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Broker CBRE Wins Assignment to Sell Toys R Us Headquarters

Brokerage is Marketing Wayne, New Jersey, Campus to Investment Community
October 8, 2018
CBRE Group Inc. has been retained to market and sell the former headquarters of retailer Toys R Us, which is nestled on a roughly 200-acre wooded campus in Wayne, New Jersey.

The property is one of the largest real estate holdings that the toy retailer, which closed its stores this summer while laying off more than 30,000 employees, is shedding as part of a liquidation. The company is selling its assets to pay off its creditors, a process that’s underway now in bankruptcy court.

Jeffrey Babikian, executive vice president, and Robert L’Abbate, first vice president with CBRE's advisory and transaction services team are handling the Toys R Us assignment, Babikian said in an interview. Both executives work out of CBRE’s office in Saddle Brook, New Jersey.

They are marketing the headquarters to the investment community, Babikian said, adding there is "significant amount of interest" in the former headquarters.

"There is a lot of capital in the market looking for opportunity," he said.

Toys R Us Preparing to Sell Wayne Headquarters ]

The secluded site, adjacent to a lake-like reservoir in Passaic County, is a prime example of the suburban office complexes that were built in New Jersey during a construction boom several decades ago. That kind of office space, sometimes referred to as "stranded assets" by the real estate industry, has fallen out of favor with corporate America, which is looking to attract a millennial workforce that prefers urban settings.

Babikian acknowledged that the Toys R Us campus faces that challenge, but he remained optimistic.

"It’s a beautiful setting overlooking a lake," he said. "It is a Class A facility, a beautiful area. It’s just that it’s in a very suburban market. There’s not a big demand for this type of large product. It’s a very large campus, so we are taking it to the market to the investment community. We think it’s going to be a great opportunity for somebody, whether it’s to infuse capital back into the property or reinvest, we’ll find out."

The Toys R Us headquarters at 1 Geoffrey Way, a street named after the retailer’s giraffe mascot, includes two office buildings with about 575,000 square feet.

Toys R Us, saddled with debt from a leveraged buyout, filed for Chapter 11 bankruptcy protection last fall. But in March, following a weaker-than-expected holiday sales season, the company said it was ceasing operations and liquidating its assets.

Through a series of auctions, former Toys T Us and Babies R Us stores, leases and distribution centers have been sold. The retailer's two largest warehouses, located in New Jersey and California, fetched $177 million this summer.

In July, Toys R Us retained Raider Hill Advisors, a real estate and retail advisory firm, to sell its remaining portfolio of roughly 284 commercial properties totaling 14.5 million square feet, including its headquarters. Raider Hill retained CBRE to handle the sale of the Wayne facility.

This week, a group of Toys R Us lenders said they were going to buy the retailer's intellectual properties, revive its brand and start a new toy company, Geoffrey LLC.

In the township of Wayne, Toys R Us was third-largest local taxpayer, paying about $2.86 million last year, and at its headquarters it had employed more than 1,000 workers.

Linda Moss, Northern New Jersey Market Reporter  CoStar Group   
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