Mack-Cali, which had been a major force in the Westchester office and flex-space market, appears to be completing its exit from that market with the sale of a portfolio of properties to RMC Acquisition Entity LLC, an affiliate of the Robert Martin Co. LLC.
The sale, with a price tag of $487.5 million, is expected to close in the second quarter of this year. There are two definitive agreements covering the 3.1 million square feet of space. The Business Journal obtained a complete list of the buildings involved. There are 56 in all, including those at the Stamford Executive Park in Fairfield County. It is a five-building development on West Avenue, just off Exit 6 of Interstate 95 in Stamford. The Stamford Executive Park includes approximately 270,000 square feet of office/flex space.
The properties in Westchester include addresses at Westchester Plaza, Executive Boulevard and Clearbrook Road in Elmsford, Skyline Drive in Hawthorne, and Odell Plaza, Executive Boulevard and Corporate Boulevard in Yonkers.
Robert F. Weinberg, who with the late Martin Berger founded Robert Martin Co., said, “The acquisition of these outstanding properties continues our legacy of innovation and market leadership.”
The company’s managing director and partner Greg Berger added that it is very bullish on the Westchester market. “Robert Martin Company has been firmly rooted in Westchester County for over 60 years. We know how to manage these buildings and have excellent relationships with the local communities.”
Tim Jones, also a partner with Robert Martin Co. and its CEO, said, “This portfolio gives us a huge market share in Westchester with a product line that is currently in great demand.” He said that spaces such as the ones they’re adding to their portfolio constitute the hottest sector of the commercial real estate market.
Mack-Cali, headquartered in Jersey City, has been repositioning itself to concentrate on properties in what it describes as “select waterfront and transit-oriented markets throughout the Northeast.”
“Proceeds from the sale of this portfolio will be used in part to pay down debt and to purchase Soho Lofts, a 377-unit apartment community in Jersey City, which furthers our waterfront strategy,” Michael DeMarco, Mack-Cali’s CEO, said. He also said that the sale of the office/flex portfolio “substantially completes our strategic repositioning.”
Mack-Cali’s announcement on March 11 said that a portion of the proceeds from the sale will be used to repay about $230 million of unsecured debt.
In January, the Business Journal reported on Mack-Cali’s sale of its six-building industrial park at 1-6 Warehouse Lane in Greenburgh. Called the Elmsford Distribution Center, the 387,000-square-foot industrial park was bought for $70.25 million by Realterm Logistics. In another fairly high-profile transaction, Mack-Cali had sold the Westchester Financial Center near the train station in downtown White Plains to Ginsburg Development Cos. for $83 million. It had been one of the leading projects created by the Robert Martin Co. during urban renewal in White Plains.
Howard E. Greenberg, president of Howard Properties Ltd. in White Plains, is a veteran real estate broker who is considered an expert on the Westchester commercial market. “I’m very happy that a local player is buying this portfolio,” he said. “This is 3.1 million square feet; these are dominant parks in Yonkers, Elmsford and Hawthorne, and this is the flex product which was developed by the original Robert Martin principals (Robert Weinberg and Martin Berger). This is the flex product hub for the county and it’s an extremely important product.”
Greenberg noted that Mack-Cali has become more focused on New Jersey. “They have become much more active in the multifamily business and they have become much more Jersey-centric.” This has included a special emphasis on the Jersey City/Hoboken area. “They seem to want to plow all of their investments into that area because rents are rising both in terms of residential and in terms of office space and there are big multihundred-thousand-square-foot tenants.”
If the sale has any upward effect on pricing in the flex space segment of the Westchester market, Greenberg expects it will be minimal. “A lot of that firming of the pricing has to do with supply and demand. Particularly in the flex market, the demand has outstripped the supply for the last number of years and even under Mack-Cali prices have firmed significantly on that product,” he said.
Greenberg welcomes the return to Westchester-based ownership of the properties. “The Halperns, the Schulmans, the Cappellis, and obviously Weinberg and Berger of the Robert Martin Company, were all local people that developed locally and their whole focus was local. Their fortunes rose and fell in Westchester and that’s not the case with a big real estate investment trust.”