Overall optimism for the future of real estate in Westchester and Fairfield counties was the order of the day when Westfair Communications, publisher of the Westchester County Business Journal, Fairfield County Business Journal, WAG magazine and numerous digital newsletters presented a webinar on May 28 featuring five experts exploring what the real estate market is likely to look like in the wake of the COVID-19 pandemic.
The panelists were: Bruce Berg, CEO of Fuller Development Co., a division of the Cappelli Organization; Fred Camillo, first selectman of Greenwich; Clayton H. Fowler, founding partner, chairman and CEO of Spinnaker Real Estate Partners; Thomas LaPerch, director of the commercial group at Houlihan Lawrence; and Andrew S. Weisz, executive vice president of the RPW Group.
“We were very fortunate in that our construction business has remained open, as we’re considered an essential service” Berg said. “But our approach to dealing with tenants is an adventure every day, whether it’s a retail tenant or an office tenant or a residential tenant. They’ve all been different and the experiences every day have been unique and we’re adapting as we go.”
Camillo said that the real estate market in Greenwich has remained active. “Lots of Realtors that I’ve spoken to seem to be very busy right now. We’re trying to look at all the silver linings and how we could not only adapt in the short term but how we can come up on the other side of this more prepared, efficient, more effective and have Greenwich be more of a destination than it already is.”
Fowler said there was no slowdown on projects Spinnaker has had in construction, but some new deals were a different story.
“Jobs that were about to start, about to close in terms of construction lending, they stopped or have been put off,” Fowler said. “We had one particular deal that we really liked the economics of … fell apart at the end and we’re putting Humpty Dumpty together again now. We had a hotel that we put on the shelf until the fall for obvious reasons even though that particular hotel in New Haven had something called Y-A-L-E supporting it.”
Fowler said that having to work from home has made it a little more difficult to bring new deals together and he looks forward to again working out of his office in South Norwalk.
“I’m pretty bullish on the market right now,” LaPerch said. “After speaking to the president of our company, Liz Nunan, the numbers are better than expected for the housing market and that’s a very good sign considering the hard part of showing houses and properties, but she says the numbers are better than expected and the good news is that it’s driving business up here on a commercial basis.”
LaPerch said this is the third time he’s been through a severe downturn. “My message to all the brokers on my team is stay focused, stay ready and speak to your clients because we’re going to be busy.”
At the RPW Group, Weisz said they’re seeing an uptick in activity at their buildings.
“A lot of inquiries. There are virtual tours. There have been some physical socially distanced tours, and I think the residential market is hot. It’s tough to find a rental right now. Those will convert to sales and people want to work close to home. So, I think the two work together and they’re going to benefit each other and I think long-term … it’s something really positive for Westchester and Fairfield County.”
Berg said that by doing virtual tours during the outbreak the Cappelli Organization was able to continue leasing space at its new 14-story building in New Rochelle, The Standard, at 50 LeCount Place.
“We started construction on another project that we’re joint-venturing with Related on Huguenot Center. We’re also the general contractor on two other jobs in New Rochelle, so we’ve actually got four jobs underway in New Rochelle,” Berg said.
“Construction was considered essential here in Connecticut so that never really stopped,” Camillo said. “What we’ve tried to do while the roads were fairly empty is to get as many projects done, but an unintended consequence of that is while people were stuck home the complaints started coming in about drilling during the day and all types of noises coming from the construction sites. With town hall reopening via appointment only in a couple of days we hope to be caught up on the permits and that the commerce will continue unimpeded and hopefully pick up.”
LaPerch said that the pandemic is likely to force adjustments in real estate for the retail sector.
“Retail reinvented themselves for the last five or six years and I think they need to do it again but I think with this pandemic the pricing is going to adjust and I think landlords, in my opinion, will be a little more generous with their terms and their pricing. So I’m pretty optimistic those storefronts will be filled in a different manner. I think the worst part of the pandemic is for the development of the senior living and assisted living.”
LaPerch said that there is concern in the industry about what future requirements may be imposed in view of the way nursing homes and other congregate situations became hot spots for COVID-19.
“I’ve talked to a couple of developers over the last couple of days and they’ve told me that the banks have pumped the brakes on some of these approved projects because they don’t know what the buildings have to be outfitted with,” LaPerch said.
“Commercial leasing, commercial sales, debt equity financing, that was all on pause up until two or three weeks ago,” noted Weisz.
“As of the middle of May, things started to slowly come back. Interestingly, we’ve actually signed two small office leases, both around 3,000 feet, all directly due to COVID and both, interestingly, similar situations. CEOs of both companies that were a little older in age and just said ‘We have expiring leases in New York and we’re going to move’ — they both live in Westchester County — and ‘we’re going to move our office to Westchester and give our staff 12 months, the staff that works in New York City, to figure out how they’re going to get to Westchester County.’”
Weisz said RPW Group is due to break ground in a couple of weeks on its approved apartment project for 1133 Westchester Ave. in White Plains.
“We’re more excited than ever about that project,” Weisz said. He said that Westchester offers people the opportunity to live in less-dense surroundings than does New York City. He also said that they intend to move forward with their project for about 200 apartments on Webb Avenue in Harrison that is in the early stages of environmental review.
“The focus now is on getting back into the workplace and this is something that we’ve been working on for a number of weeks,” Weisz said. “First, and most importantly, relationships matter now more than ever. Tenants and landlords: that relationship is crucial — being able to be in contact with your tenants and vice versa. We’re sending out biweekly building memos to all of our tenants and we have been throughout this COVID process alerting people to what we know and what we’re planning.”
Weisz said that measures his company was taking include offering temperature checks for those tenants who would like it in the lobbies of buildings, increased cleaning staff and sanitizing all high touchpoints such as in elevators, encouraging stair use instead of elevators, and putting in new filters and sanitizing HVAC units.
Berg said that his biggest concern is for the retail industry and in particular restaurants and gyms.
“They are all unclear on how they are going to proceed not only because of the pandemic but people are afraid to go out. They don’t want to go and sit in a restaurant with people wearing masks. I think they are going to be the most challenged of anybody coming through the rest of this pandemic.”
Fowler said he expects a lot of adjustment in landlord-tenant relationships when the tenants are restaurants.
“We want them in the buildings. We want street life. It will change for a little while so we’ll make the adjustments,” Fowler said.
He said he remains bullish on U.S. real estate because “320 million Americans aren’t leaving. As long as we can handle as communities our incredible debt burdens that COVID is foisting on us we’ll be fine.”
The Silver Sponsor for the event was The Cappelli Organization.
Sponsors of the event were: the Building & Realty Institute of Westchester and the Mid-Hudson Region; Aditum Internet Management Service; H2M architects + engineers; VHB, engineers, scientists, planners, designers.
Supporters of the event were: Gregory Sahagian & Son Inc., premier awning company; Atlantic Westchester Inc., commercial HVAC company; Rakow Commercial Realty Group.
Webinar highlights problems and promise