2014: A Year of Renewals, Part 2 of 6
Distress and success
By Howard Greenberg, President of Howard Properties, LLC
A number of office buildings have fallen into financial distress or receivership after losing major tenants. 3 Westchester Park Drive (formerly known as 3 Gannett Drive) is in receivership after Heritage Realty Services defaulted on its mortgage following the loss of its anchor tenant Wilson Elser to RPW Group's 1133 Westchester Ave.
1311 Mamaroneck Avenue went back to its lender after a stint in receivership, and was purchased at a discount by its former owner Onyx Equities. Onyx is reportedly in the process of buying the complex on the south side of Rt. 287 that currently is master leased by Jones New York and occupied by that company and PepsiCo for swing space while its Purchase headquarters is undergoing a major renovation.
White Plains Plaza (1 No. Broadway and 445 Hamilton Ave) lost law firm Jackson Lewis to 44 South Broadway (44,000 SF for its lawyers group) and 1133 Westchester Ave. (23,000 SF for its administrative group).
There have been some successes as well. Faros Properties has exceeded all expectations in its lease-up of 120 Bloomingdale Rd. (also bought out of receivership), and has reportedly agreed to sell 555 Theodore Fremd Ave. in Rye at a significant profit after improving occupancy in that asset. GHP has purchased Taconic Corporate Park in Yorktown at a very favorable price from its lender. With low cost bases in these distress purchases, new owners can afford to do necessary renovations and still offer competitive rents.
Brian Carcaterra of CBRE is leasing agent for the 1.5 million SF Normandy portfolio in the 287 East submarket. He reports they have been pleased with their year. But it has been comprised of primarily renewals (some with expansions), and early commitments by tenants to longer lease terms. Their retention rate was over 90%, which is very impressive in this market. Overall, the portfolio has signed about 125,000 SF of leases, with documents currently being negotiated for an additional 75,000 SF. Their goal for 2015 is to supplement this year's success with new transactions.
Dannon is currently in the market for about 120,000 SF, as the end of its term nears at its Hillside Avenue building. They, too are looking for a way to keep everyone on as few floors as possible, and are reportedly focusing on the huge 44,000 SF floors at 44 South Broadway in the White Plains CBD.
Acadia Realty Trust has signed a lease for about 29,000 SF at 411 Theodore Fremd Ave.in Rye. This represents an interesting dynamic, as it will leave its current space (at 1311 Mamaroneck Avenue, which has been in receivership), for a building that had its economic problems years ago, that has been sold to new ownership and has recapitalized. U.S. Alliance Credit Union in Rye has also signed for about 10,000 SF at this building.