Real estate executives bullish on Westchester.
The pair gave an "Insider's Forecast for Commercial Real Estate" at a breakfast for brokers held recently in the executive dining facility of Ardsley Office Park, the former Ciba Geigy International property, a 470,000 square-foot research and office park on 50 acres in Ardsley, Town of Greenburgh. The site is owned by Ardsley partners, a joint venture of Halpern Building Corporation, The Robert Martin Company and Nadel Associates.
Ardsley Park, the two revealed, is being marketed to a variety of multiple users - especially the biotech sector, whose research and development business is being out-sourced by Fortune 500 Manhattan - based corporations. If asked, Ardsley Partners would split off for sale any of the eight buildings on the campus. Also of particular interest on-site is a remote 12-acre parcel of flat land, zoned heavy industrial - a rare find in the area.
Berger, a 20-year veteran of the Westchester real estate scene, traced the history of the last two decades. He described 1977 through 1986 as years of unprecedented growth where, "almost anyone" could build and lease. From 1986 to the present, with the contraction of the market, real estate owners concentrated on operations, emphasizing quality and value. The next decade will focus on the customer and technology, he predicted.
The two agreed that the overall economy is strong and has stabilized. Corporations are right-sized, and they, as well as new companies, are hiring again. Residential real estate, the retail market and the hotel market have revived. Vacancy rates have dropped - as much as two percentage points in the last year. The adjacent markets of Fairfield County and Manhattan have rebounded. Now is the time for the industrial and flexible-use markets to recover, the executives said.
"The most dramatic thing happening in commercial real estate today is that it is changing from an asset to an industry," Berger said. Currently, only three percent of real estate is owned publicly, in contrast with the 75 percent public ownership of other industries. Though mostly privately held, real estate businesses operate much like Fortune 500 companies today.
Real estate companies are restructured, out-sourced, strategized and efficient. Like retail and utility companies, real estate is undergoing consolidation; and it, too, will reemerge as an industry, Berger said. More so titan tenants, the developers' customers today are brokers and lenders.
Halpern, who recently transferred interest in eight other Westchester office buildings to a publicly traded REIT, Reckson Associates Realty Corp., is experiencing the shift from a family business to institutional ownership first-hand. As an Executive Vice President of Reckson and President of Reckson's to-be-formed Westchester division, Halpern discussed institutional involvement in real estate.
"Now that institutions have had five to 10 years of real estate experience, they have become better operators of commercial property," he said. "They, as well as privately-held companies such as Robert Martin, also have the capital to buy older properties and transform them into Class A space."
There will be a shortage of Class A product, the two agreed. Nothing has been built in the area during the last 10 years. Retrofitting and rehabilitation will be more economical than building anew, they say. Although there may be some build-to-suit tenants in single buildings, the future profile will be multi-tenanted buildings in which the focus will be on no-frills, service and professionalism, they predict.
"Function will be the order of the day," Berger said. Halpern added that there was room for growth in terms of aesthetics.
All in all, a number of properties are expected to change hands. And whether it be public or private, capital infusion is expected to tone the market.
|Printer friendly Cite/link Email Feedback|
|Publication:||Real Estate Weekly|
|Date:||Apr 17, 1996|
|Previous Article:||EastRidge Properties implements multi-building recycling program.|
|Next Article:||Lead paint: what the regulators are up to.|