PARSIPPANY, NJ-The recent acquisition of 6 Upper Pond Rd. in here, while certainly a boon for acquirer Pond Partners LLC, could mean something more to the real estate industry. The 73,450-square-foot, class A office building located on 5.67 acres traded for $5.25 million after seller EBI LLC reduced the price.
The deal may be a sign that buyers are becoming more realistic about pricing--and that sellers are cautiously returning to the market, says Scott Lippert, head of the real estate practice of law firm Pashman Stein LLC, which represented Pond Partners. “It’s nice to have a transaction,” Lippert told GlobeSt.com.
Talks between the two parties began in June, and the sale closed in November. Two main points were critical: Pond Partners could pay in cash, and EBI cut its price. The company acquired the building for $9.9 million in 1995. After a tax appeal reduced the assessed value to $8 million, EBI accepted the $5.25 million offer. “These are smart people, who made a business decision to accept the bid,” Lippert says. “There weren’t a lot of buyers to begin with.”
The deal helps to set a parameter for future deals, which could encourage more transactions. Lippert says his sense is that the market will pick up in next year. Still, everyone remains cautious. “It’s only one transaction,” he adds. “I don’t want to read too much into it.”
Lippert notes that the last major downturn, from 1988 to 1994, required five to six years to turn around. “We’re only in the third year of this debacle,” he warns, with a six-or seven-year turnaround required.
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