Over the past five years, Port Chester has been one of the most sought-out places for commercial real estate investors and developers. Nestled between Rye, Rye Brook and Greenwich, the village has always been known as a destination of wonderful restaurants and entertainment.
However, many of the buildings were old, in poor condition and needed major capital improvements. Outside investors were starting to take notice of Port Chester as “transit-oriented development” or “TOD” was becoming a primary focus for many. It was an opportunity to capture value by transforming downtown areas.
In the early part of 2015, I focused attention on commercial real estate in Port Chester, with the goal of knowing the name of every building owner in the village. I would walk up and down the streets canvassing the area, cold calling and gathering information. Quickly, I learned that many of these buildings have been with these owners and their families for generations. The common theme amongst these owners was that the time is now to maximize their returns in Port Chester.
Buyer demand was very high and one of the first listings I sold, 125 N. Main St. (also known as the BAR Building), sold for its asking price of $1.9 million before hitting the market. Shortly thereafter, I was hired by the owner of 22-28 N. Main St. to market his contiguous properties, which sold for their asking price of $2.6 million.
Many buyers were looking to assemble adjoining buildings with plans to redevelop them. Several were very successful and now have sizeable lots that are primed for new mixed-use developments.
From 2018 through today, over 100 commercial buildings have traded in Port Chester. Many of these buildings were value-add purchases, in which investors would make capital improvements in buildings to increase rents and overall market demand. A large percentage of these properties were mixed-use buildings in the core of the downtown area. These buildings generally had first-floor retail with either office or apartments on the upper floors.
In May 2020, the Port Chester municipal government adopted an innovative, ground-up form-based code that would focus on growth in and around the train station. Developers believed there would be tremendous demand for millennials and empty nesters looking to downsize.
The area behind the train station is where the CD-6 zoning allows a developer to build up to 12-15 stories. In turn, this land became exponentially more valuable overnight.
The result of the zoning changes created even more motivation for sellers in a market that already had high demand. Hence, more transactions were occurring and continue to do so today. Supply has been the biggest challenge and most properties that come to the market have multiple offers in a short amount of time.
Rental growth in the community has been exceptional. The average asking rent within the village is up 14% since 2019. Mixed-use buildings generally trade with a capitalization rate of 6.5% (+/-), but as supply continues to contract, 6% and sub-6% capitalizations rate deals are not uncommon.
There are more projects in front of the Port Chester Industrial Development Agency than ever before. Some of these projects have already broken ground and are under construction. Others are still being proposed or awaiting site plan approval.
Currently, there are 2,690 apartments slated to be built in Port Chester. Below is a list of projects in motion:
406 Boston Post Road: United Hospital Redevelopment ”” 730 mixed-income residential units, a 135-key hotel, 217,000 square feet of medical office space and 90,000 square feet of commercial-retail.
108 S. Main St.: Nine-story structure with 95 residential units, office/co-working space on the third floor, 3,100 square feet of retail and 128 parking spaces.
27-45 N. Main St. and 28 Adee St.: 203 apartment units consisting of 50 studio apartments, 108 one bedroom units, and 45 two bedroom units as well as 10,000 square feet of retail space.
44 Broad St.: 17-story, 407,000 square feet structure with 286 apartments, 12,600 square feet of ground-floor commercial space and 267 parking spaces.
2-16 S. Main St.: 12-story structure with 334 residential units and 7,409 square feet of commercial space.
N. Main/Mill Street – Tarry Lighthouse: Seven-story structure with 209 residential units and 28,000 square feet of retail space.
1 N. Main St.: Five-story structure with 80 units and 9,000 square feet of retail space.
140-150 Westchester Ave.: 12-story, 202-unit building.
30 Broad St.: Nine-story structure that includes a microbrewery and pub on the first and second levels, approximately 4,000 square feet of office, and 36 apartments.
208-216 King St.: 12-story, 185-unit rental apartment building.
126 N. Main St. ”” The Embassy: 250 units, 30,000 square feet of retail.
229 Willett Ave.: 80-unit, workforce housing development.
In 2022, seven buildings that I listed have already sold for a cumulative total of over $8 million. With another $12 million in contract, I expect the momentum to continue.
Michael Rackenberg is an associate real estate broker with Houlihan Lawrence Commercial Group.
