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Case Study Close-Up: Ironside Newark Redevelopment

 
Aug 7, 2017
by Josh Anderson

NEWARK, NJ—In May, Edison Properties and The City of Newark broke ground on the $80 million redevelopment of a 456,000 square-foot warehouse adjacent to Mulberry Street, the Prudential Center and Newark Penn Station. The City of Newark is providing a 30-year tax abatement worth $1 million for “The Ironside” which will become a beautifully modern office, retail and restaurant space. The city of Newark is excited for this development, but one would be forgiven for asking a few questions. For example, why is Edison keeping this building and why is it going to restore the building, especially when most people would say it’s a high-risk gamble?

Michael Sommer, Executive Vice President of Development for Edison Properties

Fortunately, CapRate recently connected with Michael Sommer, Executive Vice President of Development for Edison Properties to learn more. “As far as I was concerned, it was a real estate developer’s dream come true,” Sommer flatly says. “Edison owns and controls over 14 acres of land in and around Mulberry Commons area. Quite frankly it was a blank slate. Our first charge was to figure out how to get things started in this redevelopment area. We looked at the former Newark warehouse now known as Ironside Newark, we looked at other vacant lots we had and we looked at parking lots. We decided that the Ironside project was the first one we should start with.”

Why though, we ask? “It’s a spec office building, but given its location at the northern entryway to the Mulberry Commons redevelopment area, for those coming on foot from Newark Penn Station, it was a no brainer,” he replies. “Walk down the Carter highway from the station, it’s the first parcel that you’ll see. In addition to that, the centerpiece of Mulberry Commons is a 3-acre park that the city is developing. And we decided that to leave a hulking, vacant warehouse sitting with park frontage with this newly developed state of the art park didn’t make any sense.”

Without delay, Sommer says Edison evaluated the building, looking at its historical nature, and realized they certainly had the structural capacity to do something big. “We ultimately decided that, given the bones of the structure and its location, it was the right way to get started, with loft-style office upstairs and with street level retail downstairs,” he says.

In spite of the fact that it is the first spec office building in Newark in over thirty years, Sommer says that Edison continues to be very optimistic that this project will be very successful, because it is differentiated. “It’s certainly unique in Newark, and it’s even unique in the greater New Jersey market,” he explains. “in that it’s a warehouse loft-style office conversion project, which is actually prevalent throughout the boroughs—you’ll find it in Long Island City, you’ll find it in Manhattan, and you’ll find it in Brooklyn—but in Newark it’s really the first of its kind.”

We also asked about the  interplay from a development standpoint between Newark and Edison, and Sommer said that it’s a public-private partnership to say the least, but it’s not just Edison-specific. “The Devils at the Prudential Center are heavily involved, Newark CDC is heavily involved, and NED eventually from an operational standpoint, will be involved,” he responds. “In partnership with the city, we were able to move this project forward very quickly. Getting a project started is a heavy lift, to say the least. Without the cooperation of Mayor Baraka, his administration, and the city officials, this would never be at the point it is today.”

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