Ma Bell is no more, but her fingerprints are everywhere in Monmouth County, from the hulking office buildings, now vacant, to the tenants that still call it home, many of which trace their roots to the old Bell System.
And while those obsolete office buildings have long weighed on the submarket, a variety of reuse projects is drawing new interest to the region. Coupled with an increasingly competitive market for small and midsized spaces, the region is enjoying momentum: Through June, the greater Monmouth submarket had recorded 1.82 million square feet of net absorption, according to brokerage firm CBRE. That includes about 1.7 million square feet from the Bell Labs complex in Holmdel, which is under contract to be sold and redeveloped, plus 145,000 square feet from smaller deals.
Despite being a smaller, tertiary office market, Monmouth County is attractive "because so many of the CEOs and entrepreneurial business-type owners live down here," said Suzanne Macnow, a CBRE broker who is active in the submarket. "And what we've noticed in the last few years is that rather than commuting, a lot of them are starting to pull their businesses closer to home."
Those firms tend to be in the financial and professional services sectors, especially around Red Bank. The area is home to Wall Street powerhouses like Morgan Stanley, whose 33,000-square-foot lease anchors an office complex in Shrewsbury, and newer firms such as Sawtooth Group, a marketing agency that moved last year from Woodbridge to a 20,000-square-foot space in Red Bank.
Those smaller deals are a driver in Monmouth because of its size and the paucity of large, modern spaces.
"Under 10,000 (square) feet is where the bread and butter of Monmouth County is," said Michael Staskiewiecz, a senior vice president with Lee & Associates. He estimated 85 percent of leases here involve spaces of that size, taking place largely at older, class B properties with landlords willing to make improvements.
Through last week, leasing velocity tracked by CBRE totaled 387,000, the firm said. Macnow, meanwhile, said earlier this month that she shows "anywhere from three to five buildings a day to tenants looking at space, so it's very busy."
In fact, those large, vacant, single-tenant buildings tend to overshadow activity in Monmouth — perhaps moreso than elsewhere in the state, since it's a smaller submarket. After Memorial Sloane-Kettering acquired a former Lucent Technologies building in Middletown, with plans to open a cancer treatment center at the 288,000-square-foot property, CBRE reported the availability rate among larger buildings in greater Monmouth County had fallen to 26.3 percent — down from 48.4 percent at the end of 2012.
Sloane-Kettering's interest in the market is another source of optimism for commercial real estate in the county. And Ralph Zucker, president of Somerset Development, said it validates his company's plans for the massive Bell Labs complex in nearby Holmdel. After years of discussions, the Lakewood firm is poised to move ahead with a redevelopment of the 2 million-square-foot building; the project will be anchored by 400,000 square feet of medical office space that Zucker said will drive the other uses planned for the site.
"There's always been sort of a hole in the health care donut for this part of New Jersey … in terms of the concentration of doctors in one place," Zucker said.
Somerset has tapped Community Healthcare Associates, a Bloomfield-based firm that redevelops defunct hospitals into medical complexes, to populate the space over three years.
Zucker said he expected his firm to close on its purchase of the Bell Labs property next month.
Monmouth County has other big buildings that have less-certain futures, including a 352,000-square-foot office in Middletown's Lincroft section. Most recently used by Avaya Inc. — the telecom equipment maker and Lucent spinoff — its owners have proposed a redevelopment with more than 300 residential units. But published reports say plans have been stalled by a legal challenge from residents.
The area also could see another 135,000 square feet of office space hit the market next year, when CommVault Systems Inc. leaves its Oceanport headquarters. After outgrowing its space at 2 Crescent Place, the maker of data management software will move to a new built-to-suit complex on the former Fort Monmouth property, in Tinton Falls.
But CommVault's plans also are an endorsement of the Monmouth County submarket. David West, the company's senior vice president of worldwide marketing, said its employees are highly skilled and have ties to the area — CommVault also is a descendant of Bell Labs and AT&T. And the quickly growing tech company wanted to maintain easy access to customers along the East Coast and across the globe, he said, so "it made perfect sense to stay right here."
"There's a great workforce here and great services around us," West said. "That's why we made the decision here to invest in a facility that will carry us for at least the next couple of decades."
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