Record Broken

April 14, 2011
By Barbra Murray, Contributing Editor

Given that the commercial real estate market has not yet made a full recovery, no one would have guessed that a recent transaction would take the title of New Jersey’s highest per square-foot office sale ever–but it did. Totaling approximately 827,300 square feet, the trophy buildings at 70 and 90 Hudson St. in Jersey City, N.J., fetched $310 million in Hartz Mountain Industries’ sale of the assets to CB Richard Ellis Realty Trust.

Not only did the transaction break new ground in New Jersey’s office market in terms of price per-square foot, it also won the distinction of being the third-largest office deal ever to transpire in the Garden State.

The price tag includes CBRE Realty Trust’s assumption of $240 million of debt. “These are irreplaceable, truly unique assets,” Andrew Merin, a broker with Cushman & Wakefield Inc.’s Metropolitan Area Capital Markets Group, said. The Capital Markets Group of the commercial real estate services firm arranged the transaction. “It did not take long to find a suitor for this exceptional opportunity.”

The buildings, developed by Hartz, are located at the 8 million square-foot, master-planned, mixed-use Colgate Center, which offers immediate access to metro, ferry and light rail services. Designed in the neoclassical architectural style, the 11-year-old 70 Hudson and the 12-year-old 90 Hudson occupy a site along the Huston River, with Manhattan’s World Financial Center sitting just across the water. A 12-story structure, 70 Hudson features 409,300 square feet and is 100 percent leased to a subsidiary of Barclays Capital Inc. at a rate of $30 per square-foot. The 12-story sister tower at 90 Hudson encompasses 418,000 square feet and is also fully leased, with investment manager Lord Abbett & Co. and the National Union Fire Insurance Co. paying approximately $35 per square-foot and accounting for an aggregate 77 percent of the building’s occupancy.

“The record pricing sets a new high watermark in a rapidly improving investment market,” Merin said of the 70 and 90 Hudson transaction. “We are seeing an absolute appetite for large assets in triple-A locations. The investment community is rallying around optimism that the economy has turned around. This transaction will only heighten expectations for property owners and provide comfort that there is a market for deals of this scope.”

Among the big deals of 2010 were Northwestern Mutual Life Insurance Co.’s $231 million purchase of Warren Corporate Center, an 818,000 square-foot property in Warren and Horizon Blue Cross Blue Shield of New Jersey’s acquisition of 3 Penn Plaza East in Newark for $145.8 million.