30 Montgomery Street, Jersey City, NJ, lobby and exterior views 30 Montgomery Street, Jersey City, NJ, lobby and exterior views

JERSEY CITY, NJ—American Realty Advisors has acquired 30 Montgomery Street, a 16-story boutique office tower located in the Hudson Waterfront submarket of the New York City Metro area, from Rubenstein Partners and Onyx Equities for $101 million.

The sale follows a $20-million capital improvement program by Rubenstein and Onyx that was completed last year.

“When we invested in 30 Montgomery three years ago, we could see the momentum building in the commercial and residential real estate market in Jersey City, and we believed that increased demand for quality office product would continue,” says Stephen Card, regional director of Mid-Atlantic for Rubenstein Partners.  “Together with Onyx, we developed a capital improvement plan to remake this as a trophy boutique office building to match its trophy location.  We’re extremely pleased with the outcome of this investment, which truly gave us the chance to exercise our value-added real estate skills through an intensive redevelopment.”

Built in the early 1970s, 30 Montgomery was among the first office towers along the Jersey City waterfront.  The building had not been significantly upgraded since construction, and Rubenstein and Onyx improved the 315,385 square-foot building with one of the most extensive New Jersey office building upgrades in decades.  Among other things, the partnership invested $5 million in replacing all exterior windows, improving energy efficiency and modernizing the building’s outside appearance.  The building façade was extensively refurbished as well.

American was attracted to the asset because of the direct transportation link to Manhattan, as well as access to new and growing amenities.  In addition, 30 Montgomery will benefit from its position as a lower rent alternative in an emerging 18-hour live/work/play location, which is similar to other emerging markets throughout the country, like the Chicago Fulton Marketplace in which American recently acquired Google’s Midwest headquarters.

“30 Montgomery’s location is particularly attractive based on the rapidly transforming Hudson Waterfront submarket, which is benefitting from strong population growth, sustained residential development, expanding cultural/entertainment/retail amenities, and a diversification of the local employment base,” says Kirk Helgeson, American’s chief investment officer. “Jersey City is projected to add nearly 7,500 units by the end of 2017, driving additional economic growth associated with the new residents, service providers, retail, and amenities necessary to support a thriving 24/7 CBD.”

“During the course of our ownership of this asset, we plan to stabilize occupancy, significantly grow cash flow, and create a true core asset by renewing and marking in-place below-market rents to market, aggressively leasing the remaining vacant office space, creating vibrant retail space at the ground floor, and investing additional capital to finish cosmetic upgrades,” Helgeson says.

The building, which is 71.6-percent leased to 46 tenants, is also characterized by its easy accessibility to numerous modes of public transportation. 30 Montgomery is one block from the Exchange Place PATH station, which offers non-stop access to Wall Street in under five minutes, as well as access to New York Penn Station in Midtown Manhattan in under 25 minutes.  In addition, the office is situated near the Hudson-Bergen Light Rail line, the New Jersey Transit bus lines, and three blocks from New York Waterway’s Paulus Hook ferry terminal, which provides 10 to 15 minute service to Lower Manhattan and Midtown.

“The Jersey City office market is in the midst of transformation,” says Eric Cannon, American Realty Advisors’ senior director, investment group. “Historically a back-office operations-concentrated submarket for the financial services industry, the market is becoming a diversified mix of front-office users spanning a variety of fields, including technology, business services, media, consumer products, and publishing. Over the last five years, Jersey City has experienced substantial population growth, and is on pace to dethrone Newark as the largest city in New Jersey later this year.”

Cannon also notes that 30 Montgomery’s unique 21,000 square-foot floor plates stand out in a market dominated by office towers with large floor plates.

“We expect this asset to continue to cater to a niche tenant market, offering functionality and identity to the market’s underserved smaller-space office users, as well as an expansive window line with views of the New York City skyline,” he says. “With rental rates significantly below those in Manhattan, we believe that this asset offers an outstanding opportunity for tenants seeking lower cost space with unmatched access to nearby mass transit.”

Rubenstein and Onyx were represented by David Bernhaut, Andrew Merin, and Gary Gabriel of Cushman & Wakefield.