Newmark Knight Frank Announces the Sale of Fully Leased, 108,000-Square-Foot Office/Flex Building in Clark, N.J., for $15.8 Million for Denholtz Associates11.12.2018
Sale highlights continued demand for stabilized, well-located, office/flex/R&D space in the northern New Jersey submarket
Clark, N.J. (November 12, 2018) – Newmark Knight Frank (NKF) is pleased to announce that it has negotiated the sale of Denholtz Associates’ 108,000-square-foot flex/R&D building at 175-195 Terminal Avenue in Clark, N.J., for $15,840,000 to ANG Management. NKF Executive Managing Director Steven M. Schultz and Managing Director Tony D. Georgiev handled the transaction.
Since 1992, 175-195 Terminal Avenue has been leased as the headquarters of L’Oréal’s North American R&D division, one of six L’Oréal R&D centers in the world and the only one in the United States. Stretching across 7.61 acres, the building is a single-story, state-of-the-art flex/R&D space that recently underwent a significant renovation to extend functionality and create the modern research environment needed by one of the world’s largest cosmetics companies. 175-195 Terminal Avenue is a part of the Clark Commercial Center, a 10-building, 283,201-square-foot portfolio purchased by Denholtz Associates in a joint venture with MB1 in 2015.
Prior to their acquisition of 175-195 Terminal Avenue in 2015, Denholtz recognized that an expiring lease with L’Oréal and the need for several substantial capital improvements presented an ideal value-add opportunity. By initiating substantial exterior and interior improvements, Denholtz was able to create a modern R&D space in line with tenant needs and negotiate a long-term lease extension with L’Oréal. The successful execution of this strategy also led to a stabilized flex/R&D asset that is now highly in demand with industrial buyers.
“In an asset class dominated by long-term asset ownership like industrial, it might be hard to believe that value can be found in as short of a timeframe as three years,” said Steve Cassidy, President of Denholtz Associates. “Despite that notion, we were able to create value in a relatively short period of time at 175-195 Terminal Avenue through flawlessly executing an improvement strategy that enabled us to retain one of the nation’s premier tenants. We thank Newmark Knight Frank’s Capital Markets team for their assistance in securing a premium price for this highly valuable asset in one of nation’s most competitive industrial markets.”
Located just off Exit 135 of the Garden State Parkway between Central and Rahway Avenue, the property features a uniquely accessible location in northern New Jersey, one of the nation’s largest industrial markets. Comprising 633 million square feet of space, the northern New Jersey industrial market is characterized by high demand and a constrained supply pipeline that has led to a vacancy rate of 4.8% and an increase of year-over-year rental rates of 14.3%.
Within that market space, Union County’s flex/R&D supply is even more constrained. Though there are two million square feet of existing space in the market, there has been no new construction, while significant demand from major life sciences companies has driven vacancy rates to a historic low of 3.1%. This demand has placed a premium on high-quality flex/R&D spaces like 175-195 Terminal Avenue.
“We are extremely pleased with results of this sale and it was an honor working with the Denholtz team on this transaction,” stated Mr. Schultz.