Suburban offices are now among the least desirable asset classes in real estate, and I know from experience why.
My first exposure to them was in 1997, when I joined the Daily Record staff in Parsippany, New Jersey. Every weekday I drove from Brooklyn to Jefferson Road, where the newspaper leased one floor of a humdrum building off Route 287.
Parsippany was filled with these isolated, boring structures, each surrounded by a sea of asphalt, like a 1960s-era baseball stadium. The town zoned for these rather than apartments, because it wanted to grow “ratables” (property tax revenues) without adding children who would push up school taxes.
To get lunch, I had to walk out to the parking lot, get in my car and drive. Parsippany’s traffic engineers had decided life would be better without left turns, so turning left often required turning right and taking a 270-degree ramp.
The town’s clover-leaf turns, office campuses and interstates consumed a lot of space, spreading out and separating human activity even more than in a typical suburb.
To a twenty-something like me, Parsippany felt lifeless — strip malls with ugly signage dotting the roads, huge parking lots engulfing boxy buildings, sectioned-off single-family homes and no downtown. Where was the middle of town? There was none.
Eventually, urban planners and the real estate industry figured out that people want to be closer together so they can walk to restaurants and stores, maybe bump into friends and business associates. Creating such an environment from an aging suburban campus, however, is not easy because you have to put in multiple uses at the same time and achieve a critical mass.
Three real estate firms are doing this at a 17-acre site in my old stomping grounds. Stanbery Development Group, Claremont Development and lender/investor PCCP are turning an outdated, 290,00-square-foot office campus at 1515 Route 10 in Parsippany into a pedestrian-friendly, town-square-style development.
It will have 58,600 square feet of retail and restaurant space, 498 apartments and a Residence Inn by Marriott. Instead of a sprawling expanse of concrete for cars, it will have a multi-story garage.
The development has an unwieldy name — District 15Fifteen — but it’s impressive. It broke ground in 2023, where the Intel Corporate Center had been demolished the year before, and is expected to be completed next spring, financed with a $146.6 million construction loan from New York Life.
The first rental building, with 262 units, started leasing in the spring. Nearly half of the retail space is now spoken for, and seven deals for 15,000 more square feet are in the works. (Pierson Commercial Real Estate is handling leasing.)
I never thought this kind of transformation would happen in staid Morris County, but this is not the first. RE-NJ.com reports that the 15Fifteen development is “among the latest projects that have helped prune Parsippany’s vast stock of highway office space.” Typically, they are becoming multifamily, sometimes with retail or another component.
It’s proof that the real estate industry and town planners can learn from their mistakes and bring places back from the dead.
If the investors make a profit, perhaps one will take on another Parsippany reclamation. I know a building on Jefferson Road just waiting to be reborn.
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