Defense contractor heads for Long Island in $35m deal.

Things are coming full circle for defense contractors as Williams Real Estate, A FirstService Company announced a deal that will bring a large Manhattan defense contractor to a Plainview facility--a stone's throw away from neighboring Bethpage, where another defense contractor, Grumman Corporation, flourished for decades.

In a transaction valued at $35 million, Cox & Company, Inc., a global supplier of aerospace ice protection and temperature control systems, will move into 90,000 s/f at the new location, 1650 Old Country Road, Plainview.

The 250,000 s/f building will be upgraaea for Cox's occupancy by Steel Equities, a major Long Island developer, which has transformed much of the original Grumman parcel in Bethpage into one of Long Island's largest industrial parks. The complex deal--which will yield 50% savings on rent for Cox & Company--was brokered by Williams Real Estate's senior executive managing director Robert T. Tunis and senior managing director Richard M. Warshauer.

"This was a highly unusual and intricate deal, with several organizations involved and a lot of moving parts," said Tunis. "Cox & Company was hesitant to move before the end of its lease in 2010, and Steel Equities was hesitant to lock into a deal so far in advance. After many months of negotiations, the planets all came into alignment and now, a defense contractor is moving to Long Island instead of away from it."

"We were also able to negotiate incentives from Cox and Company's current landlord and work successfully with Nassau County officials to craft a unique transaction that will benefit Cox financially and operationally for decades," said Warshauer.

Cox & Company sought out the expertise of Williams Real Estate more than three years ago, even though its lease would not expire until mid-2010. Although Cox wished to remain in New York City, in a building that was once a quasi-industrial facility, its choices for such a large block of affordable space were limited. Renewal rents at its current location at 200 Varick Street would have been prohibitive, because the property had converted to attractive Hudson Square office status.

Tunis and Warshauer did a comprehensive analysis of Cox's situation and needs, finally selecting Steel Equities as the developer of choice. Cox, however, was initially reluctant to move with two years left on its current lease, as the company did not wish to take on the liability of subleasing its space. When it appeared as if the deal would not get done, however, Tunis and Warshauer persevered.

While these discussions were taking place, rents for space in Manhattan were skyrocketing to historic highs. The Williams Real Estate team saw that as a once-in-a-lease-term opportunity. After demonstrating how much rent Cox's space could fetch in the current market if it were converted to office space, Williams Real Estate convinced the landlord to buy out the last two years of the lease. Even with that seven figure incentive, Cox was still unsure of a move before its lease term expired.

Nassau County's Industrial Development Agency (IDA) and the Long Island Power Authority (LIPA) stepped in to help. Although other areas such as New Jersey, Pike County, Pennsylvania and New York City's Boroughs had wooed the 200-employee company, the IDA and LIPA offered the best package for the company's future growth and prosperity. These incentives included sales and property tax relief, as well as reduced energy costs. At the same time, Steel Equities located a user for the balance of the Plainview facility.

With a 50% savings on its current rent in Manhattan and other private and public incentives, Cox will move to a modern single level facility. Williams Real Estate produced a package that Cox found irresistible, enabling the manufacturer to assure its success for years to come.