N.J. Utility Renews 825 KSF Lease in Newark
- Jul 26, 2012
Both the City of Newark and the State of New Jersey have breathed a sigh of relief now that Public Service Enterprise Group Inc. has decided to keep 80 Park Plaza as its address, courtesy of a long-term lease renewal.
PSEG’s lease agreement with Wells Real Estate Investment Trust II, owner of the 1 million-square-foot office high-rise, marks one of the Garden State’s largest real estate transactions–ever. The utility company relied on commercial real estate services firm Colliers International to negotiate the transaction, which allows the company to remain at the building it has called home since 1979. However, PSEG did some looking around before making the decision to continue to maintain its home base in Newark, where it has kept its headquarters for over a century.
“We looked at a number of different alternatives, which included the suburbs in different locations, as well as New Brunswick,” Bryn Cinque, an senior managing director with Colliers, told Commercial Property Executive. “What they were looking for was the best value for their ratepayers, shareholders, as well as for the employees, and [80 Park Plaza] proved to be the most cost effective option for them.”
Overall, the New Jersey office market is holding steady in its struggle to recover, although there are a few bright spots. Northern New Jersey is experiencing signs of health with positive net absorption and a reduction in vacancies in the second quarter, as per a Colliers report. And Newark, specifically, is faring better than most markets, but it would have faced a big challenged had PSEG decided to set up shop elsewhere.
“The lease is very important to the Newark office market,” Cinque noted. “Although the Penn Station Market in Newark has about a six or seven percent vacancy rate, had PSEG vacated its building, the vacancy rate would have increased significantly, which would have put significant downward pressure on rental rates. So it certainly keeps the market more stabilized.”
PSEG is not alone in its appreciation of the advantages of Newark as a prime business location. Panasonic Corp. has announced its plans to build a 338,000-square-foot headquarters at a cost as $200 million. Additionally, Prudential is reportedly considering a local relocation to a build-to-suit. “The primary attraction is the transportation convenience, both the rail to the airport, as well as the highway infrastructure,” said Cinque. “And it does have numerous amenities locally within the central business district.”