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Media magnet? N.J. poised to attract news groups

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Forbes is moving from New York City to this building in Jersey City.
Forbes is moving from New York City to this building in Jersey City. - ()

Forbes Media will mark its centennial in just under three years, having built its brand with its flagship magazine, business lists and rankings of the world's richest people.

But the media giant won't celebrate from its longtime home in Manhattan. By then, it will have settled into its new headquarters in Jersey City, where it will move by December under a high-profile deal struck in January.

Only time will tell if other media companies follow Forbes across the Hudson River. But real estate experts say New Jersey looks more inviting than ever to news organizations and publishers in search of lower rent and modern office space.

Jeffrey Schotz, who oversees leasing for Parsippany-based SJP Properties, said the influx of technology firms to Manhattan has changed the landscape for media companies and their traditional homes. That's especially true in the city's Midtown South area — roughly between 30th and Canal streets — where Google Inc. and others have taken space at an aggressive, high-volume pace in recent years.

"They've eaten up the space that some of these other industries might have otherwise taken — (and) they're pushing rents up much higher," said Schotz, SJP's executive vice president for leasing and marketing. "And they have essentially just pushed out a lot of the industries that have been making up the Midtown South market."

In the first quarter, asking rents for Class A space in Midtown South averaged about $75 per square foot, according to the brokerage firm JLL. That's nearly double the rates on New Jersey's Hudson waterfront, where Class A space runs about $37 per square foot.

Companies such as Forbes have reacted by exploring other markets in and around the city, Schotz said. Before its move to New Jersey became official, the publisher told state officials it was considering other lower-cost alternatives to Manhattan, including Brooklyn, with its current lease set to expire in December.

But Forbes opted for Jersey City's Newport section after a $27 million, 10-year tax credit from the state Economic Development Authority helped seal the deal. The company is moving 350 jobs to 499 Washington Blvd., a 14-story tower owned by the LeFrak Organization.

A Forbes spokeswoman said no one was available for comment last week.

Meantime, Schotz said SJP is in discussions with other media companies for its space on the Hudson waterfront — along with other tech and financial services firms that also have been affected by changes in Manhattan's office market.

LeFrak is seeing similar interest. Marylou Berk, the firm's senior vice president of property management in New Jersey, said that "lately we have seen a growing number of media and consumer companies attracted to … the Hudson waterfront." Those tenants — a departure from the financial services firms that once dominated the market — are drawn to its communications and transportation infrastructure, plus the benefits of being in Newport's mixed-use community, she said.

In an emailed response, Berk added that LeFrak is "in conversations with a variety of potential tenants including some media companies looking to relocate to Newport" in order to take advantage of its modern, technologically advanced spaces and "their measurable economic advantage."

"We expect that over the next few years a growing number of new industries, from media to consumer companies, will migrate away from New York City as they realize the many benefits of locating within Newport's community," Berk said.

Even with Forbes' high-profile move, some insiders say there are no signs of a long-term trend. Many other news organizations that have fled Midtown in recent years have ended up in Lower Manhattan.

Still, experts say New Jersey's appeal is growing for companies requiring a mobile workforce. Since January, NJ Transit has offered Wi-Fi access to customers at 11 train stations, including major hubs such as Hoboken Terminal and Newark Penn Station.

The agency also plans to extend the service to its trains and other stations over the next three years, officials said last year.

"That can only broaden the fact these employees can work from anywhere, so maybe being physically located downtown is not as important," said Matthew Dolly, vice president of research with the brokerage firm Avison Young's New Jersey office.

If nothing else, publishers everywhere are weighing their options as advertising revenue dwindles.

"I would say that the industry is under cost-containment pressures, which is why I think they look at New Jersey as a lower-operating-cost platform," said Dan Loughlin, an international director in JLL's New Jersey office. He added that media companies "see it as a labor play, especially in Hoboken and the waterfront," where they're able to attract and retain top talent.

The consolidation trend is playing out within the Garden State's own media industry, where many prominent newspapers are downsizing and shedding excess space. In January, the Jersey Journal moved its headquarters to a 10,000-square-foot office in Secaucus, leaving behind its landmark 100,000-square-foot building in Jersey City.

The Asbury Park Press, meantime, is moving from its sprawling headquarters in Neptune to an office building across Route 66. Its new space will be about one-third of the size of its existing 175,000-square-foot building.

But when it comes to luring companies from out of state, New Jersey can offer business incentives that are now more potent than ever. Schotz, the SJP executive, said it's tough to overlook the impact of the Grow New Jersey tax credit program, which lawmakers strengthened last year with the Economic Opportunity Act.

"That's not the only reason, but that is a huge draw," Schotz said of the incentives. "Once you get through looking at what your options are in New York, and you start doing your financial analysis, you add Grow New Jersey to it (and) it's overwhelming."

E-mail to: joshb@njbiz.com
On Twitter: @joshburdnj

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