Hard hit by the recession and bad real estate loans made in
the '80s, banks are regaining their footing and slowly returning
to the commercial marketplace. The evidence is a spate of lease
and sales transactions over the last year.
"It is only the tip of the iceberg as the banking industry,
between expansions and contractions, continues to change itself,"
said Thomas V. Bermingham, executive director at Edward S. Gordon
Co. of New Jersey, a brokerage in Saddle Brook.
Mergers, acquisitions, consolidations and expansions are
stoking much of the activity as banks look for space to meet
their reconfigured needs. Over the last four years 71
state-chartered commercial and savings banks and savings and loan
institutions were acquired or closed, according to figures from
the state's Department of Banking.
In one of the larger deals, Margaretten Financial Corp., a
mortgage banking company recently acquired by Chemical Banking
Corp. of New York, is moving from Woodbridge and Perth Amboy to
an Edison office building, expanding its space by more than a
third, to 125,000 square feet.
In South Brunswick, United Jersey Bank has leased 94,685
square feet in the Dayton Corporate Center to accommodate about
450 employees involved in a merger last July of it and two sister
banks, United Jersey Central and United Jersey South. All are
subsidiaries of UJB Financial Corp., based in West Windsor.
And United National Bank will relocate its headquarters from
Plainfield to a 70,000-square-foot building now being built in
Bridgewater, which it will lease.
In the only sales transaction, Hudson United Bank, which
acquired eight banks in four years, bought a 64,350-square-foot
building in Mahwah for its new headquarters.
Projections are that the activity is likely to continue
because some of the state's six larger banks, rumored to be in
the market for space, have yet to make their moves. Brokers say
banks are also looking for places to set up emergency computer
They also say that an interstate banking bill recently
approved by the Senate and sent to President Clinton for signing
may provide yet another spur to consolidations or expansions. The
bill would eliminate the remaining barriers to interestate
banking, as well as a requirement that banks operate separate
subsidiaries in each state.
Properties that became available when banks that owned or
occupied them failed are also being taken over and leased to new
tenants. One is the 304,000-square-foot former headquarters in
Livingston of the now defunct Howard Savings Bank, the largest
bank to go out of business in New Jersey.
All this adding and subtracting of space, brokers and analysts
say, has had a positive, but modest, impact on the market. Still,
they say, no new construction is expected.
"We're not seeing a whole lot of closings of free-standing
buildings and those that do become available are being snapped
up," said John Young. He is a vice president and regional manager
of the Northeast office of the Satulah Group of Atlanta, which
helps banks consolidate their operations.
Donald P. Eisen, a managing director at Cushman Wakefield,
the national brokerage with offices in East Rutherford, added
that the "market is improving and improving quickly for prime
space." The oversupply, he said, is in older buildings.
The brokerage says the vacancy rate for the state's 11-county
northern and central office market is 20.96 percent; last year it
was 22.6 percent. Much of the space absorbed was Class A, which
continues to dwindle. And while average asking rents, now at
$17.79 a square foot remain low, concessions such as rent-free
periods are disappearing. …