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Jersey City buildings' sale sets N.J. commercial real estate record

By , - Last modified: April 27, 2011 at 3:02 PM

A new standard has been set in New Jersey for top-of-the-line commercial real estate.

In a deal completed this week, Hartz Mountain Industries sold two 12-story buildings in the Colgate Center, 70 and 90 Hudson St., in Jersey City, to CB Richard Ellis Investments for $310 million, or $375 per square foot — the highest rate on record for New Jersey, according to Real Capital Analytics.

The two buildings offer 827,318 square feet of fully leased space between them, and were completed between 1999 and 2000. Tenants include Barclays, National Union Fire Insurance Co. — a subsidy of AIG — and Lord Abbett & Co. They will be part of the CB Richard Ellis Reality Trust portfolio.

“We find both buildings very attractive and very significant to our portfolio, because it is our first asset in the immediate New York market,” said Phil Kianka, CEO and executive vice president of CB Richard Ellis Reality Trust. “We believe this is a creative acquisition for our portfolio … (that) provides further value for our investors.”

The deal was brokered by Andrew Merin, of Cushman & Wakefield’s Metropolitan Area Capital Markets Group, along with David Bernhaut, Gary Gabriel and Brian Whitmer.

“They are the flagships of Hartz Mountain’s development capabilities, occupy an unparalleled location and are fully leased to blue-chip tenants with limited near-term rent roll. It did not take long to find a suitor,” Merin said.

Merin said the deal is a result of improving optimism about the economy and “an absolute appetite for large assets in triple-A locations.”

“One thing you’re seeing in the New York City market is active movement, with respect to new acquisitions and looking at and investing in gateway cities,” Kianka said, citing a cyclical market and built up equity. Jersey City “has some of the same attributes as the New York City market, but with less the price. These particular assets are a terrific value.”

Kianka said replicating the quality of the two buildings at the $375 price-per-square-foot price would be a “challenge,” which is why the firm decided to enter the immediate New York market for the first time.

The Colgate Center is a master-planned development, featuring housing, a public park and additional commercial buildings, all near mass transit.

“We are pleased to have been the developer of the most valuable buildings, on a per-square-foot basis, in the history of New Jersey real estate,” said Emanuel Stern, president and chief operating officer of Hartz Mountain, in a statement. “Colgate Center is an important part of our company’s history, in addition to 70 and 90 Hudson — land that we controlled now includes New Jersey’s tallest office tower and an ultra-luxury condominium”

“Large, million-square-foot properties have a life of their own,” Kianka said. “We look forward to what else we can do in the market … we never say never to New Jersey.”

According to published reports, tax abatements were transferred in the deal — but instead of Jersey City receiving $3.1 million on a standard 1 percent transfer fee, the transfer fee was not included in the original agreement between the city and Hartz Mountain, and the city only received $50,000 from the purchase. CBRE paid approximately $70 million in cash, and assumed $240 million in loans, for the purchase.

E-mail Melinda Caliendo at mcaliendo@njbiz.com

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