancy rates, according to The Birch Group CEO & Founder Mark Meisner. Home prices average nearly $1.5 million, and roughly 35 percent of New Jersey’s billionaires reside within the submarket.

Value-add strategy

Mack-Cali had purchased three of the four buildings in 2017 as part of a 1.1 million-square-foot investment in New Jersey. RXR Realty sold the six-building portfolio for $368 million. Following that deal, the owner executed $15.2 million in capital improvements at the properties. Mack-Cali had owned the property at 150 JFK Parkway for a longer period, adding a new parking structure in 2018. The Birch Group plans to further upgrade all the assets, engaging Gensler to oversee design.

The Cushman & Wakefield Capital Markets team arranging the transaction included David Bernhaut, Andy Merin, Gary Gabriel, Frank DiTommaso and Seth Zuidema, in conjunction with Adam Spies and Kevin Donner. The brokerage’s equity, debt & structured finance team comprising John Alascio, Alex Hernandez, Chuck Kohaut and TJ Sullivan was also involved.