COVID was a final blow to some NJ suburban office parks. Here's how they're morphing

If you’re a New Jersey suburbanite, you’re probably familiar with the seemingly ubiquitous collection of office parks dotting the landscape.

They’re everywhere — but since the COVID-19 pandemic and shift to work-from-home, many of them sit nearly empty. Some have become ghost towns.

“Our suburban office inventory is overbuilt and under-demolished,” said economist James Hughes, dean emeritus of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University.

So what do you do with them? Repurpose them. That’s what’s called “adaptive reuse” — the practice of taking a building or property and repurposing it for a new function.

In many cases, that means demolishing these office parks and replacing them with housing or warehouses, said Jeffrey Otteau, managing partner and chief economist for the Otteau Group, a real estate consultant in Old Bridge.

That's what has been playing out at sites across North Jersey, from the former Hoffman-La Roche campus on the Nutley/Clifton border to the former Mercedes-Benz headquarters in Montvale and the former Pearson headquarters in Upper Saddle River.

“When a suburban office building sells, it typically sells for land value, meaning the sticks and bricks, the glass and steel, make no contribution to what someone pays,” Otteau said.

Whether it’s a downtown like Morristown's or an empty office campus in Wayne or Nutley, developers are looking at new ways to use the space.

“Some of it’s play and work. Some of it doesn’t have a residential component,” said Peter Bronsnick, an executive with real estate services firm Cushman & Wakefield, based in East Rutherford. “Everyone’s looking for ways to monetize these corporate campuses and do things to ultimately create mixed-use environments.”

How did we get here?

New Jersey saw a glut of office space construction in the 1980s, as talent fled urban centers across the region, Hughes said.

He estimated that by 1990, 80% of all the office space ever built in New Jersey had gone up.

Joel Garreau, in his 1991 book “Edge City: Life on the New Frontier,” described these new office parks at the edge of their metropolitan areas.

Office parks sprang up across Bergen County, along the Route 80 corridor and at the intersection of Routes 80 and 287 in Morris County.

Even before the pandemic hit in 2020, younger talent had already started to flock back to urban centers, including Hoboken, Jersey City and Manhattan, said Otteau.

Work-from-home “further reduced the demand for the use of physical office space,” he said.

Not in my backyard

But the transformation from office parks to residential development and mixed use does not always go smoothly. Some towns and their residents may sue to block those efforts within their borders.

In Woodcliff Lake, where automaker BMW is looking to sell off 20 acres of its corporate headquarters, borough Mayor Carlos Rendo said there may need to be controls on whatever gets built there, especially if it ends up being housing.

“If it’s a higher-density development, is the infrastructure already in place sufficient?” asked Michael Cerra, executive director of the New Jersey League of Municipalities, a trade group of the state's 564 towns and cities.

In other words, the existing police and fire departments, roads, local schools and water and sewer infrastructure may not be able to handle the added population.

“I would say the controversy is not necessarily NIMBYism [not in my backyard] as it is ‘Hey, is this what’s best for our community,'” said Bronsnick, of Cushman & Wakefield. “We appreciate growth, but we want to be mindful of the uses and how that impacts our community. We need to reposition the assets. We know that we can’t just have them sit there forever.”

So where is this office demolition and redevelopment happening? Here are seven examples across North Jersey.

Former BASF complex, Mount Olive

The 930,000-square-foot former North American headquarters of BASF Corp. in Mount Olive, in Morris County, was demolished in November. It is slated to be replaced by a warehouse project.

Former Mercedes-Benz headquarters, Montvale

Englewood-based developer S. Hekemian Group is planning to build more than 200 apartments at the former 32-acre campus of Mercedes, which left New Jersey in 2015 for Atlanta.

Former Pearson headquarters, Upper Saddle River

The former Pearson Education campus is under construction for 208 apartment units.

Former TD Bank, Mahwah

Construction is finished on a 208,345-square-foot warehouse on the former TD Bank office building site at 1000 MacArthur Blvd. in Mahwah. It's now at 75% occupancy, being leased by tenants who are expected to occupy the building later this year.

Once fully operational, the new facility is expected to generate 66 tractor-trailer trips per day, with access to Route 17 using a route that would avoid the town’s three nearby schools and public library. Mahwah residents have complained about the potential for truck noise and traffic. The builder is Russo Development.

Former Toys R Us, Wayne

The 192.3-acre site that previously housed the Toys R Us headquarters in Wayne will eventually feature 1,360 apartment units and potential retail such as arcades, movie theaters and restaurants. But the process has been bogged down in litigation.

M Station, Morristown

Accounting giant Deloitte and drugmaker Sanofi are both slashing their office footprints — Deloitte from a much larger office in Parsippany and Sanofi from a much larger office in Bridgewater — as they embark on plans to call Morristown their home.

In 2022, the landlord of the former Deloitte headquarters in Parsippany set out on a $3 million upgrade of the office complex. The former Bridgewater campus of Sanofi was sold for over $260 million in 2022 to AVG Partners, a private equity group, with more than 200 properties totaling over 10 million square feet in 22 states.

The two are bringing a combined 3,400 employees to the downtown of Morris County’s largest city, in addition to the Valley Bank national headquarters. The latest milestone was a “topping out” ceremony in January this year, when the last construction beam was added to one of the buildings at the M Station project.

The redevelopment consists of two buildings: M Station East, which was completed in July 2022, and M Station West, which will be completed in early 2025.

Once finished, the complex will include a 1,000-car parking structure with EV stations, a landscaped rooftop with wellness areas for yoga and outdoor movement classes, and ground-floor retail and dining, the developers said. One such business, salad food chain Sweetgreen, will open inside M Station.

“A lot of buildings will offer a conferencing center, a fitness center, a cafeteria, a golf simulator, outdoor space with seating, food trucks that come once every two weeks,” said Blake Goodman, managing director with real estate services firm JLL, based in Parsippany.

ON3, Clifton/Nutley

In 2013, the pharmaceutical company Hoffmann-La Roche walked away from the 116-acre site that straddles the border between the two towns. Then, developers Prism Capital bought the property in 2016 with plans for a “Live, Work, Play” community with offices, residences, restaurants and retail.

The campus has been repopulated largely with corporate clients, primarily life sciences, pharmaceuticals and medical tenants, with the expectation that 5,500 people will be employed there.

Along with pharmaceutical company Eisai, the site has seen the addition of the Hackensack Meridian School of Health and offices for Ralph Lauren and laboratory company Quest Diagnostics.

Hackensack Meridian Health broke ground in 2021 on an 80,000-square-foot medical office building that will feature an urgent care center.

Clifton approved a Starbucks at the site in 2023, with a drive-thru, electric charging stations and new landscaping.

There are also plans for a 400-space parking garage, a hotel and eventually a supermarket.

Daniel Munoz covers business, consumer affairs, labor and the economy for NorthJersey.com and The Record. 

Email: munozd@northjersey.com; Twitter:@danielmunoz100 and Facebook

This article originally appeared on NorthJersey.com: Here's how NJ suburban office parks are morphing