Savings from building’s purchased made for accommodating lease terms.Aggressive lease terms were one of several factors that helped to woo Samsung to a building across the street from its current U.S. headquarters in Ridgefield Park, the property owner said Wednesday.
Cushman & Wakefield, the building’s leasing agent, announced Dec. 11 that the consumer electronics company would be relocating in July to a 193,000-foot space at 85 Challenger Road from its current 147,000-square-foot headquarters building at Mack-Cali Realty Corp.’s 105 Challenger Road.
“The lease is almost 30 percent better than the average lease for a Class A building,” said Kenneth Pasternak, chairman of KABR Real Estate Investment Partners. The average Class A lease is about $29 a square foot, with a tenant improvement allowance of $25 a foot, he said. KABR asked for $23 a foot and offered $30 per square foot tenant improvement allowance, but “ultimately, the deal with Samsung was a significant improvement on that with both of those numbers.”
KABR purchased 85 Challenger Road in June from AIG for $10.5 million, less than one-third of its assessed value of $38 million; the discount allowed the firm to be more competitive with its lease terms, Pasternak said: “Having paid only $42 a square [foot] for the building, we were able to give them terms that probably very few other landlords were able to afford to do.”
85 Challenger Road, which was completed in 1990, was “built to higher standards” than 105 Challenger, he added. In addition to a newly renovated lobby and larger windows, “this building lays out a lot more efficiently,” he said. “There are fewer architectural impediments, like chases and columns.”
Samsung had also outgrown its space at 105 Challenger, where about 500 employees currently occupy the entire building. Samsung’s new space at 85 Challenger could accommodate up to 800 people, although the firm would initially house about 600 employees at the new building. More company workers are expected to move into the facility as leases expire on satellite locations in Bergen County and as the company hires more staff. With the growth of its television and cell phone businesses, “they expect to hire in the near term,” Pasternak said.
KABR is currently in discussions with five or six prospective tenants to take the remaining 40,000 square feet of available space at 85 Challenger, he said, but “there’s still some conversations about [Samsung] taking additional space between now and when they occupy.”
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