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Tri-State

Onyx Equities inks Newark’s largest office lease in years

NJ Transit’s 400K sf lease sparked controversy over pricing, transparency

Onyx Equities' Jonathan Shultz and 2 Gateway Center in Newark
Onyx Equities' Jonathan Shultz and 2 Gateway Center in Newark (Onyx Equities, Google Maps)

Onyx Equities inked a massive office lease in Newark, the likes of which the New Jersey submarket hasn’t seen in some time.

NJ Transit agreed to take 407,000 square feet at the 2 Gateway building, NorthJersey.com reported. The lease was confirmed in a second quarter report from CBRE, which noted the deal was larger than activity in the Newark submarket for the previous 10 quarters combined.

Details of the lease are sparse, but hints of what is going on have been quietly emerging for some time. In a document prepared for the state legislature’s budget hearing committees in May, the starting rent was cited at $39 per square foot. A year of free rent was included, but so was a 2 percent annual increase in rent beginning in the fourth year of the lease.

The starting date for the lease is unclear. It’s also unclear if NJ Transit needs to pony up any money to have the space fit its needs, or if Onyx would fit any such bill.

The fate of NJ Transit’s current headquarters at 1-2 Penn Plaza East is also unclear.

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The lease is controversial, including for the price tag the transit authority at 2 Gateway, which was the most expensive among possible office locations. Other building owners that responded to a request for bids on the lease came in at least $100 million below the cost of the newly inked lease.

Add in the upcoming projected annual budget shortfalls of $118 million and $1 billion and the optics of signing an expensive lease look less favorable. That’s especially true when stacked up against WebMD, which signed a lease last year for 100,000 square feet in the same building, but with a starting rent of $34.50.

One board member of the transit agency resigned over the lack of transparency in the relocation process.

— Holden Walter-Warner

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New JerseyNewarkOffice Leasing