SHORT HILLS, NJ—The Birch Group, a privately-held commercial real estate investor, owner and operator, recently revealed the $255-million acquisition of a prominent four-building portfolio in Short Hills, NJ. The off-market acquisition comes on the heels of the company’s recent $77-million portfolio purchase in Morristown, and further cements its focus on acquiring prime value-add office assets across the suburbs of Northern NJ.
The 843,300-square-foot portfolio comprises four class A office buildings located at 51, 101, 103 and 150 JFK Parkway in the affluent Short Hills submarket, widely recognized as one of the most prestigious and iconic suburban office regions in New Jersey.
Cushman & Wakefield represented Mack-Cali Realty Corp., the seller in the transaction, and is also being retained by the Birch Group as the exclusive office leasing agent for the properties. According to a release from the seller, the transaction releases approximately $100 million of net proceeds, after retirement of financing and transaction costs, which is expected to be used to pay down the company’s unsecured corporate debt during the second quarter of 2021.
“The Short Hills disposition continues our strong sales momentum in the suburban office market and reinforces our ability to achieve our goals at a solid pace without sacrificing value,” explains Ricardo Cardoso, EVP and Chief Investment Officer of Mack-Cali. “While we have reached a significant milestone in our sales process, we continue to work diligently to finalize terms on our remaining non-core commercial assets.”
As for the buyer, with the acquisition, The Birch Group has now acquired over $750 million of commercial office assets since 2019. “This portfolio offers a unique opportunity to reposition historically high-performing properties back to best-in-class assets, which is a hallmark of The Birch Group’s strategy. Short Hills is known for its incomparable prestige that manifests in heightened expectations among the regional tenant base,” says The Birch Group CEO and Founder Mark Meisner, in a prepared statement. “A one-size-fits-all approach to asset management doesn’t work in this submarket, and our focus will be on enacting tailored improvement strategies to create enduring value for our tenants and investors alike.”
The portfolio, which represents The Birch Group’s first foray into the Short Hills submarket, has a storied history of attracting and retaining blue chip tenants. Currently 80% leased to an impressive roster of 22 tenants, The Birch Group targeted the portfolio as a unique repositioning opportunity. The properties’ unrivaled trophy quality and preeminent Short Hills address has drawn the likes of Citibank, Investors Bank, KPMG, Bank of America, UBS, Dun & Bradstreet, Morgan Stanley and Wells Fargo — all current tenants.
Situated directly off Route 24, the properties offer regional connectivity to the Garden State Parkway, I-78, and the NJ Turnpike with immediate access to a highly skilled executive labor base in Short Hills, the wealthiest town in N.J. and the sixth wealthiest town in the United States. The buildings are further complemented by an expanding, walkable mixed-use amenity base that includes convenient access to the high-end Mall at Short Hills, a 4-Diamond Hilton Hotel, Canoe Brook Country Club, and The Upton — a recently completed upscale residential development by Roseland Residential Trust. The Mall at Short Hills is New Jersey’s premier shopping destination, offering unrivaled access to the state’s most extraordinary collection of quality retail including four of the world’s most prestigious department stores along with 150 specialty shops, restaurants, cafes and entertainment options.
The Birch Group will employ its unique value-add strategy for the portfolio, complementing $15.2 million of recently completed renovations at the properties by previous ownership, in addition to a newly constructed parking deck at 150 JFK Parkway. To this end, The Birch Group has tapped world-renowned commercial design firm Gensler to lead the design enhancements.
“During the pandemic, there has been a demographic shift to the suburbs and the migration of this talent pool represents an extraordinary opportunity to meet the demand for high-quality office assets in prime New Jersey markets,” Meisner adds. “Short Hills is among one of the most prestigious suburban locales and it has consistently achieved above average rents in New Jersey, while maintaining the highest occupancy rates within the market.”
Each of the properties are located in the high-growth Route 24 Corridor, which is ideally situated near affluent residential communities including Short Hills, Millburn, Summit, Livingston, Chatham and Florham Park. Short Hills alone is home to 35% of N.J.’s billionaires, boasting a $1.475 million average home price and access to a top-level talent base, which has traditionally drawn consistent interest from high caliber Fortune 500 companies and leaders across industries spanning medical, finance, education and technology.
“These properties are situated within proximity to New Jersey’s most highly sought-after residential areas, which has long enabled them to attract a nationally recognized roster of blue chip tenants,” said David Bernhaut, executive vice chairman of Cushman & Wakefield of New Jersey, Inc. “The Short Hills cache has been instrumental in attracting wealth management, consulting, accounting and legal firms, as well as the headquarters of Dun & Bradstreet and Investors Savings Bank. These companies have chosen Short Hills due to its unparalleled local and regional highway access, proximity to private country clubs, high-end hospitality, and other conveniences that you simply can’t find in other submarkets.”
The four-building portfolio is located less than 15 miles from Newark Liberty International Airport, and within easy reach of NJ Transit’s Summit Station, which provides tenants and visitors with an easy commute to Manhattan via the Midtown Direct train line.