Philadelphia-based BPG purchased the complex in 2006 for about $50 million, Chris Locatell, a vice president at BPG, tells GlobeSt.com. He acknowledges the price is reflective of the impact the recession has had on asset values and the risk appetite of buyers today. "We priced it at a point that would make it attractive for any potential user, whether it be an occupant or investor," he says. "Somebody who acquired it at this price point would get a competitive advantage." BPG currently owns seven office buildings in New Jersey, four in Princeton, two properties in Trenton and one in Bordentown.
Joe Nahas, BPG's senior vice president, tells GlobeSt.com that the firm's typical investment cycle is between five and seven years. "So investments that were acquired back in '05 and '06 are starting to reach the timeframe where [companies would look to dispose of them]," he says.
CB Richard Ellis is leading the sales effort. To reproduce the 97-acre, five-building campus today would cost more than $250 a square foot in Morris County and more than $1,000 per square foot in Midtown Manhattan, according to Jeff Dunne, vice chairman of CB Richard Ellis. The CBRE team includes Dunne, Kevin Welsh, Patrick Murphy, Sam Buckley and Peter Eppie.
"It is rare to see a property of this high quality being marketed at such a low price," says Dunne in a statement. "Morris Crossroads presents a prime opportunity for corporate users to relocate from Manhattan or other New York Metro areas and take advantage of a well-located, headquarter-quality office property while benefiting from significant operating cost savings. The total estimated savings over a 10-year period, including rent and labor cost savings, is over $600 million compared to leasing in Manhattan, and is over $314 million compared to leasing elsewhere in Northern New Jersey."
He noted that the $47 price is essentially the cost of the land or less than one year's rent in Manhattan.Locatell says the property is adaptable for multiple tenants and a variety of users, including finance, accounting and insurance firms; pharmaceutical companies; and telecommunications entities. It could also be converted for alternative uses, such as a medical or hospital facility, residential complex or conference center.
On-site amenities include conference facilities, a full-service cafeteria with 800 seats, covered parking and a new 10,000-square-foot fully equipped fitness facility. It also offers extensive fiber-optic and electrical infrastructure for uninterrupted business operations with two emergency generators. The property is being marketed to both investors and potential occupants.
"An investor can make a go at it at this price point," Locatell says. "The fact is, we are at the bottom and we see the market is starting to turn and some prospects starting to peak their heads out again. If it's not an investor, we are also targeting users who would look to consolidate and/or reposition themselves into an institutional-quality asset. We are actually having some conversations with users right now who are considering it for a relocation/consolidation where they would move from five [or] six facilities into this property and be able to reduce their overhead. So potentially a user like that could be a buyer as well as a developer."
When BPG first acquired the property, it targeted financial companies. "At that time, the financial/insurance industry was growing significantly in Northern New Jersey and Manhattan," he says. "We felt we could offer a price advantage. We were actually engaged in conversations with a large financial institution that crashed and burned when the meltdown occurred a year-and-a-half ago. We're now going after a broad spectrum. New Jersey has a pretty diverse user profile, but it specializes in pharmaceuticals, telecom and finance. It will probably be one of those, but it's an unknown at this point."
Morris Crossroads is visible along Interstate 80 at its interchange with Routes 206 and 46, just 15 minutes west of the Morristown/Parsippany submarkets. Morris County is home to approximately 50 of the Fortune 500 companies, including Kraft Foods, UPS, JP Morgan, Honeywell International and M Mars.
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