New Jersey has made plans to consolidate state offices in Newarkinto two buildings--including the landmark IDT tower--saving up to$10 million a year, the Treasury Department said late lastweek.

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After years of planning and negotiation, the state signedletters of intent last Friday on two 10-year leases, which will cutits office space in Newark from 620,000 square feet to 580,000square feet by 2011, Treasury spokesman Tom Vincz said in astatement.

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The state plans to take 484,000 square feet in the former IDTbuilding--now owned by Broad-Atlantic Associates LLC--at 520 BroadSt. for $28.77 per square foot and 103,000 square feet at 765 HenryInvestors-owned 765 Broad St. for $21.55 per square foot.

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While several commercial real estate brokers have noted that thestate's rent seemed high, Massey Knakal first vice president ofsales Geoffrey Bailey does not believe it is an outrageous figure."If you look at the Newark region, it is typically a $20 or lessmarket, but there is so much money being put into the IDTbuilding"--the word on the street is that the state is asking forrenovations of around $52 a square foot--"that $29 does not seemunreasonable. This is not your typical downtown building and it'sstill below what you would get at One Gateway," he adds.

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Also neglected in most media reports is the fact that thebuilding offers parking and is practically next door to the lightrail station, making the lease rate seem less daunting. "Parking isalmost unheard of on the east side of Broad Street in the North Endof Newark," says Fidelco Group chairman Marc Berson, who has longbeen an advocate for redevelopment in Newark, particularly theNorth End, where Fidelco owns One Washington Park and 494 BroadSt.

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Berson agrees with Bailey's assessment of the state's reportedrental rate. "Many brokers are talking about getting a deal downthe street for $18, but that's for a two- or three-year lease in aconsiderably smaller space," he says. Although he declined to namespecific buildings, Berson tells GlobeSt.com that Newark hassnagged rents in the high-$20s before. "In the end, when you havedeals that are multi-floors and require very specific build-outs,tenants are prepared to pay the price."

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The losing bidders have 12 days to object or ask for moreinformation before the leases become official. "The procurementfollowed an extensive master planning effort covering the lastseveral years to maximize space efficiency, reduce space and trimleasing costs," Vincz said in a statement.

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Commercial real estate broker Christian Benedetto Jr., who worksfor Newark-based Hopkins, Sampson & Brown Real Estate AdvisoryServices, tells GlobeSt.com, "These leases together would be one ofthe largest transactions in Newark over the past decade, furthershowing that Newark--and specifically the Broad Streetcorridor--has continued to thrive even in the worst economy in 50years. New Jersey taxpayers should be especially happy, as thisconsolidation both reduces space and costs."

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