Tenants expect modern.
Tenants want sustainable.
And tenants need a good deal.
“Tenants are the lifeblood of the commercial office business and it”™s vitally important for landlords in every market, but especially in markets like this one because of the challenging economic times, to work with tenants and retain tenants,” said Kim Morque, president of South Norwalk-based Spinnaker Real Estate Partners L.L.C. “The challenge is to modernize the space. Location, of course, you can”™t change. But if you have a well-located building, then you have part of the equation taken care of.”
The commercial office market has not been unscathed by high unemployment numbers and the mortgage meltdown.
According to Cushman & Wakefield”™s commercial office market report for first quarter 2010, the overall vacancy rate for Class-A office buildings in Westchester County in New York was 15.6 percent; that number grew to 17.9 percent for second quarter 2010.
Whether or not the state of the leasing market can be correlated with the race to remain competitively viable by upgrading property, is uncertain.
What is certain, says Manhattan-based Heritage Realty Services Founder and CEO George Constantin, is that the effort to keep facilities up-to-date is imperative.
“I started my business in 1985 at Helmsley-Spear and the philosophy was to do something every year,” Constantin said. “You want to create the proper work environment so you retain tenants and you attract new tenants.”
Heritage is now in the midst of a capital improvement campaign at Gannett Office Park in West Harrison, N.Y., a three-building project worth $3 million.
Upgrades at 3 Gannett Drive include: a complete, Energy-Star roof replacement; fully renovated bathrooms; modernized elevator cabs; enhanced closed circuit television security and access systems; upgraded common areas and main entrance lobbies; new landscaping, pavers and updated mechanical systems.
A new lobby was implemented at 4 Gannett Drive about a year ago, Constantin said, and upgrades will be made in parking areas.
“We”™re long-term holders and that”™s why we invest heavily,” he said. “We have good tenants. In 2008 and 2009, we did lose some tenants, but there”™s nothing you can do.”
Constantin said Gannett Office Park”™s current occupancy rate is in the “mid-”™80s.”
“We lost two tenants, but just signed a lease with PNC (Bank) for 4,000 square feet at 2 Gannett,” he said. “And we have a lease proposal for 40,000 square feet, so activity is picking up a bit. We offered interesting leases to existing tenants and now they”™re flourishing.”
New Jersey-based Normandy Real Estate Partners reported leasing volume for its Westchester portfolio, including The Exchange office complex along Interstate-287, exceeded 325,150 square feet.
More than 40,000 square feet of space was leased or renewed in the first quarter 2010.
Upgrades at the Platinum Mile portfolio included: heating, ventilation and air conditioning enhancements at 2700 Westchester Ave. and 106 and 108 Corporate Park Drive; landscaping and mechanical infrastructure upgrades at 707 and 709 Westchester Ave.; a new sundry and flower shop at 108 Corporate Park Drive; and common area corridor improvements at 709 and 1025 Westchester Ave.
This spring, Normandy received an award from the Building Owners and Managers Association of Westchester County for contributing to the county”™s economy.
Similarly, Spinnaker and its partner Forstone Capital, were just presented a 2010 Award for Excellence for Building Rehabilitation by the Connecticut Main Street Center.
The partners restored and renovated a 21,000-square-foot office building at 777 Main St., Bridgeport, for an affiliate of The Annie E. Casey Foundation.?“I think the interesting part of this case study was we were able to take an existing building and bring it up to a modern, first-class office standard for the tenant,” Morque said. “As part of the renovations, we put in new systems and the architect incorporated sustainable and green developments. Tenants need and want modern facilities.”
