In 2017, Jonathan Schultz and John Saraceno Jr. opened the new 307,000-square-foot home of Japanese pharmaceutical firm Daiichi Sankyo in Basking Ridge and relocated the New Jersey Turnpike Authority to its new home at the former 200,000-square-foot Hess building in Woodbridge shortly before selling both properties.
And all the while, their acquisition team at Onyx Equities found a total of over 1.4 million square feet of office space in Bergen County ripe for value-add.
“We always told ourselves we’re not here to be an empire builder or to fall in love with our assets, but to take on projects that we feel that we can handle,”’ Schultz said. “Never overdoing it, never taking on too much, slow and steady, and being really geographically focused. And we have stayed very close to our knitting.
“We’re in New York, New Jersey, Pennsylvania and Connecticut, and only certain parts that we feel we can be the best all the time.”
But being the best has often been an arduous process, Saraceno said.
Since co-founding the company with Schultz in 2004, Saraceno can recall well over a dozen times Onyx lost out to experienced competitors. And while most would shy away from acknowledging their shortcomings, it is this acknowledgement that has made the firm a leader in value-add in the state, he said.
“As product type develops, we get smarter,” Saraceno said. “We have developed parameters that allow us to look at things differently and pursue niches inside a space that weren’t otherwise being pursued by people and we sort of adapted our business plan to address that.
“The geography is still the limiting factor that we put in ourselves – because we view real estate as a local business – but we have expanded our appetite for product type inside that geography. Into the industrial arena, into the residential arena, more on the retail environments, than we did when we started the firm.”
Schultz and Saraceno said they plan to pursue a diversification strategy in New Jersey, New York, Pennsylvania and Connecticut since it is in these markets where the firm has honed its skills.
While holding on to its roots as a suburban office redeveloper, the Onyx team has already begun delving into retail, industrial and even into residential a little more than in previous years, Saraceno said.
Expanding into industrial and residential, Saraceno admits, is not exactly a groundbreaking diversification strategy, but the Onyx team is happier with being a smart redeveloper instead of a pioneer.
“What we love about ourselves, and John and I have chosen, is that we don’t need to rush,” Schultz said. “We don’t need to do a lot of deals. Investors love that we’re very disciplined. We’ve always stayed small, were not biting [off] too much to put ourselves in a distracted [mode], or to be focused with what we have at hand.
“In real estate, you have to be able to see it, touch it, feel it and improve it. We’ve never left that premise. It’s hands-on. And it’s not like we’re buying something net leased. This is hard work and it is a heavy lift.”
The diversification of Onyx’s portfolio is well underway. While the firm owns more than 1.4 million square feet of office space in Bergen County with Garrison Investments, Onyx has begun implementing a value-add strategy at Woodbridge Crossing, a 285,000-square-foot retail center. And it is also in the planning stages for two residential developments in Ridgewood.
But regardless of its diversified portfolio, Onyx’s footprint in the near future will largely continue to be in the office market. The firm is currently working on several projects in Rochelle Park and Morristown.
“We will continue to play Bergen County, we’ll play Morris County, we’ll play other markets in the office game and in the industrial game,” Saraceno said. “It’s only certain markets we will play within the state.
“Our view is, there is always a need for office space in Bergen County. It is a densely populated county, proximal to New York City, and all these reasons will always be there. … We will be the best in class in the markets we play. And that theory continues to resonate in this market.”