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How Rubenstein And Onyx Turned A 'Diamond in the Rough' Into $101M

Last week, American Realty Capital purchased Jersey City’s 30 Montgomery—a 15-story, 320k SF office building—for an impressive $101M from a JV of Rubenstein Partners and Onyx Equities. Rubenstein regional director of the Mid-Atlantic Stephen Card tells us how they turned the diamond in the rough around, attracting some of the area’s biggest buyers.


When Rubenstein and Onyx purchased the building in October 2013—a year after Hurricane Sandy pounded the city—the previous owner had already put over $10M of capital into the building to remedy the storm damage, particularly to the building’s mechanicals, which were in the basement.

But despite the new infrastructure, Steve (above) says the building still had a Class-C feel, with a dark, aggregate concrete skin and a single-story, small and uninviting lobby.

Built in the early ‘70s, 30 Montgomery hadn’t been significantly upgraded since construction. “We inherited practically a brand-new building on the infrastructure side, but we had a goal to take the design and appearance and bring it to what people want today, introducing a more pleasant tenant experience,” he notes. “We wanted to create Class-A real estate to broaden the amount of potential investors on exit.”


Above, what 30 Montgomery looked like before the renovations.

It was certainly an engineering feat—the building was home to 46 small tenants, and any work had to inconvenience them as little as possible. While re-skinning the entire building was on the table, the partners ultimately decided to paint the concrete panels after finding a material that could cover and hold over differing textures while brightening the building’s appearance.

And replacing windows in a high-rise was something that hadn’t been accomplished in New Jersey beforehand, Steve says. In order not to impact tenant operations, 15 or more windows were replaced each night after the tenants left.

The operable windows had been important to tenants, he notes, as the building had an older HVAC system. As the building was heating up, the top-floor tenants were roasting while the lower-floor tenants’ teeth chattered. This heating issue was fixed with the introduction of new digitally controlled valves and a new building management system that allowed tenants to control the heating and cooling on each floor.

Overall, these upgrades, including new windows, cost nearly $5M, but they saved Rubenstein and Onyx $1/SF in operating expenses, and the retrofit almost paid for itself in energy costs savings alone, Steve points out. Bonus: There were no more tenant complaints about the HVAC system.


Tackling the lobby was next. “The tenants’ first impression walking into the building hampered our ability to drive rents, and the street-level experience was that of an older building,” Steve says.

30 Montgomery was set back from the street, with an open-air overhang that served as a traffic byway for residents rushing to and from the Exchange Place PATH station. Rubenstein and Onyx expanded the lobby footprint out to the end of the existing second-floor overhangs, adding 2,500 SF to what’s now 8k SF of retail.

Then they constructed a much larger two-story lobby (above) with high-quality, modern materials, an upgraded security desk, new branding and glass curtain walls. A full-service conference center was also constructed on the second floor.

“The value we created in retail began to drive the office rents higher,” he says, and before the JV sold the building, it was in negotiations with high-end, fast-casual tenants. Four restaurant tenants will likely fill that space, he says, and even though the Jersey City market has plenty of amenities, it’s always a plus not having to leave the building when you want to grab a bite to eat.


When Rubenstein and Onyx purchased 30 Montgomery, the building was 70% leased with undermarket rents.

While it had the same percentage of tenancy upon its sale (with new leases and expirations balanced out), Steve says even the increased rents achieved by Rubenstein and Onyx on new deals are now significantly undermarket—and when Cushman & Wakefield went to market the building, it snagged nearly 100 confidential agreements and nearly 40 building tours.

“There was tons of interest spanning the investor world, from the privates and publics to funds,” Steve points out, noting Jersey City’s attractiveness with 8,000 residential units in the pipeline and rental rates still significantly below Lower Manhattan, but with similar transportation access. “All the boxes were checked, but they still had meat on the bones—someone could come in and get positive rent growth above what they underwrote. That’s why investors were willing to take on the lease-up risk.”