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Grapevine: Looking at B&L's future

It could be months before Bausch & Lomb finds its new headquarters in New Jersey, but speculation is well underway about where the eye care company will land.

One source pointed to Warren, where B&L will sublease 90,000 square feet from Citigroup at a five-building campus off I-78. Rumors are now swirling that the banking giant is exercising an early termination option for one of its other buildings there, the person said, potentially clearing a path for B&L to expand, should it pick Warren.

Another source noted Valeant is considering many options in the region, and is "not focused on one property yet."

"Valeant is all over the market," the person said.

Word broke late last month that the contact lens maker will relocate from its longtime home in Rochester, N.Y., after it was acquired by Valeant Pharmaceuticals International. The Canadian drugmaker said it would look for a new headquarters between its own U.S. base, in Bridgewater, and B&L's existing pharmaceutical division in Madison's Giralda Farms complex, where its lease expires in December.

Valeant announced in May it would acquire Bausch & Lomb in an $8.7 billion deal. The jobs impact of the acquisition in New Jersey is not yet known, though 200 jobs will be cut from B&L's Rochester operations as the base is moved to the Garden State.

Real estate experts have said Valeant was seeking around 150,000 square feet, so "it's not a great leap of faith for a deal to be structured there (in Warren) … given that they've already planted a flag there," an insider said. The five buildings at the campus range in size from around 150,000 to 180,000 square feet.

Northwestern Mutual owns the 830,000-square-foot campus, though B&L's space is being subleased from Citigroup. That deal runs through mid-2019.

At Gateway, insult to injury

Newark may be in store for a battle with some of its top office landlords, Grapevine has learned, thanks to looming property tax hikes tied to the city's revaluation earlier this year.

A source said tax bills for some of the largest buildings would go up as much as 25 to 30 percent under new assessments issued by the city, affecting properties such as One Newark Center, the Gateway towers and the Penn Plaza buildings. That could result in a rash of tax appeals once the city adopts its budget for the coming year.

The tax hikes could also be insult to injury for three of the four the Gateway owners, who stand to lose Prudential Financial as a tenant once the company completes its new office tower on Broad Street. Site work for the project has been underway since the spring, despite the prospect of litigation by the Gateway landlords over the nearly 1 million square feet that Prudential will vacate late next year.

The project is being financed with the help of a $211 million tax credit under the state's Urban Transit Hub program.

The Star-Ledger reported last month that the revaluation caused "a significant tax burden shift from residents to commercial property owners." The article followed Mayor Cory Booker's introduction of a $588 million city budget that cut property taxes for homeowners by 13 percent.

A city official defended the results of the city's first revaluation in 10 years, noting that prior to the analysis, residential owners shouldered 53 percent of the property tax load, compared to 39 percent by commercial owners. The official said "in most municipalities, the commercial owners would carry a heavier burden," adding that an increase in property values can sometimes benefit commercial owners.

The person also acknowledged the owners' right to appeal the assessments, "and we're sure that they'll do that."

Grapevine reports on the behind-the-scenes buzz in the business community. Contact Editor Tom Bergeron at tomb@njbiz.com.

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