Betting Big on Newark
By Keiko Morris
Wall Street Journal – December 7, 2014
NEWARK, NJ – Betting Big on Newark
Rugby Realty Co. is making a big bet on the Newark office market, despite its relatively high vacancy rate.
The New Rochelle, N.Y., real-estate company, which has bought 33 buildings in the last 36 months, has purchased the 579,000-square-foot building at Three Gateway Center.
The price wasn’t disclosed. The seller, Tahl Propp Equities, bought the tower in 2000 for $57 million and had been marketing it for $65 million.
Three Gateway is part of a four-building complex. Its main tenant, Prudential Financial Inc., is moving some of its employees from Three Gateway Center to a new office building it is constructing in downtown Newark. Prudential said it would continue to occupy about a third of the building. Rugby Realty, however, estimates the insurance company will occupy about 40% of the tower. The real estate company plans to invest $20 million in a new lobby, cafe and elevators.
“At Rugby Realty we don’t buy buildings that are leased but partially leased so we can put our stamp on the building,” said Maurice Ades, Rugby Realty’s principal and managing director.
The office vacancy rate for Newark was 18.7% in the third quarter, according to Cushman & Wakefield Inc.
Mr. Ades said he is optimistic the city is on an “upswing.” He said positive signs include residential and hotel projects in the works, Prudential’s investment in its new tower and Panasonic’s new building for its North American headquarters. New Jersey’s economic incentives are also strong attractions for tenants.
“It is such an easy way to still have access to Manhattan and get the benefit of somewhat lower rents,” Mr. Ades said.View the story here