A Vacancy Rate Does Not Define a Market

A vacancy rate alone does not properly explain the office market in Parsippany-Troy Hills Township

300 Kimball Drive is a 400,127 square foot office building that was once owned and occupied by State Farm Insurance

PARSIPPANY — Office vacancy rate studies do not include single tenanted or owner occupied office buildings. Therefore, office buildings occupied by ADP, Tiffany & Co., Wyndham Worldwide, Avis/Budget, T-Mobile, UPS, GAF, Zoitis, Iqvia Health Products, AFR / E-Lend, Envision Physician Services, Delta Dental, New Jersey Manufacturers Insurance, DSM Nutritional Products, Evonik Industries and Day Pitney LLP which have a combined square footage of over 3,500,000 square feet are not included when Parsippany vacancy rates are calculated.

Buildings that owners are keeping vacant and are not being marketed because they intend to repurpose the use of these sites are included in these vacancy studies.

These buildings total over 750,000 square feet. When you include the above mentioned office buildings occupying 3,500,000 square feet, and exclude the buildings containing 750,000 that are going to be demolished so the site can be used for another purpose, these vacancy rate studies drop by 10 to 15 percentage points which makes the actual office vacancy rate for Parsippany between 12% to 15%.

Daniel S. Cassese, Parsippany’s Tax Assessor said “I estimate that there are 2,000,000 square feet of vacant office area in Parsippany divided by the total office area of 14,500,000 equals a 13.8% vacancy rate.”

With over 14,500,000 square feet of office area, 4,500,000 square feet of industrial/warehouse area, over 2,500,000 square feet of retail space, 17 hotels/motels containing 2,722 hotel rooms, over 8,000 apartments and over 14,000 residential homes; Parsippany-Troy Hills is what could be considered the Business Center of Morris County.

Within the 25 square mile area of the Township, major highways intersect throughout the municipality including Route 80, Route 287, Route 46, Route 10, Route 202 and Route 53.

The Township offers easy access to major highways for companies looking to move to Parsippany. Parsippany has a much diversified population. It also has numerous recreation amenities, including 29 parks, 12 lakes and two 18 – hole golf courses located at the Knoll East and Knoll West Country Club which are both owned by the Township.

Parsippany is turning into a live, work, play and stay amenity rich micro market. Millennials are beginning to move from areas close to mass transit, where apartment rents are high, to suburban locations that have diversity, amenities, easy highway access and where apartment rents are much more affordable.

Here is a list of a few of the office buildings located in Parsippany-Troy Hills Township that highlight what really is taking place in the office market of the Township.

300 Kimball Drive is a 400,127 square foot office building that was once owned and occupied by State Farm Insurance. They vacated 80% of the building in 2013 and only occupied one floor. As of today, State Farm no longer occupies office space in this building. Transwestern Investment Group transformed this single tenant user building into an amenity filled multi-tenant office building. Typical amenities include renovated café and tenant seating areas, fitness centers, training and meeting areas, atrium lobbies, and covered parking. These types of amenities attract Millennials. Companies are now looking to lease in buildings that offer these types of amenities. Transwestern was able to lease large blocks of tenant space to new tenants. The building sold on March 8, 2019 for $66,000,000 and at the time of the sale, it was 78% occupied. This is a good example that if the owner is willing to make an investment in an office building in Parsippany, they will be rewarded.

169 Lackawanna Drive contains 256,750 square feet of Class A office space

169 Lackawanna Avenue was once previously occupied by a single tenant, New York Life Insurance. The building sold as vacant to 169 Lackawanna LLC t/a RVI Insurance Company and is currently managed by Vision Properties. This 256,750 square foot office building has been transformed into a multi-tenant Class A building offering many of the amenities that are mentioned above including full emergency power back up. The site has been rebranded as The Offices at Fox Hill. The building is now 40% leased to three new tenants. 111 Littleton Road was a vacant 36,389 square foot office building for years. It is visible from the access Road from Route 287 South leading to Route 80 West. The owner, Commercial Realty Group, has just completed the renovation of this building and has recently leased office space to three new tenants.

Three Sylvan Way was previously owned by Dun & Bradstreet

3 Sylvan Way was previously owned and occupied by Dun & Bradstreet. It was sold on December 22, 2015 to 3 Sylvan Realty, LLC. The owner, Mack-Cali Realty, transformed this 158,011 square foot office building into a multi-tenant building offering many amenities for new tenants. Within the past year they have leased over 100,000 square feet to two new tenants.

5 Sylvan Way is a 151,383 square foot office building located in the Mack-Cali Business Campus. Mack-Cali is in the process of remodeling the lower level for a café, conference rooms and the renovation of the existing bathrooms. This building is now 94% occupied.

35 Waterview Boulevard is 94% occupied

35 Waterview Boulevard is a 172,500 square foot multi-tenanted office building located in the Waterview Corporate Center. It is one traffic light from Route 287, Route 80 and Route 46. It sold on February 15, 2018 for $28,150,000 and at the time of the sale it was 95% occupied.

4, 5, 6 Century Drive are three office buildings constructed in 1980. They contain a combined square footage of over 280,000 square feet. Bergman Realty, in partnership with Time Equities, purchased all three buildings in 2016. They are nearing completion of the transformation of these three buildings into what is now known as the Century Office Campus. Amenities include a time work area containing a media center, art room, game room and massage room. There will also be an open courtyard connecting these three buildings.

Latitude, located at 369-399 Interpace Parkway

369-399 Interpace Parkway owners, Vision Real Estate Partners, just received approvals from the Parsippany Planning Board to convert two mirror image office buildings, containing 700,000 square feet, into an office campus setting offering an open outdoor seating area and an amenity filled central glass atrium connection the two office buildings to be rebranded as Latitude East and Latitude West. Vision Real Estate Partners are also renovating the 226,000 square foot office building at 20 Waterview Boulevard into a fully amenitized building to be branded as Northpoint.

Renderings courtesy: Vision Real Estate Partners/Nelson
All renderings courtesy: Vision Real Estate Partners/Nelson

The above referenced office buildings are all located in Parsippany-Troy Hills and total 2,200,000 square feet of office area. As you can see, there are many highlights going on with the office market in Parsippany that are not mentioned in a vacancy rate.

“As a professional, I have over 45 years of experience in the field of tax assessment. (City of Newark 1974-1985 and Parsippany-Troy Hills 1986 to present),” said Daniel S. Cassese, CTA, SCGREA.

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