CitiStreet Takes 147,000 SF at Archon Property

400 Atrium Dr. is a 350,000-sf class A building within the Archon Group's 850,000-sf, 67-acre office campus off I-287 here. Other tenants include Merck, Sun Microsystems and Computer Sciences Corp. CitiStreet had initially signed a memorandum of understanding for the space last October.

Fred Arena, director of commercial real estate, and Samuel Morreale, Tom Monaghan and Steve Jason of the Chatham, NJ office of the Irving, TX-based Archon, were the in-house leasing reps for the owner. Joe Sarno, senior director, and Jon Marks and Jeremy Neuer of the Iselin, NJ office of Cushman & Wakefield of New Jersey, repped CitiStreet.

Terms of the transaction were not disclosed. But according to a published report, the lease aggregates $25 million over a 7.5-year term. Industry sources estimate that the lease nets out to between $22 and $23 a foot. Average asking rents in the submarket, which has a vacancy rate in the 40% range, are just over $25 a foot, according to Cushman & Wakefield.

The high local vacancy rate owes, in part, to the shedding of more than one million sf by AT&T and Merrill Lynch over the last few years. Indeed, Merrill was the previous occupant of 400 Atrium Dr.

CitiStreet is actually vacating a slightly larger space at Two Tower Center, where it occupies more than 180,000 sf on seven floors. The 147,000 sf at 400 Atrium Dr. covers four floors in a configuration that CitiStreet officials say will be more efficient than their current location.

But CitiStreet won't be moving until next February, when its lease in East Brunswick runs out. As part of the deal, Archon is also paying up to half of the relocation costs for its new tenant, as well as a portion of the cost to build out the space, according to sources. CitiStreet officials estimate they will save more than $2 million a year in rent with the move.

"Within the context of the soft regional market, Archon displayed significant flexibility in carrying the existing vacancy for a full year in order to secure this credit-worthy tenant," C&W's Sarno says. "This transaction illustrates the heightened competition between owners to secure tenants.

"At the same time, CitiStreet's commitment to relocate rather than renew at its existing address illustrates that companies are beginning to dedicate capital dollars to realize the advantages of moving to upgraded space," Sarno continues, referring to the $3 million Archon has already spent to upgrade the campus. "CitiStreet has grown over time in its current location, and the building no longer fits its needs. They took advantage of current rates to achieve long-term savings."

Besides its office buildings, Atrium Corporate Park also includes the Garden State Exhibit Center and a 360-room Doubletree Hotel.