It has been 20 years since builders put the finishing touches on 200 Greenwich Ave., a small building that squeezed offices above its retail space along Greenwich”™s renowned “Rodeo Drive East.”
With a de facto building moratorium in place in Greenwich since 1987, the big squeeze has been on in the market since, benefiting Antares Investment Partners, which correctly staked its business on a rapid appreciation in Greenwich real estate values.
In presenting details of its $4 billion Harbor Point development to Stamford”™s planning board last month, Antares is entering a market which is itching for additional office and residential space to keep up with a recent boom of financial firms drawn to the city”™s still-developing cluster.
It is the same dynamic that Greenwich experienced in the creation of its hedge fund cluster ”“ but unlike in Greenwich, Antares faces the specter of other developers creating commercial and retail space in adjacent areas of Stamford, which could in turn hold down the appreciation of Harbor Point.
James Cabrera, Antares founding partner, is confident that the company”™s instincts on Harbor Point will bear fruit in the long run, and his firm”™s record to date brooks no doubt about its decisions.
Antares today owns roughly $5 billion in assets in Fairfield County. The next fund the company raises for investment will likely be in the $500 million range, and will be devoted to office purchases, he said.
Antares built its business under the correct assumption that a de facto moratorium on new office buildings in Greenwich could only increase real estate values in the town. As financial managers fled New York City to establish hedge funds in Greenwich, rents rocketed to more than $100 per square foot, on par with all but the toniest New York City addresses.
“From bed sheets to spreadsheets” was how The New York Times described the trend in the early 1990s, as hedge fund manager Paul Tudor led an exodus from the city to Greenwich.
Hedge funds proved ideal tenants, able to bear the cost of ever escalating rents in exchange for the perquisites of living in Greenwich within close proximity to clients in New York City.
“They understand that the primary cost in their business is (human resources) and technology,” Cabrera said. “Third ”“ by a long distance ”“ is real estate.”
Greenwich offices are growing old in the tooth, however. Greenwich American Centre, Greenwich Office Park and Pickwick Plaza ”“ the three largest office parks in the town ”“ are between 30 and 40 years old.
They still hold appeal, however ”“ Goldman Sachs Group Inc. is preparing to take the bulk of space in Greenwich American Centre, marking the Wall Street icon”™s first major presence in Connecticut.
The Greenwich properties have thrived even as new space became plentiful farther east, due to a 1980s construction boom fueled by a combination of a fast-growing economy, declining interest rates, and the proliferation of savings and loans institutions that had ample capital to lend.
Fairfield County proper experienced a moratorium on new as a whole had a dearth of new construction in the aftermath of the stock market crash of 1987. Buildings totaling 2.2 million square feet were completed between 1986 and 1988, including:
? 2 Stamford Plaza
? 300 Atlantic St. in Stamford
? Enterprise Corporate Towers in Shelton
? First Stamford Place
? Metro Center in Stamford
? Two buildings in Norwalk”™s Merritt 7 Corporate Park.
Despite its January sale of Pickwick Plaza ”“ at $235 million, the highest price to that point received for a Connecticut office ”“ Antares is still a believer in the Greenwich market, as evidenced by its $130 million buy of UST Inc.”™s headquarters at 100 West Putnam Ave. The company is in the process of vetting architects who will design a $50 million renovation of the building.
Cabrera said the same six bidders it fought off for Pickwick Plaza were in the running for UST. All live in Greenwich, he said.
Antares may have a new competitor on its home turf. Last month, New York City giant SL Green Realty Corp. spent $56 million, or $460 per square foot, to acquire 500 West Putnam Ave. up the street from UST.
Isaac Zion, SL Green”™s managing director, said the building”™s price tag was driven by being located in “supply constrained” Greenwich, and said the company is scouting other acquisitions in the county.
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