Author: PCRestate

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.