CBRE Group has entered into talks with potential anchor tenants for a proposed one million-square-foot office tower that would be the commercial centerpiece of a radical redevelopment plan for downtown Newark, The Real Deal has learned.
Under the master plan being developed, the Richard Meier-designed SOMA Newark (SOMA stands for South of Market Street) project calls for 15 million square feet of development, including 8,000 residential units, 4.75 million square feet of commercial space and 550,000 square feet of retail, located across from the University Heights section of Newark.
The negotiations have centered on a 40-story office tower at 101 Market Street at the corner of Washington Street, with the anchor tenant occupying 200,000 square feet. The proposed building would include retail space on the ground floor, and potentially have market-rate rental units on the upper floors, depending on the level of demand.
CBRE is also marketing a smaller, 180,000-square-foot office tower on Washington Street, which would need an anchor tenant for up to 70,000 square feet of space.
“We are actively pursuing and have had discussions with potential anchors for both opportunities,” said Dudley Ryan, senior vice president at CBRE in New Brunswick, N.J.
Sources familiar with the negotiations say preliminary discussions have been held with PSE&G and Verizon, however those firms are expected to remain in their current locations. PSE&G had previously threatened to leave its current downtown Newark, N.J. headquarters if it didn’t receive millions in tax credits. Verizon in 2008 got $20 million in tax credits to remain in Newark.
PSE&G and Verizon officials were not immediately available for comment.
Ryan said he expects a new anchor tenant to come from outside the state of New Jersey, as the site is eligible for urban tax credits from the state of New Jersey for relocating jobs within walking distance of Newark Penn Station, which includes Amtrak, NJ Transit and PATH train service as well as a bus terminal.
Officials caution that the overall configuration of the building is not final, and could change depending on the tenant, the financing and other issues.
The search is part of a larger effort by the city of Newark to lure new companies to the downtown area.
In 2011, Newark Mayor Cory Booker announced a deal to develop a new North American headquarters for Panasonic, the consumer electronics giant, which would move from Secaucus, N.J., with the help of $102 million in tax credits.
SOMA Newark is being developed by a group led by RBH Group and Berggruen Holdings, the team behind the controversial $149 million Richard Meier-designed Teachers Village project. Teacher’s Village is the first phase of the overall SOMA plan.
The SOMA project is part of a big project by Booker to turn downtown Newark into a 24-hour neighborhood, with corporate employees, college students, local residents and visitors coming to the city to shop, watch a game at the Prudential Center and eat and drink in local establishments. Newark’s downtown has suffered for years because workers remained sheltered in covered atriums during the day and abandoned downtown after work hours.
“Everything we’ve done in this project, including Teachers Village, is intended specifically to make sure you have density at the street level, you have streetscapes that are friendly,” said Ron Beit, managing member of RBH Group.
Teachers Village already has signed “term sheets,” or non-binding agreement outlining terms of a deal, with several potential tenants, he said, and the site will include a mix of restaurants, retailers, community organizations, medical offices and grocers.