Continental Plaza in Hackensack sold in foreclosure auctionMonday, July 30, 2012 Last updated: Monday July 30, 2012, 3:50 PM
BY KATHLEEN LYNN
STAFF WRITER
The Record
Continental Plaza, the 40-year-old, three-building office complex in Hackensack, has been repossessed by its lender at a foreclosure auction to satisfy a $102 million mortgage.
MICHAEL KARAS/STAFF PHOTOGRAPHER
Continental Plaza, the 40-year-old, three-building office complex in Hackensack, has been repossessed by its lender at a foreclosure auction to satisfy a $102 million mortgage. The foreclosure on the high-profile complex overlooking Route 4 reflects the challenges facing the office market in recent years as employers cut their staffs, pushing the state's unemployment rate to 9.6 percent and emptying out cubicle farms. North Jersey's offices have an overall vacancy rate of around 20 percent, according to commercial real estate brokerages.
Continental Plaza's lender, a JPMorgan Chase investment unit that bundled commercial mortgages, took possession of the property at a Bergen County sheriff's auction last month when no other bidders stepped forward.
Continental Plaza, which was built in the early 1970s, was purchased by a joint venture of Morgan Stanley and Normandy Real Estate Partners of Morristown in 2004 for $108.5 million. Normandy, which managed the property, spent $4 million in 2007 and 2008 to upgrade it with renovated lobbies, new landscaping and new pedestrian bridges connecting the buildings to the parking decks.
But Continental Plaza's owners were apparently unable to refinance the mortgage when it matured in 2009 — a time of much tighter credit.
"You're going to continue to see assets like this fall into default, because too much debt was put on them at the top of the market," said Dan Fasulo, managing director of Real Capital Analytics, a New York real estate research firm. Although the 2004 purchase was financed with a mortgage equal to 77 percent of the property's value, by 2009, commercial lenders were willing to lend only up to 60 percent of value, Fasulo said.
Normandy Partners said its policy is not to comment on transactions.
The 650,000-square-foot complex is about 30 percent empty, according to Blake Goodman of Newmark Knight Frank, the property's leasing agent. Asking rents are $26 per square foot, he said.
The three buildings, two of them 10 stories and one 12 stories, include tenants such as TGI Friday's, the federal Social Security Administration and Shubert Ticketing, the parent company of Telecharge.
Goodman said the new owner of the property, which is represented by LNR Property of Miami Beach, plans to hold it, at least for the short term. The new owner is improving the complex by replacing the elevators, repaving the parking deck and renovating upper lobbies. The property is on 12 acres overlooking Route 4 and Hackensack Avenue, across from the Shops at Riverside retail mall.
The office market has faced difficulties beyond the slow economy.
The need for office space has declined as more employees work from home. In addition, employers are cutting back the amount of office space they allot per worker.
Email: lynn@northjersey.com