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Birch Group pays Mack-Cali $255M for NJ office portfolio

The Birch Group, a privately-held commercial real estate investor, owner and operator, today announced the $255 million acquisition of a four-building portfolio in Short Hills, N.J.

The off-market acquisition comes on the heels of the company’s recent $77 million portfolio purchase in Morristown, and further cements its focus on acquiring prime value-add office assets across the suburbs of Northern N.J.

The 843,300 s/f portfolio comprises four Class A office buildings located at 51, 101, 103 and 150 JFK Parkway in the affluent Short Hills submarket.

Cushman & Wakefield represented Mack-Cali Realty Corporation, the seller, and is also being retained by The Birch Group as the exclusive office leasing agent for the properties. With the acquisition, The Birch Group has now acquired over $750 million of commercial office assets since 2019.

MARK MEISNER

“This portfolio offers a unique opportunity to reposition historically high-performing properties back to best-in-class assets, which is a hallmark of The Birch Group’s strategy. Short Hills is known for its incomparable prestige that manifests in heightened expectations among the regional tenant base,” said The Birch Group CEO and Founder Mark Meisner.

“A one-size-fits-all approach to asset management doesn’t work in this submarket, and our focus will be on enacting tailored improvement strategies to create enduring value for our tenants and investors alike.” 

Mahbod Nia, CEO of Mack-Cali, said, “This transaction represents yet another significant step towards simplifying our company through the disposition of suburban office properties while generating liquidity to pay down corporate debt and strengthen our balance sheet.”

“The Short Hills disposition continues our strong sales momentum in the suburban office market and reinforces our ability to achieve our goals at a solid pace without sacrificing value,” added Ricardo Cardoso, executive vice president.

The portfolio, which represents The Birch Group’s first foray into the Short Hills submarket, is 80 percent leased to a roster of 22 tenants, including Citibank, Investors Bank, KPMG, Bank of America, UBS, Dun & Bradstreet, Morgan Stanley and Wells Fargo. 

Mack-Cali already spent $15M renovating the portfolio

Situated directly off Route 24, the properties offer regional connectivity to the Garden State Parkway, I-78, and the NJ Turnpike with immediate access to a skilled executive labor base in Short Hills, the wealthiest town in N.J. and the sixth wealthiest town in the United States.

The buildings have access to the high-end Mall at Short Hills, a 4-Diamond Hilton Hotel, Canoe Brook Country Club, and The Upton — a recently completed upscale residential development by Roseland Residential Trust.

The Birch Group will employ its value-add strategy for the portfolio, complementing $15.2 million of recently completed renovations at the properties by previous ownership, in addition to a newly constructed parking deck at 150 JFK Parkway. To this end, The Birch Group has tapped world-renowned commercial design firm Gensler to lead the design enhancements.

“During the pandemic, there has been a demographic shift to the suburbs and the migration of this talent pool represents an extraordinary opportunity to meet the demand for high-quality office assets in prime New Jersey markets,” Meisner added. “Short Hills is among one of the most prestigious suburban locales and it has consistently achieved above average rents in New Jersey, while maintaining the highest occupancy rates within the market.” 

Each of the properties are located in the Route 24 Corridor in Short Hills, which is home to 35 percent of N.J.’s billionaires. 

“These properties are situated within proximity to New Jersey’s most highly sought-after residential areas, which has long enabled them to attract a nationally recognized roster of blue chip tenants,” said David Bernhaut, executive vice chairman of Cushman & Wakefield of New Jersey, Inc.

David Bernhaut

“The Short Hills cache has been instrumental in attracting wealth management, consulting, accounting and legal firms, as well as the headquarters of Dun & Bradstreet and Investors Savings Bank. These companies have chosen Short Hills due to its unparalleled local and regional highway access, proximity to private country clubs, high-end hospitality, and other conveniences that you simply can’t find in other submarkets.”

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