NJ Transit celebrates signing of 25-year, $440M lease at Two Gateway Center

Calling it a more efficient and collaborative workspace for its employees while affirming its commitment to Newark, New Jersey Transit announced Tuesday it has signed a 25-year lease at Two Gateway Center.

The lease, which is for 407,173 square feet with the potential to grow to 431,680, has been called into question by some lawmakers — who wondered if NJ Transit took the lowest bid.

Those questions grew louder as NJ Transit, which signed the lease June 18, did not make it available to the public (as required) until Monday evening.

The lease drew attention due to its high cost. At $39 a square foot, the lease will be approximately $440 million in its entirety. It is the largest lease in money — and square feet — by a state agency in state history.

The location, however, appears to be the only building in the vicinity of Newark Penn Station that is able to handle the square-foot requirements of the agency. The Panasonic building, which offered a lower square-foot rate, does not appear to be capable of meeting the total square-foot needs.

In addition, Onyx Equities (the landlord) has committed to making nearly $75 million in upgrades to the space — an unusually large expenditure.

The four-building Gateway Center is across the street from Newark Penn Station — and now features a fully renovated opening that faces Newark Penn. It also has a direct pedestrian connection to the station.

Under the terms of the lease, NJ Transit will take the following space at $135 per foot:

• All of floors 6, 7, 8, 9, 11, 12 and 18;
• Part of the 10^th floor (just over 17,000 square feet);
• Part of the 2^nd floor (8,663 square feet for a public meeting and conference room);
• Potentially an additional 24,507 square feet on the 10^th floor (depending on a decision by the existing tenant).

The agency also may take the 5^th floor, should that tenant agree to move to the 18^th floor — but that appears unlikely.

This much is clear: NJ Transit needed to move.

Its current headquarters at Penn Plaza East is more than 30 years old and would require approximately $120 million in repairs and renovations over the next six years, including complete overhauls and replacements to elevators and the HVAC and other systems. The repairs and reconstruction would take several years, and require temporarily relocating employees, significantly disrupting the work environment, productivity and the efficient management of the transit system.

NJ Transit may be able to occupy space in Gateway in 14 months — an incredibly fast pace for such a build-to-suit project.

Diane Gutierrez-Scaccetti, the state transportation commissioner and NJ Transit board chair, was thrilled by the move.

“NJ Transit’s new headquarters will provide a more efficient and collaborative workspace for NJ Transit’s employees who design, build and operate our transit system,” she said.

NJ Transit CEO Kevin Corbett praised the agreement.

“NJ Transit has always been committed to keeping our presence in Newark, the city which has been our home since our creation more than 40 years ago,” he said. “NJ Transit has now negotiated a lease agreement that provides the best value for New Jersey’s taxpayers, for our customers and our employees. This new headquarters provides the modern office environment required to properly run the nation’s largest statewide transit system.”

Two Gateway Center provides direct access to Newark Penn Station via Gateway Center’s pedestrian bridge as well as Gateway’s new street-level entrance just across from the station’s historic waiting room.

Gov. Phil Murphy’s administration has committed more than $190 million to renovating and restoring Newark Penn Station to again be the crown jewel of the state’s transportation system, serving as a grand entryway to New Jersey.

Onyx Equities, the owner of Two Gateway, has agreed to provide $130 per square foot toward design and construction, currently valued at approximately $53 million, specifically to meet NJ Transit’s needs and create a modern work environment, customized to maximize productivity and efficiency.

NJ Transit officials said the new, up-to-date work space also will help the agency attract and retain professional staff, and will allow consolidation of administrative employees from other locations throughout the state.

A copy of the lease can be viewed here.