Broad St. office tower in Newark trades for 5.2M

//February 11, 2010//

Broad St. office tower in Newark trades for 5.2M

//February 11, 2010//

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Office market ‘not thriving,’ but buyer attracted to low price point.Downtown Newark office tower 570 Broad St., previously owned by Montvale’s Ivy Realty and Plymouth Meeting, Pa.’s Urdang & Associates, has been sold to The GLC Group, according to the East Orange-based real estate developer and manager.

The 14-story, 200,000-square-foot Class A building is the first office acquisition in Newark for GLC, which primarily has developed residential properties in urban areas, mostly in Essex County, said principal Mark Caller.

“I can’t tell you that the Newark office market is thriving by any means,” he said. “But the location, the condition of the building and, really, the price point of the building put us in a position where we feel we can offer more for less money.”

The building traded for $5.2 million, said Caller; the purchase price is about a quarter of the $21 million that Ivy — in its first foray into the Newark market — and Urdang paid when they acquired the office tower from Heritage Management Co. in 2006. The significant decline in the property’s value over the four-year period was partly the result of challenges in the local office market, but also because the previous owners “definitely overpaid” for their purchase, he said.

The building is currently about 70 percent vacant, because “the market demand in Newark has not been very strong, with prices in Manhattan dropping daily,” said Jon Karnick, principal of Assurance Realty Group LLC, the leasing agent for 570 Broad St. The vacancy rate for Class A and B office space in downtown Newark is currently at around 17 percent, he said. Also, “the previous ownership didn’t add certain amenities necessary to compete with the product available in the surrounding market,” although it installed new windows to the building’s eastern exposure to add views of Manhattan.

Ivy and Urdang “didn’t have a choice” in putting up the property for sale about a year ago, Karnick said. “The building was having financial difficulties.”

Urdang declined to comment and Ivy did not immediately respond to a request for comment.

While a number of parties were interested in the property, “the ability to move fairly quickly allowed us to make the deal,” Caller said. GLC first learned in November that the building was for sale and closed the deal in early December, with the help of financing from a group of New York-based investors, he said.

Caller said GLC plans to attract new tenants to 570 Broad St. by charging below-market rents. “We expect to do leases in the $16 per-square-foot range, where the market in Newark generally trades at $18-plus,” he said. The developer also expects to upgrade the office tower’s hallways and bathrooms, as well as adding amenities like a conference center and gym, Caller said. In addition, “we’re also looking to acquire some more property in the area to provide parking” for tenants.

E-mail Evelyn Lee at [email protected]