Miles Berger: Newark Poised for 2016 Growth

Miles Berger, chairman and CEO of The Berger Organization

NEWARK, NJ— This year will be “a positive year for the real estate industry,” in Newark and northern New Jersey, according to Miles Berger, chairman and CEO of The Berger Organization. And, he predicts, it may even include a new casino. The Berger Organization’s overall residential, hospitality and commercial operations encompass more than one million square feet of space and 12 hospitality properties in Northern New Jersey and New York City. “Values seem to be rising in New Jersey’s urban centers,” Berger tells GlobeSt.com exclusively. “We see companies that left Newark 30 years ago returning, relocating either headquarters offices or branch offices back into Newark.” Berger acquired his Newark-based company’s first property, the Newark Holiday Inn , in 1976, launching a career that has changed the skyline of New Jersey’s largest city. In 1986, he acquired the Robert Treat Center , a 100,000-square-foot office tower, and the adjacent 176-room Robert Treat Hotel , extensively renovating both, and in 2008 partnered with the Best Western brand for the hotel. Subsequently, Berger has added the historic Military Park Building , 60 Park Place , the Fireman’s Insurance Building , 10 Park Place , and the landmark 570 Broad Street and 765 Broad Street office buildings to the company’s Newark portfolio. He also has targeted acquisitions of properties in emerging cities like Jersey City and East Orange. His formula is simple: Buy tired older buildings and renovate them just enough to get a second look from companies seeking to downsize their space and avoid class A rents. “What we look for is typically a class B office building that’s 40 percent occupied where vacancy rates are increasing, occupancy is going down, and we gut the building sections at a time, and we make it into a B-plus, not an A building, in the range of about $23 a square foot,” Berger says. “That pulls people from Gateway and from the suburbs. It’s more affordable, it’s in an area where maybe 30 years ago people didn’t want to have their office, but today they do, they are willing to be on that corridor.” Berger attributes Newark’s rising prospects to the “ever-increasing costs” of living in Manhattan, and increasingly, even in Jersey City and Hoboken and other waterfront cities. “The Jersey City waterfront has been tremendously developed over the past decade or two,” he says. “What we see now in Jersey City, for example, is that development is moving into the Journal Square area, where developers are building luxury residential towers that haven’t been built there, ever.” The commute from Jersey City’s waterfront into Manhattan, or from the Broad Street area of Newark, “is shorter than if you lived on 90 ^th Street and Broadway and had to commute down to 34 ^th Street in Manhattan. It takes a shorter time to come from New Jersey,” Berger says. The rise of companies returning to Newark has been pronounced for some time in the Gateway District of Newark, near Penn Station, says Berger , but it’s slowly beginning to expand to other areas. “We now see that trend extending down to the Broad Street Corridor , with the Prudential Building that opened about 10 months ago,” he says. Residential conversions of older properties are also taking place, with several developers planning to convert older office space into multifamily housing. Despite concerns about the impact on existing Newark residents from the increasing amount of market rate and luxury housing being planned, Berger thinks the city and its residents can handle it. “The areas that these conversions are going in were never residential prior,” he says. “They were department stores, some office buildings, so we’re not displacing any residents with these conversions.” He notes that other cities have gone through down cycles and managed to survive. “In the 1960s, New York City was down, and now it is gold,” he says. “Prices keep rising, and that’s why the outer boroughs have become so popular. People just can’t afford Manhattan. Newark has many, many neighborhoods, so the downtown doesn’t necessarily affect what happens in the wards [districts].” The joint project by Philadelphia developer Carl Dranoff and the New Jersey Performing Arts Cente r to develop a 300-unit residential tower called One Theater Square is expected to get out of the starting blocks in the first quarter, Berger says. “That is going on vacant land,” he says. “There was nothing there before, basically.” Up to five major residential developments in downtown Newark are likely to kick off over the next five years, Berger thinks. More importantly, he thinks the NJ legislature will approve a ballot question seeking voter approval for two casinos in Northern New Jersey, and he hopes Newark will get the nod for one of those gaming sites. “That would be a very big plus for the city of Newark and for the state of New Jersey, because the revenues will be tremendous once casinos open in northern New Jersey,” he says. “As the legislation is being written, these will be $1 billion-plus facilities, so they will be beautiful hotels and showplaces for entertainment and gambling that New Yorkers will be happy to come to, and be able to be there in 15 minutes by public transportation, or 30 by taxi or Uber .”