JLL Income Property Trust, an institutionally managed daily NAV REIT, announced the acquisition of 170 Park Avenue, a 147,000 s/f purpose-built life sciences building in Florham Park, New Jersey.
The property is net-leased on a long-term basis as premier laboratory space and the corporate headquarters for Celularity Inc., a clinical-stage biotechnology company. The purchase price was approximately $47 million.
“Within the office sector our priority investments are healthcare oriented, focusing on medical office and life science properties,” said Allan Swaringen, President and CEO of JLL Income Property Trust.
“In a post-COVID environment of eroding fundamentals for traditional multi-tenant office properties, these two healthcare-oriented sectors stand out for their lower vacancy rates, healthy net absorption and balanced new supply due to significant barriers to entry because of higher construction and tenant improvement costs. These factors also lead to higher tenant retention even during periods of weakness within traditional office market environments.”
Swaringen added: “While we are excited about expanding our healthcare allocation, we were also attracted to acquiring 170 Park Avenue significantly below replacement cost and with tenant and prior owner-funded improvements to the building in excess of $80 million. Celularity’s improvements resulted in 170 Park housing some of the most advanced laboratory and manufacturing space for cellular medicine and biomaterials in the country.”
The lease term is for 15 years and provides for an average of 2.5 percent annual rent increases.
With over 3,200 life science companies, New Jersey is a major biopharmaceutical and drug development hub within the US. The New Jersey life science market totals in excess of 17 million square feet of research, development and lab space ranking among the top markets in the country behind Boston, San Francisco and San Diego.
170 Park Avenue is located on more than 18 acres in The Green at Florham Park, a 270-acre master planned mixed-use office park, which includes tenants such as BASF’s North American Headquarters and the New York Jets headquarters and training facility.
This investment is JLL Income Property Trust’s second acquisition in the healthcare sector in this market following its 2016 purchase of 140 Park Avenue, a newly constructed 100,000 s/f medical office building leased on a long-term basis to Summit Medical Group, New Jersey’s largest multi-specialty doctor practice group.