JV acquires 2M-square-foot former Merck HQ in Kenilworth (updated)

Comprised of nearly 2 million square feet, the acquisition of Merck’s former headquarters – which it still occupies, by the way – in Kenilworth is one of the largest New Jersey office and life sciences transactions in history.

That’s according to a joint venture of Onyx Equities LLC and Machine Investment Group LP, which announced the closing of the transaction with Merck Sharp & Dohme LLC (Merck) Feb. 16. Situated on 108 acres, the campus offers biologics, research and development buildings. Financial terms were not disclosed.

In 2020, Merck announced it would consolidate its Garden State campuses into a single location in Rahway. According to the JV, the company will lease back the entirety of the Kenilworth site while its new headquarters is expanded, vacating in phases over the next several years.

“This collaboration is an incredible opportunity to help reimagine the hub of life sciences while also continuing Merck’s strong history and legacy of serving patients and communities,” said Shefali Shah, global real estate lead, Merck. “We believe Onyx Equities LLC will foster long-term value, economic growth and sustainability within the community. We look forward to collaborating with Onyx Equities LLC and their team members on a smooth transition.”

The JV says it plans to market the property’s state-of-the-art laboratories (which cover more than 1.4 million square feet) and support facilities to biotechnology, pharmaceutical and technology companies. All of which are particularly drawn to the region due to its educated workforce and access to regional infrastructure.

The campus also features 500,000 square feet of Class A office space, 30 acres of developable land, a 25-megawatt cogeneration plant, three full-service cafeterias, a fitness center, auditoriums and conference centers, outdoor amenity areas, and more than 3,200 surface and structured parking spaces.

In a statement, Gov. Phil Murphy celebrated the deal.

“New Jersey receives two forms of good news today as one of the pillars of our business community chooses to commit its long-term future to New Jersey and one of our leading developers prepares to build a high-tech life sciences hub, consistent with our vision for New Jersey’s economic future,” Murphy said. “I congratulate both Merck and Onyx and eagerly await the advancements they will make in our state, which will solidify our status as a national leader in the life sciences sector.”

Onyx has a knack for leaving things better than they found them. Case in point: the $50 million capital improvement effort at AT&T’s former headquarters in Morristown that’s drawing office tenants, post-pandemic.

When it comes to life sciences space in the state, demand is picking up while quality space is proving harder to come by. While lab space under construction across the nation was up at the end of 2022, according to a report from CBRE, in New Jersey, there was no significant development underway.

“The life sciences industry is surging, and its rapidly developing technology requires new specialty facilities,” said John Saraceno Jr., co-founder and managing principal for Onyx Equities LLC. “The Merck campus represents an opportunity to host blue chip companies that will benefit from proximity to New Jersey and New York’s highly educated workforce. We’re excited to apply Onyx’s unique asset repositioning platform to attract the next generation of life science and technology leaders.”

Merck was represented by JLL’s Dan Loughlin, vice chairman; Jose Cruz, senior managing director and New Jersey office co-head; and Kevin O’Hearn, senior managing director, in the transaction. Onyx’s development team handled the transaction internally.

Cole Schotz said it counseled Onyx in connection with the joint venture aspects of the deal and upper-tier corporate structuring, as well as a portion of the finance component. That team included members Jordan Metzger and Samantha Epstein, as well as paralegal Kim Calkin.

Editor’s Note: This post was updated at 2:21 p.m. ET on Feb. 24, 2023, to include Cole Schotz involvement with the transaction.