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Wall Street Journal / Biz - Money

Mack-Cali Envisions Main Street on Jersey City Waterfront Complex

Mack-Cali plans to transform a waterfront promenade along Jersey City’s Harborside office complex that has served largely as a pleasant commuting path for workers into a bustling main street.

By

Keiko Morris

For decades, the waterfront promenade along Jersey City’s Harborside office complex has served largely as a pleasant commuting path for workers going to and from the train station.

Now landlord Mack-Cali Realty Corp. plans to make this stretch of riverside boardwalk into a bustling main street.

During the last decade, developers and owners of office buildings in the New York City region have been moving away from the idea of the structures as a self-contained fortresses protected from urban grittiness.

People walk outside at the waterfront in the Harborside development in Jersey City, N.J.Photo: ELIZABETH SHAFIROFF for The Wall Street Journal

Instead, commercial landlords have been bolstering connections to surrounding public spaces, especially desirable waterfront areas. Easy access to communal spaces and neighborhood amenities from parks to restaurants and coffee shops also are in rising demand as companies pack more employees into less space.

While Harborside has trailed other areas in its embrace of the waterfront, Mack-Cali is on a mission to re-engineer the Harborside complex as a riverside destination for the city. The company has plans to add restaurants along the walkway and a ferry stop. It also is giving the property a $75 million face-lift and upgrade.

“Brooklyn has been doing this for a while, Manhattan has embraced it and now we’re getting our act together, but we are doing it in a different way,” said Mack-Cali chief executive Michael J. DeMarco, who grew up in Jersey City. “This is open workspace on steroids.”

The upside for Mack-Cali is boosting the value of its nearby residential developments and Jersey City office properties. Just outside the Harborside complex, Urby, a 69-story tower co-developed by a Mack-Cali subsidiary and Ironstate Development, opened earlier this year and has been leasing its 762 apartments at a steady clip, Mack-Cali executives said. Two more residential towers are planned nearby.

People sit in the atrium in the Harborside development in Jersey City, N.J.Photo: ELIZABETH SHAFIROFF for The Wall Street Journal

On the waterfront, three buildings—Harborside 1, 2 and 3—make up the core of the complex. The first building’s 400,000 square feet of office space will become available in the next year as a tenant moves out. Mack-Cali also owns two other office buildings that are part of the Harborside complex and another tower nearby, and has plans to develop a new 1.2 million-square-foot office in partnership with SJP Properties, which is serving as the project’s construction manager, adjacent to the complex.

The three connected buildings abutting the waterfront originally were built in the 1920s to handle freight storage for the Pennsylvania Railroad. It was converted to office space in 1982 and purchased along with adjacent sites in 1996 by an early version of Mack-Cali. Back then, the walkway, which is part of the Hudson River Walkway, was purely a transitory experience for workers, said Christopher DeLorenzo, Mack-Cali’s executive vice president of leasing. Now the emphasis is on the amenities of a round-the-clock neighborhood companies view as important in recruiting and retaining workers.

Per-square-foot asking rents at Harborside 1 are in the upper $30s to low $40s range, but, after the building is renovated from top to bottom, and the facade is replaced to create floor-to-ceiling windows, asking rents will rise to the middle to upper $40s range, company executives said.

“I think the concept now of turning the building inside out and marrying it to the environment to provide that seamless attachment is more current in thought in the last three to five years,” said Kevin Riordan, executive director of the Center for Real Estate at Rutgers Business School. “And I think it’s been accelerating with millennials willing to live downtown.”

Mack-Cali’s ramped-up efforts to make the Harborside complex also follows the evolution of Jersey City and its waterfront, where much of the new development during the last 10 to 15 years has been residential buildings, said Rich Mirliss, executive managing director of real estate services firm Colliers International.

“You couldn’t do what they are trying to do 10 years ago because there wasn’t the infrastructure and population to support the retail,” Mr. Mirliss said. “There wasn’t a 24-7 community.”

Before Mr. DeMarco’s arrival, Mack-Cali had been making modest changes to Harborside, but he has stepped up the pace since he joined the company two years ago. The Harborside complex has the advantage of direct access to the riverside promenade, in contrast to West Side Manhattan’s Hudson River Park which is largely separated from commercial and residential buildings by a highway, Mr. DeMarco said.

In May, the company opened up a seasonal beer garden, the Lutze Biergarten, which is named after DeMarco’s grandfather, a carpenter and mason. They put garden tables and seating along the walkway as well. Harborside’s atrium, which leads to the river walkway, is intended to be a public living room of sorts, offering a place to work for both tenants and the surrounding community.

The company has hosted foodie events such as craft beer and wine festivals and brought in regular concerts in the atrium. On Thursday, Top Chef contestant Leah Cohen and her husband and business partner Ben Byruch will open Piggyback Bar, a casual version of the couple’s Pig & Khao on Manhattan’s Lower East Side.

Mack-Cali is in talks to bring in at least three other waterfront restaurants, Mr. DeMarco said. The company has about 150,000 square feet of retail space it plans to lease with almost 50,000 square feet dedicated to food and beverage venues.

As part of that, the food hall will be revamped with a rotating roster of kiosks and the company is considering bringing in a grocer. About 60,000 square feet will be devoted to other types of retail such as a fitness center focused on specific workout classes.

Company executives also are hoping the Oct. 2 opening of the ferry terminal operated by New York Waterway will be a game changer.

Write to Keiko Morris at Keiko.Morris@wsj.com

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