Atlantic Health Commits to 533 KSF in New Jersey

June 23, 2021

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The transaction marks one of the state’s largest office and medical leasing deals in recent years.

SouthGate Corporate Center

Atlantic Health System has committed to 533,000 square feet at a three-building campus in Morristown, N.J., in one of the largest office and medical leasing deals signed in New Jersey in the last five years. The transaction includes lease extensions and a 32,000-square-foot expansion that bring the property to full occupancy. Colliers negotiated on behalf of the tenant.

The landlord is Harrison Street Real Estate Capital, which has owned the campus also known as SouthGate Corporate Center since 2018. The company purchased the Class B asset from National Business Parks Inc. for $135.1 million, in the state’s largest medical office sale at the time.

CommercialEdge data shows SouthGate Corporate Center occupies more than 49 acres at 435, 465 and 475 South St. The three-story buildings completed in the 1980s are home to Atlantic Health’s corporate headquarters and to several medical office facilities. Located just east of Interstate 287, the property is some 3 miles south of downtown Morristown and less than 2 miles south of Atlantic Health’s flagship, Morristown Medical Center.

Colliers Executive Managing Director Bryn Cinque, Senior Managing Director James Bailey and Associate Stephen Graziano assisted Atlantic Health System in the negotiations. Cinque and Bailey were also instrumental in the company’s recent expansions into Clark, Bayonne and Bridgewater, N.J. John M. Demarco of Schenck, Price, Smith & King LLP represented the tenant as outside counsel.

New Jersey office market, on route to recovery

While medical office deals and transactions are a category of their own, such a large deal marks a breath of fresh air for a regional office market recovery that faces an uphill battle. According to a recent Colliers report, office leasing activity showed promising improvement in the first quarter of 2021, up 42.6 percent from the previous quarter. Transactions totaled 1,959,691 square feet, of which 918,743 square feet represented new leases and 862,015 accounted for renewals.

The same report shows the largest lease transaction of the first quarter closed in Hamilton. The State of New Jersey renewed its 332,494-square-foot lease at 3444 Quakerbridge Road. Next in size was the 131,745-square-foot office space secured by Honeywell International Inc. in a sale-leaseback transaction for their headquarters in Morris Plains.