A trio of active real estate developers expressed optimism last week about the near future of the area’s commercial real estate sector.
The developers addressed about 120 brokers and industry professionals as part of a panel discussion organized by the Commercial Industrial Brokers Society of Long Island at RXR Realty’s 58 S. Service Road in Melville.
The panel, moderated by Richard Caputi, managing partner of Cresa Long Island, included Joel Bergstein, president of East Rutherford, N.J.-based Lincoln Equities Group; John Finn, director of acquisitions and leasing at Smithtown-based Damianos Realty Group; and Scott Burman, partner in Garden City-based Engel Burman Group.
“Our focus is to find well-located property and high quality property.” Finn said of Damianos, which has bought or sold 850,000 square feet of space over the last several years. He said his firm found “a fabulous opportunity” in a recently purchased 70,000-square-foot shopping center in Shirley that is 90 percent vacant. “It’s a great piece of real estate,” he said of the center, which will benefit from a recent vote to bring sewers to the area.
Damianos, Finn said, has done especially well with its recent $32 million acquisition of 100 Motor Parkway in Hauppauge, a 223,000-square-foot building that was 65 percent occupied. He said his firm persuaded the former owner to sell at a time when Damianos needed a 1031-exchange deal, because of its sale of a 38-year holding, 900 Merchants Concourse in Westbury.
Leases bringing the newly acquired Hauppauge property to 90 percent occupancy have since been signed. He said future upgrades will allow the landlord to seek rents surpassing $32 per square foot as it becomes “the W Hotel of office buildings” designed to help tenants attract millennial employees.
Similarly, he said, $12 million in improvements to the 170,000-square-foot 1733 Motor Parkway in Islandia has helped to bring the largely empty office building to 96 percent occupancy. Finn noted that a reprising of the former single-tenant building designed by architect Richard Meier at 41 Pinelawn Road in Melville, is now 100 percent leased after being repositioned for multiple tenants.
Meanwhile, Bergstein said Lincoln Equities, an office developer since the late 1980s, when developers were converting industrial buildings to offices, is focusing more on industrial.
“It’s interesting to see how things have come full cycle,” Bergstein said.
Lincoln plans to soon begin construction of a 195,000-square-foot industrial property with 36-foot ceilings on a former Winter Bros. site in Hicksville aimed at e-commerce distributors seeking “last mile” facilities. He said such buildings are rare on Long Island, where 400,000 shipping containers arrive each year.
“We see continued strong demand,” Bergstein said, adding that the new Hicksville building is taller than most existing warehouses on Long Island. “We understand Long Island in some ways is about a half step behind the rest of the market.”
With continued strong e-commerce demand, he said rents for industrial properties could eclipse office rents.
“We think we’re going to set some records for rent,” Bergstein said. He said Lincoln is looking for additional sites to repurpose for industrial, even though there is a dearth of properties and despite the fact that construction costs are more than twice what they are in New Jersey.
Burman, whose family business started in industrial properties, said the firm now is largely focused on housing with some retail. Engel Burman now operates 18 Bristal Assisted Living facilities on Long Island and has six more under construction. He said the firm is bringing the concept to Westchester, New Jersey and Manhattan, where it is re-developing an Upper West Side property and planning a ground-up facility aimed at dementia patients on the East Side.
Burman said the firm, faced with market saturation and competition on Long Island, plans to build six to 10 Bristals in southeast Florida, which he said has similar demographics to Long Island. He also noted the firm’s research and drug-addiction treatment facility with Northwell Health is under construction in Calverton.
Burman said the firm is also building large-scale multifamily housing communities because of the barriers to entry in the Long Island market, where it may take five to seven years to obtain entitlements. Most of the communities are for people age 55 and over, but he also made mention of a rental project geared toward younger people the company is planning in Uniondale.
By: David Winzelberg
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