RexCorp Realty officials are confident an ongoing $20 million improvements project at their Platinum Mile properties will prove a good investment in a tighter metropolitan real estate market.
The privately owned company spent $5 million last year and $2 million in the first quarter this year to reposition its 14-building, 1.6 million-square-foot portfolio, on the Westchester Avenue “Platinum Mile” straddling White Plains and Harrison along Interstate 287. The company plans to spend $10 million on indoor and outdoor improvements this year and $5 million in 2008, RexCorp Senior Vice President Joseph Caruso told a Westchester County Board of Realtors audience last week.
“Location, location, location,” Caruso said. With about 2 miles of exposure along the interstate, “It”™s a fantastic location.”
RexCorp was formed in January by former managers and 160 employees of Reckson Associates Realty Corp. after that publicly traded company”™s $6 billion purchase by SL Green Realty Corp. RexCorp and Jon L. Halpern”™s Marathon Asset Management paid Green more than $2 billion to acquire 2.8 million square feet of space on three Westchester office campuses.
The company says its commercial properties in the county, Long Island, New Jersey and Connecticut are worth $3 billion and total 11 million square feet. Caruso said the company has about $1 billion of property in active development and more than $2 billion of purchasing power.
The Platinum Mile undertaking “is the largest repositioning project that has taken place in Westchester County,” he said. All 14 buildings are being improved, with properties ranging from 38,000 square feet to 160,000 square feet. The 70,000-square-foot former Seagram”™s building, at 103 Corporate Park Drive in Harrison, will be entirely gutted and re-skinned, Caruso said.
The company has completed work on six of 14 lobbies included in the project. “We”™ve opened them up, we”™ve brightened them up,” the RexCorp vice president said. Lobbies will provide wireless Internet connections along with cleaning and shoe-shine services.
Team rooms, fitness and child-care centers, cafes, conference rooms, 30 bathrooms and 11 plazas will be refurbished to make them more amenable to tenants and their employees. Other improvements are being made to heating, ventilating and air conditioning systems, fire safety systems, elevator cabs, roofs and rear entrances.
“The natural topography of hills and rock outcroppings has always been essential to how these properties are marketed,” Caruso said. Newly landscaped plazas will “bring them back to being people spaces,” he said. “It”™s to invite the people to come outside, to enjoy the nature and the beauty that you have.”
Â
With the repositioning, Caruso said, the Platinum Mile will become “the ultimate corporate environment.”
The Platinum Mile properties have a 73 percent occupancy rate, up from 68 percent when RexCorp bought them, Caruso said. “We”™re seeing a real mix of tenants,” he said, with “a significant amount” renting 2,000 to 5,000 square feet, as well as larger tenants.
Caruso said office space on the Platinum Mile usually rents in the mid-$20 to upper-$20 range per square foot, compared with ranges of $32 to $33 and $35 to $39 in downtown White Plains.
In commercial leasing, “What you have right now is still some supply-side economics taking place. I think truly we”™re reaching the end of that cycle,” Caruso said.
“I think we”™re going to be the beneficiary of the tightening marketplace” both in New York City and downtown White Plains, where rents are rising, he said. “The suburban White Plains marketplace is fantastic.”
Â
