Columbia Completes $175M Newark Office Sale

The asset was acquired by a partnership between Nightingale Properties and private real estate investor Simon Glick.
80 Park Plaza, Newark, N.J.

80 Park Plaza, Newark, N.J.

Newark, N.J.—Ten years after acquiring 80 Park Plaza in Newark, N.J., Columbia Property Trust has completed the disposition of the 973,000-square-foot office complex for $174.5 million. Relying on the marketing and representation assistance of commercial real estate services firm CBRE Group, the REIT sold the asset to a joint venture between Nightingale Properties and private real estate investor Simon Glick.

With the closing of the transaction, Columbia Property Trust bids adieu to Newark, but it’s a fond farewell. “80 Park Plaza was our sole asset in Newark, yet we were pleased to be able to benefit from that market’s improving fundamentals in order to reach our pricing target for the sale of the property,” Nelson Mills, president & CEO of Columbia Property Trust, told Commercial Property Executive.

It was in 2006 when Columbia Property Trust, then Wells Real Estate Investment Trust II, took 80 Park Plaza off the hands of Lehman Brothers in a $147.5 million deal. A decade later, the Class A asset attracted more than a few suitors. “The investment community responded quite well to this opportunity and to the Newark market overall,” Jeff Dunne, vice chairman with CBRE, told CPE. “We received significant interest from a combination of fund investors and private investors, which led to a number of competitive offers, and we went with the one that we felt was best.”

Developed in 1979, 80 Park Plaza consists of a 26-story office tower and a three-story plaza structure, and holds the distinction of being one of the largest office properties in the Garden State. The complex is approximately 85 percent leased, with Public Service Enterprise Group heading up the tenant roster. The energy provider maintains its roughly 825,000-square-foot headquarters under a lease that expires at the close of 2030. The package proved irresistible.

“The long-term lease with PSE&G along with their credit were very attractive to prospective buyers.  As you would expect, we had a broad range of interest, both in terms of the numbers of bidders as well as the nature and return objectives of the capital sources,” Mills added.

In addition to the premier anchor tenant, 80 Park Plaza offers the opportunity to lease five top floors at higher rates in a market that is on the upswing. The average asking rate for office space in New Jersey has increased consistently for the last 11 quarters, according to a second quarter report by CBRE, reaching $25.56 per square foot in the second quarter.

“Newark is definitely on an upward trend and experiencing very positive change,” noted Dunne. “The city continues to benefit from a dedicated base of corporate tenants, including Panasonic and Prudential, and a growing number of national retailers, including Nike, Whole Foods and Starbucks. In addition, the university community in the city is growing. We can expect to see further interest and investment in Newark as the city continues to become a better place to work and live.”

Columbia Property Trust has its reasons for exiting the increasingly coveted Newark office market. The sale of 80 Park Plaza is in line with the REIT’s portfolio repositioning. It’s a strategy that calls for the disposition of $700 million to $1 billion of assets that no longer fall into the company’s core markets. “We have chosen to focus on a few select high-barrier markets that have demonstrated sustained demand and a track record of high performance over the long-term—primarily Manhattan, San Francisco, and Washington, D.C.—and we have concentrated our portfolio and team in those markets in order to maximize our impact there,” Mills said.

80 Park Plaza, under its new ownership, will get a makeover courtesy of a new capital improvement program.

Image courtesy of Yardi Matrix