PAG Investments Lands $31M Bridge Loan for New Jersey Deal
- Feb 04, 2020
With more demand for quality office space in New Jersey, PAG Investments received $31.1 million in financing for the acquisition and renovation of an office property in Parsippany, N.J.
READ ALSO: New Jersey Office Report – Fall 2019
PAG purchased the 330,631-square-foot office property in December from Mack-Cali Realty in a deal arranged by Cushman & Wakefield. Located on a nearly 23-acre site by the interchange of interstates 80 and 287, the three-story property offers an average floorplate of 117,000 square feet. Tenants include Coyne Public Relations and medical device manufacturer Ascensia Diabetes. The property is currently 65 percent leased. Amenities include a three-story atrium lobby, a full-service cafeteria, a fitness center, conference facilities and parking spaces.
But it’s time for upgrades as PAG will use part of the financing for renovations to the cafeteria, bathrooms, landscaping, lobby, parking lot and various other improvements to the interior and exterior. JLL’s team of Michael Klein and Andrew Zilenziger arranged the three-year, floating-rate loan from Prime Finance for PAG’s recently acquired 5 Wood Hollow Road. The bridge loan has two one-year extension options.
Renovations leading to higher rents
Like many other landlords in New Jersey, PAG will undertake renovations to meet market demand for high-quality office stock. According to JLL’s report on New Jersey’s office market in the fourth quarter of 2019, rents will continue rising as properties continue to get renovated and demand remains strong.
Areas like northern and central New Jersey rents have hit $31.50 per square foot, a 3 percent increase from last year, the report noted. However, vacancy rates remained largely the same, bumping up to 23 percent in the fourth quarter from 22.9 percent in the previous quarter. Specifically in Parsippany, the area showed a 31.6 percent vacancy rate, with an average asking rent of $26.33.
As for leasing, JLL reported that most of the activity came from smaller leases between 10,000 square feet and 25,000 square feet, instead of the larger 100,000-square-foot category. With an average 117,000-square-foot floorplate, PAG has the opportunity to attract large leases to 5 Wood Hollow Road.