Sunday, July 15, 2018

New Jersey's Empty Office Park Glut Eases With Merck Headquarters Sale

New Jersey will soon have one less giant, empty suburban office park.

Unicom Corp., a Beverly Hills, CA-based IT company that's part of Unicom Global, said it agreed to buy the former Merck headquarters complex in the Whitehouse Station section of Readington Township, NJ, from Merck Sharpe & Dohme Corp. for an undisclosed amount. It concludes a move started in 2012, when Merck said it was leaving the hexagon-shaped complex spanning 1.24 million square feet on a leafy 1,100-acre campus.

Merck's former headquarters site is one of a number of large suburban office parks, and corporate headquarters, to be left vacant in the past decade in New Jersey. Industry consolidation, rising state and local taxes, and the growing popularity of urban living have driven a number of corporations out of the state -- and helped make office vacancy rates rise. Some of these properties have new owners and tenants, while others sit empty.

"It’s exciting because there’s not a speculative purchaser but basically a corporate user, so it’s pretty good for New Jersey, a really big win.  My God, that’s going to give the economy in western New Jersey a big boost."

Drugmaker Hoffmann-La Roche left its 116-acre campus on the border of the New Jersey communities of Nutley and Clifton, and the site is now a redevelopment called ON3. That mixed-use project has the state’s first private medical school in more than half a century, and other tenants such as retailer Ralph Lauren Corp., medical services provider Quest Diagnostics Inc. and biofabricator Modern Meadow Inc.

And Bell Labs’ 2 million-square-foot former research facility in Holmdel, NJ, has also been transformed into a mixed-use complex called Bell Works.

In contrast, the former headquarters of chemical company BASF Corp. in Mount Olive, NJ, remains vacant. And retailer Toys R Us, which has gone out of business and is liquidating its assets, is putting its headquarters in Wayne, NJ, up for sale.

As for Unicom, the firm did not specify on Thursday how many employees it plans to move to Whitehouse Station. Unicom put the property under contract and initiated due diligence last December and the sale is expected to close in October. The property will be renamed Unicom Science Park I & II and will be used as the company's headquarters for its New York and New Jersey operations.

"We presently have offices in Parsippany and Princeton, so it will be nice to have everyone under one roof," Russ Guzzo, Unicom vice president of sales and marketing, said in an email. "It is unclear the number of employees that will be coming over to the new site at this time, but we have big goals as far as new hires."

Unicom Global consists of more than 40 corporate entities encompassing a range of businesses. It has acquired a number of products and business lines from technology company IBM, including System Architect, Focal Point, PurifyPlus, solidDB and the PowerHouse programming language. It is also the parent company of the former GTSI, now named Unicom Government, which it acquired in June 2012. Other major business units include Unicom Systems, offering IBM mainframe software products, and systems integrator Unicom Engineering, formerly NASDAQ: NEI.

The complex consists of 1 Merck Drive, a 992,476-square-foot hexagon-shaped building, and the smaller 2 Merck Drive, a 223,357-square-foot structure, according to CoStar.

James Hughes, professor and dean emeritus of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University, said Bell Lab’s former facility in Holmdel and the Merck former headquarters are both "iconic structures" architecturally.

Merck’s former main headquarters is clad in Spanish granite and features natural light. The building also has a 1,900-vehicle underground garage, Hughes said.

Merck transplanted the site's trees during construction and they are now fully grown in an open area in the hexagon’s center, Hughes said.

"There’s a mature forest in the middle of it," he said.

While studies show millennials are attracted to workplaces located in urban settings near public transit, Hughes said a California-based company like Unicom may be accustomed to its employees commuting to work in cars, or to providing shuttle transportation to workers, making a location in rural Whitehouse Station seem like less of a drawback.

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