The commercial real estate market in Hudson County is doing better than most of the state, while the nation’s recession, housing crisis, and credit crunch continue. Cutbacks on Wall Street are expected to have a big impact west of the Hudson River, but the statistics for commercial space are not bad. Office space in Hudson County boasts the lowest vacancy rate in New Jersey at 5.7 percent, according to a January report from Rutgers University, meaning that most available office space is filled. In addition, the rent for Class A office space in Hudson is $50 a square foot, compared with $150 in midtown of Manhattan – luring many companies across the river from high-priced New York City.
Companies moving in
According to Rutgers University, 8.6 percent of commercial space in Hudson County (which includes office plus retail space) stood vacant in the fourth quarter of last year, compared to a statewide average of 15.8 percent.
Hudson County has been successful in luring Manhattan-based companies west of the river. In January, Secaucus gained the MLB Network, the new 24-hour sports cable network affiliated with Major League Baseball. The network, which went on the air Jan. 1, had initially planned to build a new facility in Harlem, and was going to use the old MSNBC studio in Secaucus short-term just until the new building was completed. However, the developer of the Harlem site had trouble obtaining financing due to the credit crisis and the uptown studio was delayed. After the MLB Network began making extensive and costly renovations to the studio space, the company decided to stay in Secaucus long-term.
Secaucus also has two other media outlets. WWOR-TV is located on Meadowlands Parkway. And New York City-based WPIX, the flagship station of the CW network, has an office on Plaza Drive.
In addition, New York City-based Arch Insurance Group has announced plans to relocate to Jersey City’s financial district along the waterfront. The company has reportedly signed a 15-year lease for a 100,000 square foot office space in Plaza 3 at the Harborside Financial District. The real estate deal will relocate 300 jobs to Jersey City.
AXA Financial has also leased space along the Jersey City waterfront. The company has agreed to lease a 244,957 square foot office space on Washington Blvd., according to a published report.
Similarly, Thompson Financial has signed a lease for a 15,000 square foot office space in Hoboken. The company, an international information and technology solutions provider for the financial industry, will move to SJP Properties’ Waterfront Corporate Center II on Frank Sinatra Drive, the same complex where Swiss pharmaceutical company Octapharma moved last year.
Some smaller businesses are also relocating to the region.
Automated Shading, a company that makes motorized shades for homes and targets the interior design industry, has opened a new office in North Bergen. This office will focus on Automated Shading’s sales operations. According to published reports, the company has other offices in Florida, New York, and Pennsylvania.
Hotels are big
Despite the fact that the county has more than 15 hotels, including in North Bergen, Secaucus, and Jersey City, there’s apparently room for two more – and their openings are attracting a lot of attention.
The new Westin Hotel on Washington Blvd. in Jersey City is already accepting guests. The 23-story high-end hotel has 429 rooms and 20,500 square feet of event and meeting space. It includes a 10,000-square foot grand ballroom that can seat 790 guests or accommodate 1,450 people for a reception. The hotel, which is expected to cater primarily to business travelers, offers daily room rates of $180 to $250. The hotel’s opening created 230 jobs, most of which have gone to Jersey City and Hudson County residents.
And in a little more than three weeks, the highly anticipated W Hotel on Hoboken’s waterfront – the only hotel in that popular city – plans to open its doors. Opening date is slated for March 27.
The 25-story W hotel and luxury residence will feature 225 rooms and 5,740 square feet of meeting space.
Although business travel is down, businesspeople who are traveling are looking for the greatest value for their money without compromising on services and amenities. Hudson County-based hotels offer much cheaper rates than those across the river in Manhattan, and sometimes have quicker transportation to midtown and downtown Manhattan than an uptown hotel might. Ferries, trains, and buses routinely travel between Manhattan and Hudson County.
Not surprisingly, nightly occupancy rates in Hudson County hover around 80 percent, according to the Meadowlands Liberty Convention and Visitors Bureau.
New offices and malls
Hudson County saw so many office buildings rise in the past two decades – particularly in Jersey City’s Newport and Exchange Place financial centers – that the focus now is on keeping them filled rather than constructing new projects. However, office centers and smaller retail areas are being planned as part of several mammoth redevelopment plans for formerly industrial areas of towns like Hoboken and Jersey City.
A controversial plan in Hoboken to put a 75-story office tower near the train station downtown has been proposed by the city and NJ Transit, and a redevelopment plan uptown that would put offices near the city’s north border is in the beginning stages.
New malls and big-box stores will pepper the county over the coming year.
In North Bergen, where Vornado Realty Trust has been developing the area along Tonnelle Avenue and 91st Street, a number of large chains have announced plans to open this summer. Vitamin Shoppe, which already has its headquarters in North Bergen, is expected to be one of the first big stores to open in May, with Staples and Pet Smart following in June. T-Mobile, Sleepy’s, and Payless ShoeSource are slated to open in August. Two restaurants, Applebee’s and El Polo Loco, opened last year.
In Secaucus, Wal-Mart is currently expanding its store at 400 Park Place to include 30,000 square feet of new space to accommodate a larger supermarket component. The renovations, which will transform this location into what the company calls a Wal-Mart “super center,” already includes a Sam’s Club and a more traditional Wal-Mart discount retail store. The fully renovated design is scheduled to open in the second or third quarter of this year.
On a smaller scale, Bob De Ruggiero, president of Robert De Ruggiero, Inc., Realtors in Union City and Hoboken, recently reported the sale of the historic Fischer Printing Buildings located at 3500-3504 Palisade Ave. and 214 35th St. in Union City. The buildings consist of three apartments, commercial ground floor space on Palisade Avenue, and a three-level brick loft building at 214 35th St. “Demand is strong for mixed-use buildings,” De Ruggiero said.
What about Xanadu?
Just up Route 3 from Secaucus, the massive $2.3 billion Xanadu entertainment/sports/retail development is being built in East Rutherford in Bergen County. Xanadu is expected to bring 20,000 permanent jobs to the region. It is slated to open this August, but the economy has some wondering if that date will be pushed back. So far, Xanadu’s developers have not announced any changes.
Xanadu has been designed to be a cross between, an indoor amusement park, recreation facility, and shopping mall and developers of the project hope it will boost local tourism. The complex, located near Giants Stadium and the Izod Center, will feature five theme-oriented shopping and entertainment districts. It will have a total of 4.8 million square feet, with 2.3 million square feet available for lease, and will feature a 287-foot Ferris wheel, an aquarium, an indoor snow dome, two skydiving tunnels, movie theaters, and up to 200 stores. The Cheesecake Factory, Benihana, Legoland, and Cabela’s are among the businesses that have signed leases at Xanadu.
Xanadu’s debut has already been pushed back once, from November 2008 to August 2009, and further leasing appears to have slowed down. In February, the New Jersey Sports and Exposition Center, which owns the land on which Xanadu is being built, announced that Xanadu was 70 percent leased. However, developers had hoped to have Xanadu 90 percent leased by the end of 2008.
Small companies feel the pinch
The current economic recession has reached nearly every corner of the business community, and smaller companies have been especially hard hit. Many have cut back on research and development, new talent, and capital improvements.
Within the last few months, several small- and medium-sized local companies have either filed for bankruptcy or moved out of the area. Hanover Direct, a catalog company that sells clothing and home goods, announced last month that it would move its Weehawken call center to Wisconsin. The call center is expected to be completely closed by the end of April and, according to published reports, 105 local jobs will be lost as a result of the move.
Last month, Innovation Luggage, based in Secaucus, filed for bankruptcy protection in an effort to save its floundering business. Hurt by the sharp drop in both business and leisure travel brought on by the recession, Innovation Luggage has seen a 20 percent drop in sales over the last year. The company has already closed several retail stores in New Jersey and New York and hopes to use the bankruptcy to renegotiate its debts and leases at its remaining retail locations.
In January, another Secaucus company, The Children’s Place, announced that it will close its distribution center in June. As part of a long-term growth and restructuring plan, the company, which sells children’s apparel and accessories, will move its distribution operations to Alabama. A total of 350 jobs will be lost locally.