KABR Real Estate Investment Partners has signed a 193,000 square foot lease with Samsung Electronics on a new 10-year term at 85 Challenger Road, in Ridgefield, N.J. Samsung intends to relocate its U.S. headquarters from just down the street. Their current building, 105 Challenger Road, is owned by Mack-Cali, who bought it for $33.4 million, or $226 psf, in February of 2006. By comparison, KABR acquired 85 Challenger for $10.4 million, or $44 psf, in June from AIG. Prior to AIG taking the over the property from Heyman Properties (who bought it for $26.6 million in 2002), it had served as Daewoo’s North American headquarters.
Following KABR’s acquisition of the property, a report in the Wall Street Journal commented that a “‘lot of landlords were very nervous thinking that they could be undercut at any moment,’ says Gregg Najarian, a senior managing director in Hackensack, N.J., with Studley, a real-estate-services company. They were right to be worried.”
The report goes on to say that KABR agreed to lease “the property to Samsung for about $20 a square foot annually. That is well below the East Bergen County submarket’s average annual asking rent of about $31 a square foot for Class A property. On top of that, Samsung got more than $40 a square foot in tenant-improvement costs, above the average of about $30 in the market, according to Kenneth Pasternak, a principal in KABR, and brokers.”