Coupling development with land conservation can be a win-win for office parks and the public.
IN TODAY’S UNPREDICTABLE market, managing a successful investment in commercial real estate calls for creative solutions. An innovative partnership between a real estate investor and a conservation organization that established a park amenity adjacent to a corporate office park demonstrates one promising strategy.
Starting in 2014, Normandy Real Estate Partners, The Hampshire Companies, MRY Associates and the Open Space Institute, a nonprofit land conservation group, joined forces to purchase approximately 200 acres of land at Giralda Farms Office Park in the New Jersey townships of Chatham and Madison. The property was the historic remnant of philanthropist Geraldine Rockefeller Dodge’s estate, which once spanned over 370 acres.
The deal was partially financed through a public-private partnership spearheaded by Normandy and the Open Space Institute that permanently set aside 136 acres as a passive public recreational park featuring 2.3 miles of trails, a pond and planned fitness zones. It has proved to be a huge win-win for both investors and the public, with benefits that extend well beyond the office park boundaries.
A Bidding War
Although the land locked behind the gates of Giralda Farms was zoned for commercial office space, it was designated within the Township of Chatham Master Plan as a desirable site for residential development.
A small bidding war flared up in 2014, when news broke that the land — the last remaining green space within the gated commercial complex — would be coming up for sale after a foreclosure. The Morris County Park Commission and township officials called for protection of the land, which contained gently rolling, maintained fields and forested areas. Hearing the concerns, Normandy Real Estate Partners partnered with the Open Space Institute to launch a bid for the entire parcel. If successful, Normandy would retain 40 acres of the land, while the remaining 136 acres would become a public park.
Together, Normandy and the Open Space Institute pitched the idea of a joint bid to the seller, a holding company. The seller’s representatives peppered the team with questions about the unusual bid. Finally, the seller decided to take a chance, but gave the Open Space Institute only six and a half months to raise funding from its nonprofit, local municipality, county and state partners, whose ultimate backing would rest upon committee votes and approval.
Over the months, Normandy and the Open Space Institute rallied support, spurring the county to make a $10 million grant from its open space trust fund, the largest-ever open space grant in its history, just before the deadline of November 12, 2014. In the end, funding raised from enthusiastic partners — Chatham Township, the F. M. Kirby Foundation, the Geraldine R. Dodge Foundation, the Morris County Municipal Utilities Authority, the Morris County Park Commission, the Morris County Board of Chosen Freeholders and the New Jersey Department of Environmental Protection Green Acres Program — together with contributions from Normandy and the Open Space Institute successfully secured the park land for a total of $14.1 million. This, combined with added funding from the three real estate firms to purchase the commercially zoned, 40-acre tract to the north, closed the deal in time.
The new 136-acre Giralda Farms public park features 2.3 miles of trails that connect with those in the adjacent Giralda Farms Office Park and an existing public park. An additional 40 acres will be developed in the future.
To prepare the 136 acres for its new life as a park, the property’s new owners, Chatham Township, and its new managers, the Morris County Parks Commission, immediately got to work. The county refurbished old trails that already crisscrossed the property and installed kiosks, signs and other amenities, supported in part by additional funding from Normandy and the Open Space Institute. In June 2015, following a ceremonial ribbon-cutting, local residents and the press streamed onto the new parkland. It was a gratifying and celebratory moment.
The Bottom Line
Looking back on the deal, Normandy’s gamble paid off. Incorporating public input left Morris County with an outcome that satisfied many local residents and raised the firm’s stature in the community. Furthermore, partnering with the Open Space Institute helped Normandy leverage partners outside the firm’s traditional commercial real estate sector to complete the deal.
Today, Normandy, The Hampshire Companies and MRY Associates continue to evaluate their development strategy for the 40-acre site. The adjacent conserved parkland adds value to the partnership’s investment, since any developments would have resulted in potentially competitive inventory.
The conserved land has another benefit: appealing to millennials, many of whom support environmental conservation efforts. With over two miles of new hiking, biking and cross-country skiing trails connecting to an adjacent eight miles of county parkland trails for employees to enjoy during their off hours, the park raises the quality of life for Giralda Farms Office Park workers of all ages, whose employers include Fortune 500 companies Merck & Co., Prudential Financial and Pfizer Inc.
For the corporate real estate community as a whole, preserving raw land within a corporate office park that is adjacent to nearby parkland offers several positive results. In addition to preserving open space and making it accessible to the local community, it also helps commercial real estate developers stand apart in a crowded and competitive real estate market. At the same time, it reduces the potential for competing office space while enhancing rental value.
With the Giralda Farms model, which incorporates public parkland into a financially profitable office park, Normandy, The Hampshire Companies, MRY Associates and the Open Space Institute have demonstrated that development and conservation can unquestionably benefit one another.