Even as Stamford”™s Harbor Point development booms with new construction, Greenwich Harbor”™s own prime candidate for a makeover continues to idle two years after a purchase agreement collapsed alongside the credit markets, sparking litigation.
Until 2009 the home of the RBS Greenwich Capital division of Royal Bank of Scotland, which moved into a new office building in downtown Stamford, today the building at 600 Steamboat Road in Greenwich is owned by GRC Realty Corp.
GRC takes its initials from parent company General Reinsurance Corp., with Stamford-based Gen Re a subsidiary of Berkshire Hathaway that used the building as its headquarters before relocating to Stamford. In the past year Gen Re moved out of its former headquarters building at 695 E. Main St. in Stamford to take space on Long Ridge Road farther north, with its former digs subsequently a chip in the ongoing dissolution of Lehman Bros., which held an ownership stake.
An investment group called Dryland Steamboat Road L.L.C. sued GRC in 2009, claiming it was owed a $22.5 million deposit on a purchase agreement for 600 Steamboat Road valued at $205 million, a deal it says fell through after the September 2008 collapse of Lehman froze the credit markets. The parties withdrew the litigation last August without detailing the terms of any agreement.
According to the Greenwich Time, GRC is seeking a reduction on the 180,000-square-foot property”™s $101.8 million assessment, the fourth-highest in the town”™s commercial district.
Whether that plea will fall on deaf ears could well be determined by how Greenwich officials see the niche real estate market for hedge funds playing out in the coming few years.
As first reported by the Fairfield County Business Journal, Alinda Capital Partners L.L.C. took more than 25,000 square feet of space at 100 W. Putnam Ave. The onetime home of UST, the building became a magnet for hedge funds after UST”™s relocation to Stamford, only to empty again following the market collapse of 2008.
If Alinda Capital demonstrated the continuing appeal of Greenwich for New York hedge funds, the building at 600 Steamboat Road could provide the ultimate test, given its extraordinary setting on Greenwich Harbor and adjacent to both Interstate 95 and Metro North; counterbalanced by the need for a major overhaul and the maximum return GRC appears to be angling for in any sale of the building.
The time for a deal may never get better ”“ Gov. Dannel P. Malloy made his “First Five” program a centerpiece of his economic development platform, promising to lavish tax breaks on companies that agree to create at least 200 jobs in Connecticut, with lower Fairfield County a prime candidate for any takers due to its proximity to New York.
Broker Jones Lang LaSalle is listing the building ”“ the company did not immediately respond to a request for an update on its status made through a spokesman.
In its quarterly report on the Fairfield County real estate market issued this month, Jones Lang LaSalle (JLL) said vacancy rates increased for class A office space in the Greenwich central business district and rail station area, to just over 22 percent, up from under 21 percent in the fourth quarter last year. Small businesses have been snapping up less-expensive class B office space throughout Greenwich, however, with the vacancy rate down from about 17.5 percent at year-end to just below 10 percent today.
Despite the increased vacancy rate, class A rents rose slightly to approach $93 a square foot on average; conversely, class B office rates dropped to just below $60 a square foot, from more than $62 in the fourth quarter last year.
“They are having big tenants look at it,” said Jim Fagan, senior managing director of Cushman & Wakefield in Stamford. “They were not able to capitalize on a very favorable sales transaction. I think they are wise in what they are doing. If someone comes along with the right deal, great. If not, they can afford to sit on it.
“Here”™s what I can say, kind of confidently,” he added. “In the next 36 to 42 months they are going to get more money than anyone thought they could get.”
