Avison Young, in its second quarter 2014 “Office Market Report,” states, “Morris County is perhaps the best example of an area that has suffered several corporate downsizings over the past few years. However, the overall vacancy rate in the county has improved from 31.4 percent to 27.7 percent over the past year.”
Explaining this seeming contradiction, Paul Boudreau, president of the Morris County Chamber of Commerce, says, “with our proximity and access to New York, plus the quality of life and the talent pool found in Morris County, companies want – and are actively looking to – locate here.”
Together, Boudreau and Jim Jones, executive director of the Morris County Economic Development Corporation, spearhead economic development in the county.
Jones says the young employee base available in Morris is another major location driver. “Years ago, those now known as Generation X, the tech-savvy 35 to 49 year olds who comprise more and more of the workforce, were migrating to the Hudson County waterfront or lower Manhattan. At the same time, corporations were doing just the opposite: moving from New York City to corporate campuses they developed in suburban and rural locales. Today, the reverse is true. Millennials want to live and play near where they work, so they are moving to hubs that offer jobs as well as quality housing, leisure activities and nightlife. With all Morris County offers, CEOs recognize being here enables them to hire and keep the employees they seek and attract others.”
Morris County offers a quality lifestyle for both singles and families, with arts and culture and an incomparable park system. Throughout the county, there are desirable communities, housing of all types and prices, good schools and high graduation rates. For employers, in addition to a diverse and well-educated employee pool from which to recruit, the highway infrastructure of Interstates 80, 287 and 24, plus connecting highways and mass transit, including four train stations – Morristown, Convent, Madison and Chatham along the Route 24 corridor – and the Midtown Direct one-seat train ride to New York City, make Morris County an easy region to commute to and from. For national and international corporations, the county is home to Morristown Municipal Airport – the second largest airport in the state, which already accommodates many corporate jets.
Morris County’s attraction for companies and their employees is bolstered by the presence: of Morristown Medical Center, Morristown, a 656-bed member of Atlantic Health System, rated by US News & World Report as the second Best Hospital in New Jersey and the fifth Best Hospital in the New York region; and Saint Clare’s Hospital, Denville, a 433-bed facility in the northwestern area of the county.
The four colleges and universities with campuses in the county – County College of Morris (CCM), Drew University, Fairleigh Dickinson University (FDU) and College of Saint Elizabeth – all interface with the business community, benefiting the students as well as the companies and their employees.
Commercial Real Estate
Another key factor contributing to the county’s lower vacancy rate is that several corporations that have downsized are staying in Morris, while others have consolidated multiple sites and established major campuses here.
Moreover, much of the existing office building infrastructure is newer than inventory elsewhere in the state, and landlords are actively redeveloping and customizing what even was built as Class A space decades ago.
“Some 85 percent of the office inventory here was built between 1985 and 1989, and the belief then was that ‘this is Morris County,’ so when a Class A office building was built ‘someone’ would fill it,” Boudreau recalls. “Today, that’s not the case. Owners and developers have to be much more aggressive by repurposing or re-envisioning their buildings, making them more attractive for tenants – or tearing them down for redevelopment.” They also have to be aware that companies today typically house more employees per square foot, so parking needs to be increased and HVAC systems upgraded.
While New Jersey offers tax credit programs to give the state a competitive edge over neighboring and other states recruiting businesses, Avison Young reports companies are absorbing large blocks of space in the suburbs where tax credits are not as generous as in urban areas. For example, Automatic Switch Co. (ASCO), an 80-year corporate fixture on Hanover Avenue in Florham Park, was approved for a $24.5-million tax credit under the Grow NJ assistance program, which helped the company remain in New Jersey. ASCO acquired a vacant building at 160 Park Avenue, also in Florham Park, and relocated from its 400,000-square-foot industrial building to 250,000 square feet.
In a recent game of corporate musical chairs, Morris County has seen an uptick in office real estate activity. Maersk sold its 146,366-square-foot former headquarters at 2 Giralda Farms on Madison Avenue, Madison, which was designed 30 years ago as a build-to-suit for the international shipping conglomerate. The company also signed a lease for 70,000 square feet at 180 Park Avenue, Florham Park, formerly home to AT&T Labs, for its new North American headquarters.
The sale of 2 Giralda Farms came with a long-term lease with Merck, which also leased 120,000 square feet formerly occupied by IMS Healthcare, a global healthcare billing company, at 11 Waterview Blvd., Parsippany.
IMS, meanwhile, relocated to three floors – 60,000 square feet – at 100 InterPark Blvd. The site is perhaps one of the county’s best known. For decades, a deteriorating steel skeleton at the site loomed over the intersection of Routes 80 and 287, earning the reputation as “Morris County’s worst eyesore.” The project was begun by one developer in 1988 for two speculative Class A office buildings. Ground was broken and the foundations poured for both and the steel erected for the first. However, when the recession hit, there was no need for the building and the owner couldn’t carry it, so the bare metal shell tarnished the landscape until Commercial Realty Group (CRG) purchased the property in 2008. CRG completed the first building in 2009, but still had to wait for the economy to improve before the right tenant, IMS, decided to move its headquarters and 500 employees from Danbury, Connecticut to Parsippany.
Michael Walsh, president and CEO of Corporate Contracting Inc. (CCI), CRG’s construction subsidiary, notes major changes were made from the 1980s building design for the 76,000-square-foot, four-story building to meet today’s – and IMS Healthcare’s – more “employee friendly workspace.” Construction on a second, 109,000-square-foot building is now anticipated.
CCI also tackled major repurposing projects at the Morris Business Campus on The American Road, Morris Plains, a two-story, 330,000-square-foot, three-building mixed-use complex nestled in a 28-acre, park-like setting. The complex originally was constructed in 1974, with a second phase completed in 1983. CRG purchased it – nearly vacant – in 1998. CCI’s capital improvements included a new health and fitness center, a full-service café, outside seating in a garden court, three loading docks and a three-story atrium entrance that connects the three buildings. Walsh maintains these renovations helped attract tenants and achieve today’s 90 percent occupancy.
During the summer, a partnership between Vision Real Estate Partners and Rubenstein Partners completed its multi-million-dollar revitalization of The Crossing at Jefferson Park, the 65-plus acre former ITT site at South Jefferson Road and Park Avenue, Whippany. The new campus features 525,000 square feet of Class A office space and employee amenities in three redeveloped buildings plus 1.2 miles of new pedestrian and bicycle paths that connect to the Morris County Park Commission’s Patriots’ Path.
Also in Whippany, Vision and Rubenstein purchased the 194-acre former Alcatel-Lucent/Bell Labs site of 1.4 million square feet in 15 vacant office, laboratory and support buildings for the Bayer Pharmaceuticals East Coast headquarters. They subdivided and sold 95 acres to Bayer Healthcare and began developing a 675,000-square-foot, build-to-suit facility where Bayer’s Montville, Morristown, Wayne and Tarrytown, NY locations were consolidated. In addition to the Class A corporate space, the project is expected to promote residential, retail, hospitality and potentially, additional office components on the adjacent 94 acres.
In Florham Park, BASF temporarily located half of its employees at Park Avenue at Morris County when it moved from its then headquarters at the International Trade Zone in Mount Olive in 2004. Since much of the company’s workforce lives in Morris County, remaining in Florham Park emerged as an attractive option, and the company’s 325,000-square-foot new North American corporate headquarters became the anchor tenant at The Green at Florham Park, the former ExxonMobil site and now a 268-acre master planned sustainable development of Rockefeller Group Development Corp. (RGDC), which had developed the ITZ. The Green campus, with its easy access to I-24 and Morristown Municipal Airport, is designed to accommodate more than 800,000 square feet of office space, a full-service hotel, a 100-acre residential community, plus the Atlantic Health New York Jets Training Center.
Park Avenue at Morris County, located just north of The Green, is a 1.12-million-square-foot campus of six Class A office buildings – 100-600 Campus Drive. To keep the site relevant, owner KBS has retained CCI to implement a series of construction and amenity projects for existing and prospective tenants.
At the end of the summer, the Morris Township planning board approved the RGDC general redevelopment plan for a mixed-use campus at the 147-acre Honeywell International property on Park Avenue and Columbia Turnpike. The plan includes 715,000 square feet of new office space, a corporate component to be built by RGDC set between two K. Hovnanian residential developments of 235 townhomes total, 10 percent of which will be affordable housing. About 20 acres will be deeded to the township for open space.
Honeywell, which has downsized to about a third of its Morris Township workforce, is moving to property Pfizer purchased and began redeveloping for its own use, but never occupied on Route 53, Morris Plains. Honeywell plans to retain 185,000 square feet of office space at the Morris Township site.
To provide GAF with more modern and efficient workspace and room to expand, the roofing manufacturer is relocating its corporate headquarters from its 29-acre Wayne campus to Route 10, Parsippany, just west of I-287. GAF purchased the 380,000-square-foot former Realogy building at 1 Campus Drive, and is upgrading and renovating the complex.
Realogy relocated to a 270,000-
square-foot building at 175 Park Avenue, Madison, that had been an AT&T data center. Realogy reused the existing infrastructure and now has both its data center and its headquarters at this location.
The County Seat
Morristown, the county seat and a vibrant “small city” or “big town” and transit center, has become an especially attractive location for both companies and workers. Over the past 20 years, Morristown has undergone an incredible transformation, not without some challenges caused in large part by the recession. “The difference between Morristown and other communities in New Jersey and around the country that have struggled economically is that we have the infrastructure,” asserts Mayor Tim Dougherty, citing the highway access and transit service, the airport, a balance of commerce, retail and residential, diverse and solid housing stock, good schools, an historic legacy, world-class entertainment, among other benefits. “Sure we’ve had our struggles, but pursuing transit oriented development became a key component of our new master plan – which is being implemented; it’s not just sitting on a shelf.”
That planning has already yielded concrete results. Dougherty reports a downtown retail vacancy rate estimated at four percent, “very good” commercial occupancy and a “hot” housing market. There are not a lot of residential units on the market, he says. “They go quickly – and in many cases there are waiting lists.”
Morristown has evolved into a residential hub, in addition to being a retail, commercial, legal and financial center. Retirees, empty-nesters and, most recently, Millennials have been gravitating to Morristown as the place to live. For baby boomers and older, living in a downtown Morristown condo or apartment means no more big home or yard to care for, the convenience of walking to shops and services, restaurants and entertainment, access within a mile to a top-ranked hospital and nearby medical offices.
Morristown is often described as “the hole in the donut,” surrounded by Morris Township, for which Morristown is the retail, social and entertainment hub. The Green, at the town’s retail center, is further surrounded by smaller communities.
While some residents opine there should be more diversity in the stores, Dougherty quickly responds that many recent additions to the retail mix have been “soft goods boutiques,” and more retail is on the way. CVS has remediated a brownfield for the location of its new store at the corner of Speedwell Avenue and Spring Street. To improve the traffic flow at the Speedwell-Spring intersection, it has given the town 40 feet of property for an additional lane of traffic along both streets. On Washington Street, Whole Foods purchased the former A&P property and is renovating the building for an anticipated 2015 opening.
At many locations, retail space is filled almost as fast as it becomes available. When the owners of C’est Cheese on South Street announced this summer that they would be closing after nearly 30 years, another local couple stepped forward almost immediately to purchase it, and before the popular gourmet shop and eatery was closed, the new owners had begun its renovation.
At Headquarters Plaza, when Clearview Cinemas didn’t renew its lease last year, property owners Olnick & Fisher rekindled their relationship with AMC Theaters, which had operated the popular multiplex when Headquarters Plaza opened in 1987. The developers and AMC gave the theater a face lift and created a state-of-the-art movie venue that again is drawing crowds. Other culture vultures are found on the opposite side of the Green at the Community Theater-Mayo Performing Arts Center. In both cases, many patrons complement their entertainment with dining at one of the restaurants around the Green before or after their show.
With a rekindled reputation as a desirable community for businesses and employees, Pernix Therapeutics, a specialty pharmaceutical company, recently moved its corporate headquarters from Texas to 10 North Park Place – “largely because of the pool of young workers and the downtown for its employees,” the mayor reports.
With corporations like BASF, Bayer, GAF, Honeywell, Maersk, Merck and Realogy reinventing themselves, developers investing millions of dollars to repurpose properties, and choice employees wanting to live here, it’s clear that Morris County is a highly desirable, economically strong place for both businesses and workers to locate.Related Articles: