Category: Market Info

MARIO ASARO: Transaction activity is suffering from lack of availability.

How low can it go?

That’s the question brokers are asking about the still-shrinking vacancy rate for Long Island industrial space, which
plunged to a decade-low 3.4 percent in the second quarter, according to a report from Newmark Grubb Knight
Frank.
By comparison, the overall industrial vacancy rate is down from 3.6 percent in the first quarter of the year and is
substantially lower than the 4.6 percent vacancy rate recorded in Q2 2015.
And while the numbers reflect a healthy market for owners of industrial properties, the lack of available product is
limiting the number of sales and leasing deals for brokers here.
Industrial leasing activity in Nassau and Suffolk counties in the second quarter slumped to 453,346 square feet, a
38.6 percent drop from the first quarter and way below the five-year quarterly average of 1.3 million square feet,
according to a report from Colliers International LI.
“You would see more activity and transactions if there was more availability,” said broker Mario Asaro, principal of
Industry One Realty in Melville. “Many buyers are in a holding pattern or looking elsewhere, like in New Jersey.”
Veteran broker Jeffrey Schwartzberg, principal of Premier Commercial Real Estate in Woodbury, said the name of
the game in the current industrial market is lack of product.
“There’s still demand from Brooklyn and Queens, but there are very few buildings for sale,” Schwartzberg said. “It’s
an owner’s market. It’s not a buyer’s or tenant’s market.”
As a result of the strong demand and anemic supply, prices for industrial properties are firming up. Data Path, a
million, a profit from the $1.83 million the company paid for the property at the height of the market in 2007.

“This was the only building in the Hauppauge Industrial Park of this size range that was available,” said Dan Gazzola
of Newmark Grubb Knight Frank, who brokered the sale. “If there were a number of other buildings available the
seller might not have gotten this price.”
The vacancy rate for industrial properties owned by Rechler Equity Partners, Long Island’s largest industrial landlord
with about 6 million square feet, is at an all-time low of 0.9 percent.
“Over the course of the last three years we’ve seen a continued acceleration of demand among our tenants and
there’s been tremendous growth,” said Mitchell Rechler, a company principal. “We’re seeing industrial buildings
selling for prices that are hitting numbers per-square-foot that are higher than office buildings, which is pretty
astounding.”
In the second quarter, the average asking sale price for industrial properties on Long Island was $136 per square
foot, which brokers say is an all-time high.
Alberto Fiorini, principal of Alliance Real Estate in Deer Park, says the lack of inventory is creating the tightest
industrial market in recent memory.
“We are stockpiling companies looking to buy,” Fiorini said. “It’s a long waiting list.”
While the velocity of leasing slowed in the second quarter, there were still some substantial deals. Amazon leased
the entire 161,360-square-foot building at 201 Grumman Road in Bethpage formerly occupied by Goya Foods.
Entourage Commerce, which is relocating from Queens, leased the 140,000-square-foot building at 1516 Motor
Parkway, which was also sold to new owners for $12.6 million, the largest industrial sale in the second quarter.
Meanwhile, brokers see more of the same for the second half of the year: a tight market caused by high demand
and low availability.
“Existing businesses seem to be doing well and we’re seeing a continuation of the exodus from the boroughs,”
Asaro said. “We’re the next best option.”

A 14-building industrial portfolio in Hicksville was sold to Spiegel Associates in a deal that closed last month.
Industry sources say the price was $11 million.
The collection of freestanding office and industrial buildings, called the Hicksville Commercial Park, range in size
from 5,000 to 26,000 square feet, with most of the properties occupied by long-term single tenants, according to a
statement from Newmark Grubb Knight Frank which brokered the sale. The portfolio totals 144,000 square feet and
is fully occupied by 17 tenants, including Heller Metals, Network Technology Solutions, Five Borough Green Services,
CB Archery and others.
Fore Improvement Corp., which sold the portfolio, mostly located on Commercial Street, is a family-owned firm
controlled by Stanley Broadwin and his sister Arlene Broadwin Toscano. The complex was developed by their father
Harry Broadwin in the 1960s. NGKF’s Dan Gazzola and Chuck Tabone represented the sellers, while Paul Giossi
served as in-house representative for buyer Spiegel Associates.

3 Commercial St. Hicksville

There were several suitors for the portfolio, according to Gazzola, and he said Spiegel Associates was a good fit.
“It was very important who we sold this to,” Gazzola said. “It had to be a well-respected and well-liked landlord.
They (the sellers) were very close to their tenants.”

Spiegel Associates, which owns nearly 3 million square feet of commercial space on Long Island, saw the Hicksville
portfolio as a unique opportunity to expand its holdings.
“When you have an opportunity to buy a small portfolio that’s basically in your backyard, that’s how Spiegel
Associates started,” Giossi told LIBN. “There’s a shortage of industrial space and there’s a high demand for it.”

From left, Aviv Raitses, co-owner of Best Market, Tod Buckvar and Mark Fischl, principals of Suffolk County Industrial LLC of Melville, and Or Raitses, vice president and general counsel at Best Market, speak outside the old Entenmann’s complex on Fifth Avenue in Bay Shore on Monday, Aug. 1, 2016. (Credit: Barry Sloan)

Regional supermarket chain Best Market plans to open a new headquarters, distribution center and food business incubator at the site of the iconic Entenmann’s property in Bay Shore.

As part of the Bethpage-based family-owned grocery company’s expansion, Best Market will consolidate the operations of its Bethpage headquarters and Farmingdale distribution center at the old Entenmann’s bakery, which ceased production on Fifth Avenue in Bay Shore in August 2014.

Best Market would lease 295,000 square feet of space. About 200,000 square feet would be used for its headquarters, distribution center and a future store. The other 95,000 square feet would be available for an incubator for emerging food businesses, Best Market’s vice president and general counsel Or Raitses said.

The distribution center would open by the end of this year, the headquarters by spring 2017 and the new store shortly after.
“It is part of our plan for future growth on Long Island,” Raitses said. Empire State Development, the state’s primary
business-aid agency, is providing the company with up to $1 million in Excelsior Jobs Program tax credits. Best Market has agreed to create 125 new jobs over the next five years and retain 2,077 existing jobs across Long Island. It will also invest more than $6 million to upgrade the facility.

“Best Market is a great Long Island success story, and it is only fitting that they will be creating jobs and growing its business in a location that had been a major part of the Bay Shore community,” Gov. Andrew M. Cuomo said in a statement Tuesday. “This expansion underscores the state’s commitment to improving our business climate, helping New York businesses flourish, and helping regional economies thrive.”

Suffolk County Industrial LLC of Melville plans to buy the entire 519,493-square-foot Entenmann’s property for $10.75 million by early fall, and lease it to Best Market. The owners of the buyer are Mark Fischl of Huntington, a Long Island Power Authority trustee; Tod Buckvar of Woodbury, a commercial real estate developer and broker; and Best Market co-owners and brothers Aviv and Eran Raitses.

Bimbo Bakeries USA, the current owner of the building and Entenmann’s parent company, still distributes baked goods out of the facility and will also lease space after the sale. Nearly 180 jobs were lost when the old bakery ceased production due to high operating costs. The bakery had operated there since 1961.
In January, the Islip Industrial Development Agency approved $3.21 million in tax breaks for Suffolk County Industrial’s plan to buy the Entenmann’s site, including $112,000 in savings on the mortgage recording tax; $200,000 in sales tax savings for construction and a 15-year tax abatement worth $2.9 million.

Best Market increased its store count by 50 percent after it bought nine former Waldbaum’s and Pathmark locations on Long Island and a former Food Emporium in Manhattan last year. Best Market will have 30 locations in New York, Connecticut and New Jersey, including 25 on Long Island, after a former Pathmark in East Rockaway opens by early September.

Hempstead’s town board approved a site plan on Tuesday for Memorial Sloan Kettering Cancer Center to build a $140 million outpatient treatment and research facility at the Nassau Coliseum site in Uniondale. (Credit: Memorial Sloan Kettering)
Hempstead Town Board members approved a site plan Tuesday for Memorial Sloan Kettering Cancer Center to build a $140 million outpatient treatment and research facility at Mitchel Field as part of the Nassau Coliseum project.

Town officials said the site plan and environmental review cleared the final hurdles for construction on the 140,000-square-foot medical building at the Nassau Coliseum off Hempstead Turnpike in Uniondale.

The cancer treatment center is to be built on the southwest portion of the Coliseum property and includes a 452-space, 134,000-square-foot parking garage. Nassau County sold the 5-acre parcel to Sloan Kettering for $6.5 million last year.

“This project will address areas of genuine medical need in our area, and also support good jobs for our residents,” Hempstead Councilwoman Dorothy Goosby said in a statement. “I am happy to see this progressive project more forward.”

Town Board members had to approve Sloan Kettering’s site plan under the Mitchel Field Master Plan for the entire project, which includes Coliseum renovations. The approval covers the footprint and height of the cancer center and
where buildings sit in relation to each other on the property.

Hempstead Building Department officials still have to approve specific architectural details and construction plans before work begins. Board members voted to approve the environmental review with the state’s Environmental Quality Review Act for air quality, traffic, noise and water quality that are not expected to be affected by the development.

Goosby and Hempstead Supervisor Anthony Santino said the medical center fits with Hofstra University’s medical school, which is adjacent to the property, and several nursing facilities nearby.

Town Board members approved a building construction zone and master plan after previous plans to renovate the Coliseum failed.

The Mitchel Field Mixed Use District master plan covers gutting and renovating the Coliseum with 15,000 seats, as well as proposed hotels, a convention center, health and technology facilities, business offices and education centers.

Veeco plans to keep its company headquarters in Plainview. (Credit: newsday / Thomas A. Ferrara)

Veeco Instruments Inc., which makes tools to manufacture light-emitting diodes, hard drives and chips for wireless devices, is relocating about 65 New York State manufacturing jobs, including 18 on Long Island, to a facility in Somerset, New Jersey, the company announced.

A spokesman said Monday that Veeco’s headquarters and nonmanufacturing jobs related to marketing, engineering, finance and sales in its advanced deposition and etch (AD&E) unit would remain in Plainview. The company plans to move most of the 18 AD&E manufacturing jobs from Plainview to Somerset by the end of the first quarter of 2017, he said.

The company currently employs about 700 people overall, including roughly 150 at the company-owned site in Plainview. The company also has manufacturing facilities in St. Paul, Minnesota, and Horsham, Pennsylvania.

Veeco is realigning its manufacturing to save money and to meet increased demand for customized tools, the spokesman said.

“By combining these manufacturing teams under one roof, we have the agility to better balance our resources across those businesses and maintain our ability to ramp up if we need to,” he said.
Shares of Veeco rose 12 cents to close at $17.54 on Monday. They are down 14.7 percent year to date.
About 33 manufacturing jobs will be moved from the Kingston site, which is scheduled to be closed in the first quarter of 2017, and 15 from the Poughkeepsie site, which is expected to be shuttered in the fourth quarter of 2016.

Veeco has said that revenue declines in several recent quarters stem from slack demand for tools to make LEDs among Asian manufacturers.

Syosset-based Blumenfeld Development Group has closed on its purchase of a 140,000-square-foot industrial
building in Hauppauge for $12.6 million.

The building at 1516 Motor Parkway was sold by Rechler Equity Partners and is the first of three properties that no longer fit within its portfolio profile that are slated to be sold in 2016, according to a company statement.
Blumenfeld, which partnered on the acquisition with a private investor, has entered into a long-term lease with
Entourage Commerce for the entire Motor Parkway warehouse/distribution facility.

The company, a distributor of health and beauty products, is relocating from Queens with the help of tax breaks from the Suffolk County Industrial Development Agency.

The site will receive a $2 million capital improvement as part of the complex’s repositioning. The facility will serve as Entourage’s new headquarters where it will employ more than 300 people.
“Entourage has a dynamic, growing business model which grew out of their current space in the boroughs,” David Blumenfeld, a Blumenfeld Development Group vice president, said in a statement. “We are thrilled to have them in our tenant mix and provide them the footprint to successfully expand their business.”

Blumenfeld also announced its $31.2 million purchase of a three-story mixed-use building at 99-01 Queens Blvd. in Rego Park, Queens.

The 56,916-square-foot building is currently home to Bank of America, New York Sports Club and DeVry College of New York. Blumenfeld will redevelop the remaining vacant space in the building for Mount Sinai Hospital, which has entered into a long-term lease bringing the building to full occupancy. Blumenfeld expects to have all work completed for Mount Sinai by early spring 2017.

As for the Hauppauge sale, Mitchell Rechler, managing partner of Rechler Equity Partners, said the deal
“demonstrates the strength of the sales market for warehouse and distribution facilities” on Long Island.

“This property offered 23-foot ceilings and immediate access to the Long Island Expressway service road, making it a winning combination for any owner/user,” Rechler said in the statement.

The company next plans to market its building at 19 Nicholas Drive in Yaphank. The 232,000 square-foot warehouse and distribution facility is currently leased short-term.

Keystone Electronics is buying the former W.W. Grainger building at 2040 Jericho Tpke. as it relocates from Queens to New Hyde Park. (Credit: Johnny Milano) Keystone Electronics Corp., a Queens-based maker of electronic components for original equipment manufacturers and computer hardware, is moving from Astoria to New Hyde Park as part of an $8.6 million project.

The company, which has 128 full-time employees, was approved this week by the Nassau County Industrial Development Agency for tax benefits. The company had said it was also considering a move to South Carolina.
Keystone is buying a 21,800-square-foot warehouse building at 2040 Jericho Tpke. from W.W. Grainger Inc., an industrial supply company, and plans to lease a 48,750-square-foot building at 55 Denton Ave.

The Denton Avenue building is “essentially around the corner,” Peter Curry, an attorney with Farrell Fritz representing Keystone, said Tuesday. The company intends to relocate all of its employees to the new sites within its first year on Long Island. Keystone did not say how many new employees it was planning to add after completing the move, but said that it expects to grow its workforce, and that estimated average wages for employees would be $58,600 annually.

“New York City is not working with businesses in manufacturing,” Troy David, president of Keystone, said of his decision to move east. After “aggressively” looking at South Carolina, David said he was lucky to find suitable buildings in Nassau, and that the IDA benefits will help “with my cost certainty for the next 10 to 15 years.”
The IDA approved the project for a sales tax exemption of up to $41,562; $30,240 off the mortgage recording tax; and a 10-year deal on property taxes with a 5-year extension option. Property taxes will be frozen for the first seven years, and will increase by 1.56 percent a year after that.
“I’m delighted the IDA was able to bring this company to Nassau County,” IDA executive director Joseph J. Kearney said.

Over the past three years, the owners of Industry City have spent $160 million renovating the sprawling former industrial complex in Sunset Park, Brooklyn, into a home for creative manufacturers, startups and artisans.

Now a partnership between Jamestown, Belvedere Capital and Angelo Gordon is ushering the 6-million-square-foot waterfront property into its next phase—a retail hub. In recent months, the owners have invested $8 million in constructing a 1,200-foot-long public corridor, lined with retail space, that will run through the center of nine of the complex’s 16 buildings. The corridor will span 37th to 33rd streets, between Second and Third avenues.

The passageway, dubbed Innovation Alley, is slated to be completed next year. When it is finished, it will feature about 125,000 square feet of of new retail. Rents for the spaces range from $35 to $80 per square foot.

A handful of tenants have recently leased space along the alley: Flower shop Rose Red & Lavender will move into 1,500 square feet, Moore Brothers Wine Company took 2,500 square feet, andSteampunk, a maker of espresso and coffee machines, signed on for 4,000 square feet. Steampunk will use the space for a coffee bar and a manufacturing space, where it will assemble and sell its product line.

Flavor Paper, a maker of high-end custom wallpaper, is also rumored to be taking about 5,000 square feet for a showroom, as well as sales and manufacturing space.

It will be joining a new co-working concept from two of the founders of Milk Studios, which just took 8,000 square feet in the alley. The as-yet unnamed company signed on for the space, along with 12,000 square feet on a basement level of Industry City, for a coffee shop and printing center that will serve as an amenity for the shared workspace the pair plan to open upstairs at the property.

Additionally, Hometown Bar-B-Que will signed on for a 5,000-square-foot, 100-seat barbecue hall serving authentic pit-smoked meats and traditional Southern sides and desserts at Building 5 at Industry City, located at the corner of 35th Street and Third Avenue. The restaurant, founded in Red Hook, signed a 10-year lease in May and expects to open in January 2017.

“The ground-floor retail is really the culmination of the creative culture we’re bringing to Industry City,” said Glen Siegel, the founder and chief executive of Belvedere Capital. “We’re curating the retail to offer food and goods that are made here and that you can’t get anywhere else. It’s something that’s going to draw people from around the city and continue to enhance the vibrancy of the complex.”

So far, the owners have constructed the retail corridor in six of the nine buildings.  Innovation Alley will connect to a food hall at Industry City that features tenants like One Girl Cookies, Burger Joint and Table 87 Coal Oven Pizza.

Retailers have already set up shop along the completed portions of Innovation Alley. The confectioner Li-Lac Chocolate has a manufacturing and retail space in the corridor.

In addition to the new retail, the property’s owners will open a 6,000-square-foot gym and juice bar. They are also spending $5 million to install sidewalks on the side streets between the buildings that will make the properties more pedestrian-friendly and allow additional retail space along the perimeter of the buildings.

“It will give tenants a chance to have a retail window or shop front where they can sell the products they produce,” said Michael Phillips, the president of Jamestown. Pickle maker Brooklyn Brine is one such tenant that could benefit from the improved sidewalks. Located on the ground floor of Building 5, but not in the alleyway, Brooklyn Brine makes its products and also sells them out of a small store connected to its manufacturing space.

Phillips said an increasing number of visitors are frequenting the once-far-flung complex because of the improvements and also events at the complex. Industry City hosts the Brooklyn Flea and Smorgasburg from November to May, as well as New York Design Week and Brooklyn Fashion Week.

“We’re creating an ecosystem of both service and maker retail with food production and product manufacturing,” Phillips said. “We have 10,000 people visiting Industry City now on the weekends, and that number is going to grow.”

2155 Ocean Ave., Ronkonkoma
Creative Teacher Education Institute leased 1,000 square feet of office space at 2155 Ocean Ave. in Ronkonkoma. Michael Zere of Zere Real Estate Services represented the tenant and the landlord, Lakeland Properties, in the lease transaction.

120 E. Industry Court, Deer Park
A Queens-based real estate investor, listed as 120 E Industry Court LLC, purchased a 59,064-square-foot building at 120 E. Industry Court in Deer Park for $4.75 million. The building is leased to L&R Distributors. Linda Wong of Kalmon Dolgin Affiliates and Jason Miller and Jeffrey Schwartzberg of Premier Commercial Real Estate represented the buyer, while Mario Asaro and Mark Seigerman of Industry One Realty represented seller EB & HH & PK & SW Deer Park LLC in the sales transaction.

26 Harbor Park Drive, Port Washington
Irving, Texas-based 7-Eleven leased 6,363 square feet at 26 Harbor Park Drive in Port Washington. The convenience store chain is relocating its regional headquarters from Connecticut. Marisa Karmitz and Rob Kuppersmith of Cushman & Wakefield represented the tenant, while Lee Brodsky, Dan Oliver and Dan Marcus of Newmark Grubb Knight Frank represented landlord BEB Real Estate in the lease negotiations.

300 Michael Drive, Syosset
One World Distributors, a supplier of health and beauty aids, leased 15,000 square feet at 300 Michael Drive in Syosset. Devang Koya of Schacker Realty represented the tenant and Lee Brodsky, Dan Oliver and Dan Marcus of Newmark Grubb Knight Frank represented landlord BEB Real Estate in the lease transaction.