Parking for 3,900, wooded lot, just $266M
AT&T's lavish corporate headquarters in Basking Ridge will be a tough
BY GEORGE E. JORDAN
AT&T picked a tough time to put it mammoth headquarters in Basking
for sale, commercial real estate executives say.
Only about a half-dozen companies interested in the New Jersey market
big enough to fill the seven interlocking buildings filled with such
amenities as wood-burning fireplaces that date to
better times for the troubled telecommunications giant.
But all the potential suitors -- Merrill Lynch, American Express,
Johnson, Novartis AG, Verizon Wireless and Pharmacia -- either
headquarters in recent years or scattered their operations across the
in the wake of World Trade Center disaster.
A leading candidate, American Express, has vowed to return to Lower
Manhattan, where its headquarters next to the Twin Towers was damaged
not destroyed. Another potential buyer, Merrill Lynch, has significant
offices in Hopewell, where it has shifted workers displaced by the
It all adds up to AT&T facing an uphill climb to sell the facility and
increases the likelihood that whoever buys the 140-acre campus --
the state at $266 million -- will acquire it at a deep discount.
"It's a great corporate building for the right type of user, but how
the market is for the right type of user is in question in this
climate," said Mark Yeager, president of Gale & Wentworth, a major New
AT&T Chairman C. Michael Armstrong announced plans last month to sell
lease the sprawling headquarters as a cost-cutting move. He said 3,200
employees would move during the next year to more modest headquarters
company's network operations center in Bedminster.
Gary Morgenstern, AT&T's spokesman, said the company was in contract
negotiations with a real estate agent to market the property. "Our
preference is to sell the building outright," he said. "I am very
we are going to find a buyer for the building. One visit and you fall
love with it."
Morgenstern declined to identify the listing agent, but he confirmed
already has Cushman & Wakefield of New Jersey under contract to
other empty office space. Donald Eisen, Cushman's executive managing
director, declined comment.
A major real-estate figure close to Cushman and one potential buyer
AT&T faces a tough sell with both the national economy and New
commercial real estate market in a slump.
"It's a very special use," the real estate executive said. "You've
have somebody who wants to dance and make a statement and the only
anyone is making is 'Look out!'"
The AT&T campus, built in the 1970s, is comprised of a series of
none higher than 12 stores. Most have views of wooded hillsides.
There is a
two-story cafeteria, a helipad, a barbershop, a fitness center,
trails and an imposing lobby with an indoor waterfall.
The features that make the facility an architectural marvel also make
inefficient. Half the 2.6 million square feet is an underground
garage for 3,900 cars. The actual office buildings have a 40
factor" -- unusable space taken up by large lobbies, a 33-mile
hallways and a dozen courtyards.
AT&T joins a series of Fortune 500 corporations faced with a glut of
offices after waves of layoffs in the past year. Lucent Technologies,
Tyco and BASF all are soliciting tenants to sublet their surplus
AT&T's Basking Ridge campus is surrounded by unused office space. It
of the Parsippany- Route 287 submarket, where 1.1 million square feet
offices space offered for sublet in the third quarter pushed the
rates to 21.2 percent.
Empty office space was flooding the market before Sept. 11, and fewer
companies have been shopping for it since terrorists slammed two
into the Twin Towers, bombs started falling in Afghanistan and the
started wondering whether anthrax was contaminating the mail.
"There's a lot of space out there now. Companies are in a wait-and-
pattern right now, trying to figure out their business plan and their
strategy in 2002," said Stephen Jenco, an analyst at Grubb &
going to be a small group of companies that can step forward. It's
be very tough."