The Stranded Asset: What to Do with Suburban Office Parks?
New Jersey is littered with "stranded assets"—suburban office parks built in the 1980s that are now 40% vacant and functionally obsolete. The tenants aren't coming back. But these sites have incredible infrastructure: highway access, massive parking lots, and utilities. The value is in the land.
Strategy 1: The "Live-Work-Play" Retrofit
The most common play is to rezone the site for mixed-use. You demolish the weakest buildings, keep the best one, and build apartments on the parking lots.
- The Bell Works Model: A complete reimagining of the single-tenant campus into a "metroburb" with retail, office, and hospitality. (Note: This is hard to replicate).
- The Town Center Model: Creating a walkable street grid in the middle of a sea of asphalt.
Strategy 2: Industrial Pivot
With the explosion of e-commerce, industrial land is worth more than office land in many parts of NJ. Demolishing a Class C office building to build a Class A warehouse is a viable strategy, provided the zoning allows it (and the neighbors don't revolt against the trucks).
Strategy 3: Medical & Life Sciences
Healthcare systems are moving into the suburbs to be closer to patients. Converting office buildings into medical arts complexes or ambulatory care centers is a strong trend. These tenants sign long leases and have high credit.
The Zoning Challenge
Most of these strategies require a zoning change. Towns are often reluctant to lose the "ratable" (commercial tax revenue) of an office building and replace it with residential (which brings school children). The key is to prove that a vacant office building generates zero revenue and eventually becomes a blight.
Reimagine Your Asset
I help owners of distressed office assets evaluate their highest and best use and navigate the rezoning process.
About the Author
Ryan Goldfarb is a real estate development advisor. He specializes in asset repositioning and value-add strategies.