Amazon”™s recently announced effort to unload from 10 million to 30 million square feet of its industrial real estate should not put even a dent in the market for industrial space, according to one of the real estate experts at Westfair Communications”™ “The Future of Real Estate” event held on June 7 at the C.V. Rich Mansion in White Plains.
“They had roughly 400 million square feet as of the end of last year,” said Joe Vaccaro, founding partner of the commercial real estate developer V20 Group, which is based in Darien. “Shedding 10 or 20 million square feet really is not going to move the needle in a material way. It certainly could impact some submarkets where a million or a million and a half square feet comes on the market if they”™re shedding a couple of warehouses and subletting them back to the marketplace. But, in general, if you look at last year there was about a billion square feet of industrial that was leased.”
Vaccaro said that even with new industrial space being built there remains a shortage and that most developers want to build high-rise apartments rather than high-bay warehouses.
Vaccaro appeared on a panel with Gary Kerr, managing director for development in the Northeast for Greystar; Amy Rose, president and CEO of Rose Associates; Leonard Steinberg, chief evangelist and corporate broker for COMPASS; and Andrew S. Weisz, executive vice president of RPW Group. Sarah Jones-Maturo, president of RM Friedland LLC, served as moderator.
Steinberg forecast that the suburbs will continue to experience strong growth as millennials and GenZ young adults start to form families and look for good school systems for their children.
“As more commercial entities come to the suburbs, you will have the ability to have a much shorter commute,” Steinberg said. “I think people actually do love the office, but they hate the commute.”
He said that for people coming to the suburbs from the city, where they enjoyed high-rise living with luxurious amenities and services, the appeal of a suburban condominium has grown in recent years.
Steinberg said that zoning limitations control how much single-family housing can be built in suburban communities.
“Multifamily housing has many opportunities to house more people and we are very, very underbuilt,” Steinberg said. “Climate change is something as well that, combined with aging housing stock, adds to the compound impact of supply constraints. While we”™re building more today than we did maybe two years ago, we need to add in that factor as well, so the demand side of housing and multifamily housing in the suburbs I think is just going to keep growing.”
Amy Rose, whose company is building multifamily projects in Yonkers and White Plains and currently is seeking approvals for redevelopment of the former United Hospital property in Port Chester said that people are wrong if they think of the suburbs as offering an inferior lifestyle to that of the big city.
“The idea and the notion of working from home for everybody has changed,” Rose said, while also emphasizing her view that the office is not dead. “When the pandemic happened and people were in their smaller studios or smaller spaces it became clear that we had to dedicate every floor plan with the notion that somebody would take a laptop and be somewhere.”
She explained that now, in their marketing materials, they make sure that renderings show where computers and other necessities for work-at-home can be set up. Rose also said amenities in new projects include common spaces where residents can spend time on their work projects. Rose explained that her company collects information on what residents say they want in the way of amenities, such as golf simulators that can be adapted to simulate other types of activities. She said that one thing they learned from the Covid pandemic is that outdoor spaces for residents have grown in importance.
Kerr said that Greystar”™s Gateway II project, which now is being built in White Plains, will have 60,000 square feet of amenity space, which is “really unparalleled in the market. We”™re across the street from the train station, so all those people who want to work in Manhattan can get in and out of Manhattan. People who also want to enjoy the suburban lifestyle being in White Plains, and the restaurants and everything going on there, they can access the main part of the city very easily.”
Kerr said that it”™s good that the Gateway II project already is under construction because it is unlikely Greystar would start it today because of the cost of debt and the increased costs of construction.
“The inflationary pressures and the changes in debt have meant all of the supply wave is not coming,” Kerr said. “People are in the ground today. They will deliver. But, I would be shocked if everything that”™s planned is actually delivered.”
Kerr said that Greystar is not looking at the 20,000 square feet of retail space that will be available for rent in the Gateway project as a profit center, which allows them to select retailers who will be the best fit for the needs of residents and the location. He said there will be a restaurant opportunity in space at Gateway II that will be directly across from the Metro-North train station.
“That”™s something we”™re spending a lot of time on and making sure we find the right operator,” Kerr said. “The operator will drive the value; it”™s not about the rent.”
In discussing the effects the pandemic has had on office space, Weisz said, “It hasn”™t been a picnic by any stretch. Our assets and many of our competitors have faired fairly well … we”™re quite bullish on Westchester. Office tends to lag behind residential, and as we”™ve seen this mass migration of folks moving up this way I wouldn”™t be surprised if we start seeing a hub and spoke model where some companies start to open offices here or expand, which we are already seeing.”
The event was presented by Westfair Communications Inc., publisher of the Westchester and Fairfield County Business Journals and WAG magazine.
Silver sponsors were: The Cappelli Organization; Champion Elevator Corp.; and The Fordham University Real Estate Institute.
Bronze sponsors were: Benchmark Title Agency LLC; Bleakley Platt & Schmidt, LLP;Â The Building & Realty Institute; Callahan Construction Managers; Cuddy & Feder LLP; and The New York Hospitality Group.
