All across the State of New Jersey office parks are failing and being wholly repurposed as larger scale residential developments. From the Mercedes office park in Montvale, to the Toys-R-Us campus in Wayne, towns are learning that the failure to provide office parks the flexibility for non-residential growth inevitably leads to a failure of the office use and the call for exclusive residential opportunities. Meanwhile, other townships like Short Hills, Florham Park, Morristown, Parsippany, Bridgewater and Holmdel have been proactive and have rezoned their former office areas as mixed-use alternatives to the outmoded, traditional office parks. In doing so, they created stabilized ratables for many years to come. Connell Park has fallen behind that curve and with one-third of its office leases expiring by June 30, 2021, The Park is not competitive in the face of more modern, vibrant settings. The lagging position of Connell Park has only been further highlighted by the current times. As many of you reading this are working from home rather than traveling to work – ask yourself – is it realistic to assume that post Covid-19 the traditional office parks are going to regain their relevance in the market place? We think the answer to that question is obvious and, therefore, the need to allow such office parks, such as Connell Park, the ability to transform themselves is now.
The planned rezoning sets forth a future path for Connell Park that allows for the continuation of the predominant office use, but, as current conditions require, allows for a repositioning of that use into a updated, multi-use campus setting. In that regard, the zoning ordinance currently before the Township Council for consideration does not allow for the development of additional residential units, but positions Connell Park to allow for the integration of its current and future office uses into the live, work and play environment that creates a cohesive mix of uses, including the introduction of open and public spaces not currently existing within the Park. Connell is ready to significantly re-invest in this community and develop Connell Park as a viable office park for generations. To deal with the office vacancy exposure, Connell is in the middle of a 5-year repositioning plan for The Park representing a $400 million reinvestment into the campus. This includes significant upgrades to the office buildings, the creation of Round Table Studios, a coworking and social club, developing open spaces, parks, and fitness trails, and the construction of the new Embassy Suites hotel, apartments and other retail opportunities. The proposed rezoning for The Park allows for that transformation to take place through an integration of uses across the entire Park without the hindrance of arbitrary and outdated zoning designations. Did you know that The Park is currently divided into 3 separate zoning districts? Ironically, many of the uses being contemplated by the new zoning are already permitted in certain areas of The Park, but not the entirety of The Park. The rezoning eliminates those illogical demarcations and allows for the growth of The Park in a more coordinated, sensible manner that includes the opportunity for public spaces - something specifically not permitted under the current zoning. In proceeding now, the Township Council can shape that change and allow the Township’s largest ratable to continue to grow and compete in an ever more challenging office market.
Despite the obvious need for, and benefits that come with the reimagining of Connell Park, some have raised a couple of concerns. We felt it important to briefly respond to each.
The Tax Appeal Litigation
It is true that Connell and the Township have been at odds with respect to the taxable value of the Connell Park. However, the zoning issue is not about how much taxes Connell Park paid, underpaid or overpaid. The point of the rezoning is to ensure that Connell Park continues to be a substantial contributor to the Berkeley Heights tax base. One thing is certain – a bustling, well leased office campus is worth more to the tax rolls than an antiquated and empty office park. The goal of the rezoning effort is to encourage the growth of Connell Park, not stifle it.
That having been said, we feel compelled to respond to the suggestion that Connell has been unreasonably causing the Township to incur costs for property tax litigation. What is often not acknowledged is that much of that litigation has been at the Township’s initiative. For the Years 2011, 2013, 2014, and 2015, Berkeley Heights took the almost unprecedented position of appealing its own tax assessor’s assessment of Connell Park office buildings. As a result, the Township Council forced Berkeley Heights to incur significant legal and professional costs to appeal its own assessor’s assessment, and Connell was forced to spend hundreds of thousands of dollars to defend – not only its own expert’s position – but the position of the Township’s own assessor. After many costly years for both Berkeley Heights and Connell paying experts and lawyers to argue in tax court over the Township’s unreasonable demands, Berkeley Heights finally agreed in 2019 to drop its appeal of its own assessor’s assessment for years through 2015 in return for Connell dropping its counter appeal, for a net result in no change in taxes from what was originally assessed.
In 2016, Berkeley Heights raised property taxes by an unbelievable 32.7% on four office buildings during a period when office values were continuing to deteriorate in New Jersey. Connell had no alternative but to appeal such an obvious overassessment. The overassessment has continued through 2020, and Connell has been forced to challenge those overassessments.
The bottom line is this: if the rezoning of Connell Park and the upgrades Connell is making to each of the office buildings in the Park succeeds in enhancing the value of Connell Park, then The Connell Company will pay more in taxes. The goal of the rezoning effort is to ensure that result, by guarding against the loss in taxable value (and loss of taxes to the Township) that would undoubtedly result from an office park that is no longer viable.
The Council has been sensitive to the issue of additional traffic in the area of both Connell Park and the Township, generally. The rezoning being considered does not provide for a greater intensity of development from the perspective of traffic. With the proposed rezoning, the currently permitted office uses would be scaled back to allow for a balance of other non-residential uses that would result in reduced total development and, from a traffic perspective, would position the Township and surrounding areas in a position of seeing a reduced traffic demand. Even with that potential for reduction, the Township has already identified certain areas where traffic improvements may be necessary to accommodate any new development, office or otherwise. Those areas will be considered in the event that additional development applications are submitted by Connell, or any other developer for that matter.
The rezoning being proposed for Connell Park does not envision a campus to be enjoyed exclusively by the owners and tenants within Connell Park. As currently established, Connell Park cannot be accessed by the public at large for the purpose of utilizing open areas. Under current zoning, the open spaces in Connell Park are accessory uses to office buildings and are only allowed to be used by the office tenants. With the proposed rezoning ordinance and proposed agreement between Connell and the Township, however, that arrangement would change, and the public would be allowed to enjoy the open spaces of Connell Park. The new zoning would allow The Park to go forward with open space amenities that are not exclusively designed as amenities for The Park’s tenants but rather would appeal to both the tenants and the public, with the addition of a dog park, playground, jogging trails and recreational fields. Without the rezoning, the public would remain prohibited from using these facilities. That is not what Connell wants as we believe the infusion of public and open spaces is a benefit to both the Park and the Berkeley Heights community, at large. The proposed rezoning allows for that integration. The current zoning does not.
It is unclear how non-residential growth will factor into the future calculation of any municipality’s affordable housing obligation during the next affordable housing round. Indeed, the Township’s own affordable housing expert has concluded that it is impossible to know what the impact of any additional retail square footage might be on that obligation and what that obligation might even be as New Jersey Courts have not even begun the process of establishing affordable obligations beyond the year 2025. In any event, Connell Park is open to be part of the township’s solution for future obligations as it was during this past round.