Prudential Financial’s upcoming move to its new downtown Newark location could cause a vacancy problem for the landlord at its current headquarters.
Prudential’s employees currently work in several buildings at mixed-use complex 2 Gateway Center, adjoining the Newark train station. When the lease is up at the end of 2015, the financial services company will relocate its workers to a $444 million, 20-story office tower on Broad Street across from Military Park.
Owner of the Gateway complex, C&K Properties, sued to block the move, arguing that the moving thousands of workers would flood the market with over 900,000 square feet of vacant space, as The Real Deal reported.
Now, with Prudential continuing with the move, Gateway’s managing director Kevin Collins told the Wall Street Journal he is “highly confident” he can lease the space, according to the Wall Street Journal. Alas, experts in the Newark office leasing market aren’t so sure. The vacancy rate for office space in New Jersey’s largest city has been rising steadily since 2010, and was at 16.9 percent for top-quality space and 27 percent for secondary space at the end of 2013, according to research from Cushman & Wakefield, cited by the Journal.
Gateway is currently at 10 percent vacancy, according to the Journal.
“It’s going to be a challenge for the landlords,” a managing director with Jones Lang LaSalle, Jonathan Meisel, told the Journal. ”Everyone who owns buildings [in Newark] is concerned about the rising vacancy.”
Both Mayor Cory Booker and Governor Chris Christie have aggressively pursued development in Newark. Booker courted businesses during his campaign and landed more than $1 billion in new development, and Christie signed a bill in September that smoothed out incentives for companies that come to Newark. Prudential is one of the companies to benefit from this program, receiving $211 million in tax credits to develop the new tower, as The Real Deal reported. [NYT] – Angela Hunt