In January, a leak to the Bergen County Record revealed that Panasonic, a tenant in New Jersey since 1973, was considering fleeing the state in search of modern facilities and with an eye toward shrinking its North American headquarters. New York, Atlanta, Chicago and California were all on the table.
The electronics giant also began looking within the Garden State, with assistance from northern New Jersey’s biggest office brokerage—Newmark Knight Frank—under the direction of the firm’s top national producer, chief operating officer David Simson.
Mr. Simson’s team took a hands-on approach, first by analyzing the commuting patterns of each employee at Panasonic’s national office and then by calculating how much space each would need, taking into account how many deserved private offices. After that, they drew up plans so that the right departments would be next to one another.
Last week, Mr. Simson presented a rendering of the 250,000-square-foot asset that, once completed, will be Newark’s first new office tower in decades, said Newark Mayor Cory Booker in the months leading up to the lease. The property will house Panasonic, which signed a lease in June for the entire building, said Tim Greiner, the lead on the Panasonic team for Newmark.
“This day marks the beginning of what will be incredible growth for Newark, what will be jobs, increased economic dynamism, an expansion of opportunity and a multiplier of benefit effects to our city,” said Newark Mayor Cory Booker during an April 20 press conference announcing the development.
The Gensler-designed edifice, which will receive $100 million in urban-transit-hub tax abatements from the State of New Jersey, is emblematic of the way deals are being done in this market right now: they are managed end-to-end by one brokerage, they are usually signed within the same submarket in a “flight to quality,” and they often utilize generous—and effective, if at times controversial—inducements from the state.
(The tax abatements in the Panasonic deal have so far spawned one lawsuit and a dollop of criticism, though you won’t see any complaints from the brokers or the tenant.)
Theses factors have allowed the suburban New Jersey office market, which is the fifth largest in the nation and third-most-replete with Fortune 500 companies, to feel the economic downturn a bit less than elsewhere.
In fact, the past two years have shined on Newmark Knight Frank’s New Jersey office. In 2010, New Jersey laid claim as Newmark’s top-producing suburban brokerage house nationally, and this year Mr. Simson and his Garden State team have racked up nearly a million square feet in deals for the likes of the huge pharmaceutical company Novo Nordisk, PNC Bank and Quality Technology Services’ northeastern hub, he said.
Newmark, and Mr. Simson, is active on the landlord side as well. Newmark exclusively represents the only two new developments under way in New Jersey—Centra Metropark, a 110,000-square-foot rehabbed office park in Middlesex County, and 175 Park Avenue, a 280,000-square-foot office rising in Madison. Both complexes were developed by Hampshire Real Estate Companies.
As The Architect’s Newspaper explained in a review of Centra—which routinely causes passersby to pull off the highway and gawk—the project snagged bold-faced architecture firm Kohn Pedersen Fox because recessionary slumps in other markets left it twiddling its thumbs. KPF took a suburban New Jersey office development and made it into an attraction, and one that Mr. Simson is effortlessly leasing.
“This is not a rendering,” he has to keep telling people, The Commercial Observer included, when he shows pictures of Centra. The LEED gold-certified building rented 20,000 feet in the past two weeks, to NetApps, a software developer, and 1800 DOCTORS.
Both developments rent at $35 per square foot plus electricity.
The flight to quality is not slowing either, said Mr. Simson, citing Pearson Education’s recent deal for a fancy new home in Hoboken, and a move by McKinsey, the consulting giant, to 65,000 square feet of fresh space in Summit.
“The firms that have the vision are going into a flight to quality building,” said Mr. Simson, “which is causing some issues, by the way, for the older B buildings.”
If Class B buildings don’t have the capital to upgrade they are sometimes being converted to residential or, in some cases, to schools. One older office building was recently converted to a dormitory for Seton Hall students, said Mr. Simson.
Mr. Simson’s own history in real estate is somewhat akin to the market—he always put enough capital forward to upgrade.
Born on Long Island, Mr. Simson attended the University of Maryland and joined the real estate game immediately after. He has worked only in industrial and office leasing in northern New Jersey, where he began at the boutique firm Baker Marin in 1980.
He launched two brokerages (Garner Simson and GVA Williams, both of which he sold to larger companies) before joining Newmark three years ago. His happiness stems from an excellent relationship with Newmark chief executive Barry Gosin, he insisted.
“I respected and admired Barry throughout his career, and since being here I respect him exponentially more,” said Mr. Simson.
And while Mr. Simson is proud of the stature his office has reached, he is not content to rest on his laurels. In 2012, he wants to work on improving Newmark’s retail, industrial and investment sales divisions while also perfecting its project management business.
“More and more buildings come to us for repositioning,” said Mr. Simson. “Some are through owners and some are through lenders who have foreclosed. We have to have a deeper bench of individuals to service those buildings.”
But it’s no small feat joining the Newmark bench. The company, he said, is careful about hiring, and Mr. Simson in particular is wary of a generation of young adults who would just as soon text clients as shake their hands.
“We bring in one or two [new brokers] a year—and that’s a lot,” said Mr. Simson. “I love to have people with MBAs and financial backgrounds.”
Despite his firm exterior, Mr. Simson’s softer side occasionally springs out, such as when, during an interview last week, he took out his iPhone only to reveal a hot-pink encasing. “My daughter bought it for me for my birthday,” he said.