From the Star Ledger:
They’re visible from many New Jersey highways – hulking, seemingly endless structures surrounded by oceans of asphalt parking lots and carefully planned landscaping.
Merck Headquarters in Readington. The former Bell Labs complex in Holmdel. Hoffman La-Roche’s main campus in Nutley and Clifton. There are countless others.
Once, they represented New Jersey’s boom times; commercial palaces built mostly in the 1980s and 1990s that served as professional homes for new residents in the state’s ever-expanding suburban sprawl.
But as technology leapt forward and the Great Recession knocked New Jersey backward, the state’s large office campuses symbolize a shifting economy.
About a quarter of New Jersey’s office space currently sits vacant, eroding municipal tax bases by tens of millions of dollars. Experts say companies are now gravitating toward more compact offices with collaborative workspaces in downtowns and away from the large, cubicle-heavy spaces so common in the state’s suburbs.
“This is a sea change, and we’re only at the very, very beginning,” said Jeffrey Otteau, a real estate analyst and president of the Otteau Valuation Group in East Brunswick. “We’re not in the 80s anymore. This is a broad change, and its impacts are going to be sweeping.”
The companies that helped build New Jersey’s commercial real-estate foundation decades ago are no different. In the last decade, many of the state’s largest commercial taxpayers, such as Roche and Merck, have undergone reorganizations and have chosen to depart from the monolithic structures they once had built.
It leaves their host communities with real-estate white elephants and huge holes in their budgets.
“I think the worst news in the world you get as a mayor is notice from one of your largest corporations that they’re going to be moving out,” said Bill Dressel, director of the New Jersey League of Municipalities. “The implications of those decisions have a direct impact on not only your tax base but the quality of life in your community.”
Companies like Merck and Roche have been actively involved in trying to market their properties. But according to James Hughes, dean of the Bloustein School for Planning and Public Policy at Rutgers University, would-be tenants aren’t exactly beating down the doors of towns that have one million square-foot office campuses available.
“The decision makers now have to worry about the Millennials. That old suburban pattern was linked to the fabled baby-boom generation. Now, Millennials, they don’t remember the bad old days of public transit, they don’t remember the urban despair of the 70s.”
“And they don’t find plain, vanilla office buildings very attractive.”
About 80 percent of all the existing office space in New Jersey was built in the 1980s, Hughes said, and much does not fit the interactive, more compact work environment in walkable, urban communities that companies are seeking.
“The suburban market is oversupplied and under-demolished,” he said.