NJ Transit moves into controversial, new $500M headquarters in Newark

Moving days for thousands of NJ Transit workers to their new offices at 2 Gateway Center in Newark that came with a controversial $506 million price tag will be over by the end of January 2025, officials said.

“The building (Gateway 2) will be substantially occupied by the end of January,” said John Chartier, an NJ Transit spokesperson. “Only a small number of employees will move after that time.”

The first agency department reported to the Gateway 2 building on Sept. 30, Chartier said.

“As of next week, there will be two departments at the Penn Plaza HQ,” he said. “Other than (that), a small number of employees who will move after the end of January.”

The move completes a decision that was wracked with controversy, prompted the resignation of the agency’s board vice president and brought criticism from lawmakers, transit groups, riders and a rail union.

In July 2023, NJ Transit officials signed a $440 million, 25-year lease with Gateway owner Onyx Equities to move roughly 1,600 employees from a building it owns on Raymond Boulevard to eight leased floors of office space in 2 Gateway Center in Newark.

Adding to the price tag is a $44,000 per month cost to lease 125 parking spaces, and a $53.6 million authorization approved in December 2023 that pushed the grand total for the move to $506 million. The $53.6 million covers a myriad of items and contingencies to complete the build out.

NJ Transit had occupied the buildings at 1 and 2 Penn Plaza east, opposite Penn Station Newark for decades. Those buildings were constructed in the late 1980s and early 1990s. The 1 Penn Plaza building had been NJ Transit’s headquarters and is the 16th tallest building in the city.

NJ Transit took ownership of 1 and 2 Penn Plaza East in May as part of the settlement of a complicated lawsuit against Hartz Mountain Industries.

A study conducted for the agency concluded the building needed at least $180 million in renovations, which would have required relocating two floors of employees at a time to other space while the building was being rehabilitated.

Issues included heating, air conditioning and ventilation systems and elevators, officials said.

A Cushman & Wakefield second quarter commercial real estate report called it “the largest lease signed during the second quarter” of 2023. The Traded real estate blog said that in March the lease also allowed Gateway Center’s ownership group of three office buildings to secure a term extension for a $285 million loan to December with an option to extend it to 2026.

That allowed Gateway to access previously allocated funds designated for leasing incentives and property enhancements, some of which was used to outfit the office space in preparation for NJ Transit’s move.

NJ Transit has rented all the space on seven floors at 2 Gateway Center — the six through ninth floors, 11th and 12th, and 18th floors, and a 17,073-square-foot portion of the 10th floor. And that is in addition to 8,663 square feet on the second floor for a public meeting/conference room, according to the contract.

NJ Transit’s decision to lease the new headquarters was criticized for its timing, several months before the agency announced it was facing a “fiscal cliff” that required a 15% fare increase this year and passage of a corporate transit fee as part of the fiscal year 2025 state budget to close.

A realignment study announced in April 2023 led to the hiring of the North Highland Company by the state transportation department to return with recommendations for efficiencies the agency could take to reduce the gap. That report is due in February.

The deal also was criticized for how it was done, with questions raised about why a more expensive option was picked over two lower price proposals. Those questions led to the sudden resignation of Board of Directors vice chairman Cedrick Fulton on Feb. 7, 2023.

The lease also has been a rallying cry for the Brotherhood of Locomotive Engineers and Trainmen’s union, which is the last rail union to settle a new contract with the transit agency. In May 2023, off-duty engineers picketed the present headquarters chanting “Millions for penthouse views, not a dime for train crews.”