Category: Market Info

What an interesting question.

If leasing rates are climbing, is that a good thing or a bad thing?

Well, it depends upon whether you are a Landlord with space to rent, or a tenant who is actively seeking to secure new space. Of course, we as a society, have been conditioned to believe rising rental rates are a “bullish” sign as it points towards improved (lower) vacancy rates and an economy that is improving. Remaining consistent with that point of view, clearly we at Premier Commercial Real Estate are very bullish at this point in time. We see continuing signs of economic improvement and positive absorption of previously vacant rental units. And we expect that trend to continue!

So, if you anticipate a need for new or additional space OR if you are nearing the expiration of your current lease, you might want to chat with a real estate professional to jump start the process before prices rise further. Even if your lease has a fair amount of remaining term, there may be considerable benefits in opening discussions with your current landlord “sooner rather than later”.

Alternatively, you may be a buyer who has been waiting for an opportune time to buy? Or an owner who has been thinking about selling but you have been reluctant to do so, in poor market conditions. Hmmm. Interesting….so let’s take a look at these two positions.

Increasingly, property values had bottomed out in the past few years, known as the “post 2008 era”. Of course, 2011 saw signs of improvement which has continued into 2012, 2013 and now, 2014. As confidence levels improved, buyers began to realize that the bottom of the market was reached and prices are on the rise. The combination of historically low Interest rates, which have remained at attractive and inviting levels AND limited inventory (buildings on the market being offered for sale), has created a “dynamic” which has placed upward pressure on pricing. We expect that trend to continue. So, if you are considering purchasing a building, we encourage you NOT to wait much longer as you may miss the boat. Either you may experience rising interest rates or higher prices. Either way, not a good idea to put off your plans much longer, in our view.

As a property owner who had been wanting to sell, but was unhappy with general market conditions, I suggest you consider the following rule of advice that was professed by a very experienced and successful owner/developer that I respect wholeheartedly…..…”sell when you can, not when you have to”. Today, demand for purchasing buildings exceeds supply. That, of course, is a terrific situation for sellers. Some brokers refer to that as a “Sellers Market”. Not necessarily so, in our view, but certainly a good situation and opportune time to “go to market”. Think about doing so….this is the time.

The Pendulum has swung………..do you really want to wait until it swings back?

Commercial real estate transactions are typically more complex than residential transactions. Usually, they involve large sums of money and increased liability for both parties. Unlike a residential transaction where the law provides basic consumer protection for the buyer, the law takes a neutral approach to its treatment of commercial transactions.

Courts expect that both parties to commercial real estate transactions are sophisticated enough to understand the contract terms. Therefore, they will hold the parties to the terms of any sales agreement – absent illegality or fraud. For these reasons and others, a buyer and seller of commercial real estate should both have professional help closing the deal.

Property Valuation

A large part of buying and selling commercial real estate is the process of determining a value for the property. By nature, real estate is a unique product that may have no exact sales comparison. For example, a buyer may be looking to purchase a movie theater in an area where there is no other theater that has sold to establish a market for the property.

Further, commercial property often has an income component that adds to the value of the property. Commercial property typically has a current and future income stream that must be factored in to the sales price. Buyers and sellers will hire a professional valuation expert to set a price for the property.

Sales Negotiation and Due Diligence

Buying and selling commercial real estate is typically subject to intense negotiation. Commercial buyers cannot fall back on consumer protection laws if an aspect of the deal ends up not being fair. Buyers are expected to conduct due diligence. In other words, they must investigate the transaction thoroughly before making a decision.

During the sales negotiation, the buyer has leeway to determine facts that impact the value of the property and attempt to gain concessions from the seller to offset any problems. This negotiation can ultimately impact your bottom line and whether the commercial asset makes or loses you money.

Assuming Liability

Another important aspect of buying and selling commercial real estate is the potential transfer of legal liability to the new owner. If commercial property is found to violate certain laws, it can be subject to government regulation. For example, once it is determined that a commercial property is the site of an environmental hazard, the current owner must clean it up – regardless of who created the hazard.

Environmental clean-up can cost more than the property itself is worth. The process of buying and selling commercial real estate requires various types of professional assessments to ensure that the new buyer is not taking on an eventual liability.

Loss of Liquidity

Commercial real estate transactions typically tie up large sums of liquid assets. In a down market, owners can have a hard time selling the property. Owners can have trouble with tenants and vacancy rates that affect their ability to make financing payments on the property.

If payments to the lender fall behind, commercial property is subject to foreclosure. Typically, commercial real estate purchases come with a lot of long-term risk. This risk must be realistically evaluated prior to making the purchase.

A Commercial Real Estate Lawyer Can Help

The law surrounding the purchase and sale of commercial reseal estate is complicated. Plus, the facts of each case are unique. This article provides a brief, general introduction to the topic. For more detailed, specific information, please contact a lawyer who deals in commercial real estate.

Elected officials and developers will join Allstate Insurance executives in cutting the ribbon Monday on the company’s new 88,000-square-foot regional headquarters in Hauppauge.

The new building at 898 Veterans Memorial Highway, a project of Colin Development and the property’s landlord Hauppauge Office Park Associates, will hold more than 450 Allstate employees currently spread out over four separate Hauppauge locations.

The $23-million project received property tax abatement of $1.2 million, sales tax benefits of $1.1 million and mortgage recording tax incentives worth $178,500 through the Town of Islip Industrial Development Agency.

Among those expected to attend the ribbon cutting ceremony next week are Suffolk County Executive Steve Bellone, Islip Supervisor Tom Croci, Colin Development President Fred Colin and its COO Ed Glackin.

More than 160 jobs at a New Hyde Park Stop & Shop are in limbo due to the imminent closing of the store’s adjoining Peapod warehouse.

The Stop & Shop Supermarket Co., a wholly owned subsidiary of Dutch supermarket operator Ahold, informed the New York State Department of Labor on Monday of its plans to shutter the Peapod location by Sept. 29 “or during a 14-day period thereafter.

Bay Shore-based manufacturer Air Industries Group has acquired a Connecticut-based military packaging and supplies company.

Company officials declined to specify the terms of the acquisition, noting only that Eur-Pac Corp. of Waterbury, Conn., is the Air Industries Group’s first acquisition outside of Long Island. Eur-Pac will be operated as a separate and independent platform company of Air Industries; the Connecticut firm’s two principals – sons of Eur-Pac’s founder – will stay on and manage the company “for two years following the closing,

Drugmaker Forest Laboratories Inc. is selling its cavernous building in Commack, a company official confirmed.

The Manhattan-based manufacturer of branded-prescription medicines used to treat Alzheimer’s disease, depression and other ailments has put 500 Commack Rd. on the market for $45 million, according to a flier advertising the building. The move comes after Forest has spent millions of dollars to convert the building from a packaging plant to offices and laboratories, as part of a plan to consolidate nine properties in Suffolk County. Work on the conversion was recently stopped.

In addition, Forest agreed in February to be purchased by another industry leader, Actavis Plc of Dublin, Ireland for $25 billion.

“Following a full evaluation of our space requirements on Long Island, and taking into consideration recent head count changes and cost reduction objectives, Forest has made the decision to exit our 500 Commack Rd. facility by about spring of 2015,” company spokeswoman Amanda Kaufman said Thursday night.

She also said 100 people work in the building and that its sale “does not have any impact on head count nor is it indicative of any future plans related to employment.”

Forest has more than 600 workers locally out of 5,800 across the globe. In December 2013, the company embarked on a “rejuvenation” plan that officials said would reduce its Suffolk payroll between 10 and 20 percent.

The Commack Road building, which sits right off the Northern State Parkway, has more than 400,000 square feet of office, warehousing, manufacturing and laboratory space and sits on 33.8 acres of land, according to a sale listing.

Besides the Commack Road building, the drugmaker owns two other offices in Commack, totaling 123,000 square feet, and two offices in Hauppauge, totaling 135,000 square feet, according to a securities filing.

The spokeswoman said Friday that Forest sold a another 180,000-square-foot building, also in Commack, in the past year. That space had been rented to other businesses.
Forest, saying it no longer needed 945,000 square feet in Suffolk, sought help from governments in 2010-11 to consolidate and modernize its operation.
The $40-million plan was backed by $3.3 million in state tax credits from Empire State Development, New York’s primary business aid agency, and $2.2 million in tax breaks from the Suffolk County Industrial Development Agency. In return for the aid, Forest promised to add 10 jobs to its local payroll. The company had threatened to leave for Missouri, New Jersey or Ohio.
Forest is the most high profile of two-dozen or so drugmakers in Nassau and Suffolk counties. Founded in 1956, the company spent its early years in Inwood, pioneering the technology that slowly releases a drug into the body, and developed branded prescription drugs. It is known for Bystolic, which treats high blood pressure, and Teflaro, a remedy for skin infections. The business began moving operations from Inwood to Suffolk in the 1990s.

Forest had a profit of $165 million in the fiscal year ended March 31, 2014. Sales totaled $3.6 billion.

The Hain Celestial Group has purchased a manufacturer of organic and gluten-free foods for $61.3 million. The Lake Success-based natural foods company said it had bought Rudi’s Organic Bakery Inc., based in Boulder, Colo., from the investment firm Charterhouse Equity Partners LLC. The acquisition expands Hain’s already substantial presence in the market for organic and gluten-free foodstuffs, company chief executive Irwin D. Simon said earlier this week. Rudi’s “expands our participation into 11 of the top 20 natural categories in the United States,” he said. Simon also said he hopes to add to Rudi’s current product offerings of bread, buns, bagels, tortillas, wraps, pretzels, pizza crust, stuffing and snack bars. Its sales totaled $60 million last year. Hain has had operations in Boulder since the 1960s but last year moved some accounting and research operations from there to its new, $10-million headquarters and product development center in Lake Success. The company’s Celestial Seasonings teas and WestSoy tofu are still made in Boulder.

Plainview-based Rechler Equity Partners breaks ground Tuesday on the Hampton Business District at Gabreski, a new business park within Gabreski Airport on 50 acres owned by Suffolk County in Westhampton Beach.

Work has now begun on 220 Roger’s Way, a 60,000-square-foot industrial building that will be followed by eight more buildings totaling 440,000 square feet, according to a statement. Suffolk selected Rechler Equity Partners as developer for the project in 2009.

The new business park will offer space ranging from 1,333 square feet up to 100,000 square feet. Following the construction of the first building, development will begin on two office and medical buildings totaling 60,000 square feet. The business district will also include a 145-room hotel, a restaurant, a day care center, a health club, and a bank.

Company principal Mitchell Rechler said the new park will have the technology and design to accommodate today’s research and development, light manufacturing and office needs.

“Based on the response we got and our instincts when we were awarded the bid, we knew there was an opportunity to create a market where there would be significant demand,

One of Long Island’s largest mega-projects has taken another step closer to becoming a reality after the Islip Town Board voted to accept its environmental impact statement.

On Thursday, the town unanimously accepted the final environmental impact statement for the $4 billion Heartland Town Square development, which proposes to create 9,100 apartments, 1 million square feet of retail space and more than 3 million square feet of offices on 460 acres of former Pilgrim State Hospital land in Brentwood.

The first phase of the project, which still requires a change of zone and site plan approval, would build 3,500 apartments.

According to the project’s developer, the planned mix of rental apartments, shops, restaurants and offices will eventually generate about 23,000 permanent jobs, and at least 1,500 construction jobs annually throughout its build-out, which could easily eclipse 20 years.

As it is with most large development projects on Long Island, it’s been a long slog toward approvals. Developer Gerald Wolkoff purchased the property from the state for $20.1 million in 2001 and first proposed the project in 2002. After an initial public hearing on the plan in 2004, five years of back-and-forth negotiations with the developer passed before the town held the next public hearing in 2009.

There have been many obstacles, not the least of which was concern over traffic from the addition of thousands of residents and dozens of new businesses.
The Long Island Regional Economic Development Council put Heartland Town Square on its 2012 list of regionally significant projects and qualified it for $2.5 million in state funding that will go toward infrastructure and sewers.

Hi-Lume Corp. is in the process of purchasing a 57,500-square-foot facility in Hauppauge to serve as a centralized headquarters.

The Huntington Station-based commercial carpentry company will spend $4.54 million to purchase the facility, located on 5 acres at 175 Kennedy Drive, before spending an additional $3.31 million to construct a 17,500-square-foot addition. Once completed, Hi-Lume will move itself and its affiliates – Metro Interior Distributors, Liberty Doorworks and W.J. Northridge Construction, collectively known as Sutherland Building Group – out of three facilities scattered around Northwest Suffolk County and into the Hauppauge office.

“We’ve completely outgrown our facility,