Special Section - Commercial Real Estate 05/28/12 issue

FAIRFIELD COUNTY BUSINESS JOURNAL • HV Biz • WESTCHESTER COUNTY BUSINESS JOURNAL • MAY 28, 2012

Boxed-in space is her domain

BY JOHN GOLDEN jgolden@westfairinc.com

I

t took a lot of two-coffee meetings in the networking world of commercial real estate to get Patti Bancone the client list she has today.

From a desk on the second-floor landing of her family’s North Castle home, Bancone runs her two-employee business, Arcom Space Planning L.L.C. Her one employee, an interior designer, also works remotely from her own home. The buildings whose spaces they custom-design, and whose construction build-out and renovation costs Bancone often estimates and budgets, range from Fairfield County in Connecticut to the Bronx and Queens.

“At first I thought it was going to be difficult just meeting clients and missing the socialization of the office,” said Bancone, for whom casual work attire is a pair of pajamas. “But everything is done remotely now. Because of technology you can do a lot from home.”

At home and in those coffee-fueled meetings, it’s Bancone’s job to “think inside the box” – but creatively – and plan and design office and retail space, lobbies, corridors and elevator boxes for landlords, commercial brokers, office designers, builders, property managers and tenants.

Increasingly, she uses 3D renderings and animation for concept plans to help brokers and landlords better present and sell space to companies looking to lease.

“The way the Internet works now, it’s kind of like this instant gratification,” she said.

“It’s a good selling tool,” said Bancone, who updated her business hardware and software this year to keep up with the latest visual trends in marketing office space.

“If they can visualize what this looks like (when furnished and occupied) ahead of time, it just helps the process along, it helps decision-making.”

“A lot of it is helping the landlords get these tenants,” she said. Often, though, leasing prospects “decide to do something else,” and Bancone’s indispensable but often overlooked services end prematurely.

A graduate of the New York School of Interior Design, Bancone worked for architectural firms on the commercial side early in her career. She left her career track for seven years to raise her children, but did some residential architectural work, including the design of interior and exterior renovations to her suburban home.

About eight years ago, she returned to work in office space planning and project management for a leading Westchester

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County office landlord and building manager, Reckson Associates Realty Corp. “I really started to understand the landlord side, the cost-effective side of architecture.”

After Reckson was acquired by SL Green Realty Corp., Bancone briefly worked for Reckson’s successor on the Platinum Mile, RexCorp Realty, before deciding to start her own business.

“I needed to have some sort of angle to get out there.” She emphasized turnaround time, offering to have draft floor plans delivered within 24 to 48 hours to brokers and building owners. “There’s a lot of inventory out there, and you want to be responsive” to clients’ needs by setting and

Patti Bancone plans and designs commercial office spaces at her home in North Castle.

meeting deadlines, she said.

“When I started, it was all about landlords because that’s where the volume was.

We’re getting tenant work now because we’re getting into interior design. Now I’m looking to get the tenants.”

From her Westchester base, Bancone’s expanding business has moved north up I-95 into Connecticut and office spaces in Norwalk and Stamford. She has done work for Abbey Road Advisors L.L.C., the private real estate investment firm in Westport, and for Edgewood Capital Advisors L.L.C., the real estate investment company based in Southport. In Stamford, she is planning expanded retail and headquarters space for Juliska, the artisanal glassware and home design company.

Bancone’s certified woman-owned enterprise also is expanding southward into New York City. She has designed a law firm office at Hutchinson Metro Center, the Bronx trophy property of Simone Development Cos., formerly based in New Rochelle.

In Long Island City, Queens, Bancone was referred by a longtime friend to a renovations project at Citylights, a 42-story, Boxed-in space, page 4

A mixed bag in Norwalk

BY ALEXANDER SOULE casoule@westfairinc.com

A

s developers push ahead with residential projects in Fairfield County heading into the second half, commercial components of the mixed-use projects are having mixed success in signing up tenants.

Both sides of the coin are visible in Norwalk. More than a year after it opened, AvalonBay Norwalk still has street-level retail space available, though it has generated tenants for a nearby retail complex; just to the north, the neighborhood where the Summerview Square development is has filled in with multiple commercial tenants in the past several months.

In Fairfield and Westchester counties, planners are limiting much new development to existing neighborhoods near mass transit, counting on urban dwellers to draw new commercial enterprises – and vice versa.

That makes the commercial component of mixed-use projects critical to the success of new residential buildings, with no better exhibit than Building and Land Technology’s Harbor Point development, which despite the recession proved a magnet for businesses and residents alike in Stamford’s South End. In an Arizona Department of Transportation study published in mid-May that received national attention, researchers found that traffic congestion was far lower on streets that had a high density of households and businesses, a seeming non sequitur given the increased number of people coming and going. The takeaway, of course, is that more residents results in fewer vehicle owners, thereby cutting traffic.

The point is not lost on Fairfield County builders, who have increased residential permit applications this year even as Connecticut’s statewide totals have declined.

The expectations for a mutually beneficial effect will be critical in getting stalled projects moving, including District 95-7 in Norwalk that contemplates more than 600,000 square feet of space; and Waypointe further north, One can live without the other – Toll Brothers has had an easy time finding residents for its Summit at Bethel residences built on a hilltop overlooking Danbury, despite the fact that the project’s location makes it a difficult trek to many area businesses. Even in Redding, which has one of the smallest commercial districts in Fairfield County, many new restaurants are sprouting on the town’s short Main St., even though the Georgetown Land Development Co. residential village planned for the former Gilbert & Bennett factory site has been delayed.

Still, the ideal formula features both – if not as a classic mixed-use development,

than as a residential project contributing to a revitalized local commercial sector. A case in point is Summerview Square, according to Joanne Carroll, publisher of “Connecticut Builder,” and an officer of the Home Builders Association of Connecticut.

Since construction began just off Main St. in Norwalk, nearby business expansions include: • Painter’s Supply at 106 Main St., which held its grand opening in April; • Valencia Luncheria, a Venezuelan restaurant that is expanding to bigger space at 172 Main St.; and • Blackstone’s Steak House, which relocated from South Norwalk as construction on Summerview Square commenced.

“As a straight rental, Summerview Square seems to be the right formula for this market,” Carroll said.

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FAIRFIELD COUNTY BUSINESS JOURNAL • HV BIZ • WESTCHESTER COUNTY BUSINESS JOURNAL • MAY 28, 2012

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Looking for hidden value in real estate

BY JANICE KIRKEL jkirkel@westfairinc.com

T Edward Kulik, Charles Tomb, and Howard Lavitt of LRC Opportunity Fund in Rye Brook.

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he bricks and mortar are still good, just not the current use.

That’s the mantra of the principals of LRC Opportunity Fund, a commercial real estate firm in Rye Brook that looks for mismanaged properties, undervalued assets, undercapitalized owners, distressed sellers and underserved markets, mostly outside of the New York area.

LRC says what it calls “disarray” in financial markets, as well as the credit crisis, and “imbalances” in real estate values give it the opportunity to buy real estate from distressed sellers at prices below replacement costs. That is the firm’s investment philosophy.

“We look at the demographics,” said Ed Kulik, a co-founder and principal, “at the potential of areas where the local economy has been hit hard. We do concentrate on the East Coast, on areas that are starting to turn around. Right now that is mostly outside of New York.”

Howard Lavitt is the other founder and principal. It was he who formed Lavitt Realty Corp. in 1997 and then LRC Opportunity Fund in 2009. “Some of the markets we’re in right now are Raleigh, N.C. (number two on the list of the Top 10 cities in which to live, work, and play by Kiplinger’s Personal Finance magazine in 2008, and ranked number one in Businessweek.com’s first Best Cities ranking in November), it has an educated labor force, and South Carolina and Florida are big as well. We have a deal in Tampa, at the University of South Florida, where an old hotel is being converted to student housing. The hotel market is soft in Tampa.”

Especially in Florida, said Kulik, there are condos all over that are being converted to rentals or university housing. Lavitt said the firm is in the process of buying the regional headquarters in Raleigh of what used to be Wachovia, bought by Wells Fargo in 2008.

Boxed-in space ­— From page 2

522-unit co-op apartment building.

Competing against much larger and more impersonal companies, she was hired to design corridor and management office renovations and will have more work renovating lobbies and elevators there. Lobby and corridor improvements work in highend buildings such as Citylights “is really what we focus on,” she said.

The New York City real estate market

Two other new projects are also in North Carolina. One is the Brier Creek Medical Pavilion in Raleigh, a 51,000-square-foot medical building that is part of the Brier Creek community. The 2,000-acre development includes the Brier Creek Country Club, with a golf course designed by Arnold Palmer, as well as commercial space, 2 million square feet of retail space, and 10,000 residential units. The building is less than 20 percent occupied though, said Lavitt. “It was new construction, the loan was foreclosed, the bank didn’t want to put money into it for improvements. It was neglected.”

The other property is in Charlotte, called Tranquil Court, a 62,000-square-foot building in the upscale Meyers Park area of the city. It includes retail, professional and office space. It is fully occupied, with tenants including Petit Philippe and UPS. “It was bought from a debt fund,” said Kulik, “we bought the portfolio of notes, they were nonperforming.” Lavitt said medical buildings present their own set of challenges these days. “It’s not just doctors we have to deal with, it’s managed practices, getting them involved in real estate decisions.”

Still, said Lavitt, North Carolina is an area with employment growth, especially in technology and energy.

“Progress Energy in Charlotte has nuclear initiatives. Boeing is coming to Charleston.

The people who come with them will be engineers. And with Red Hat coming to Raleigh, that will bring more software companies.”

As for financing, Lavitt and Kulik said the firm benefits by going after smaller deals, in the $5 million to $50 million range. “If you go after the $100 million deals, you pay a premium. There is a lot of capital chasing larger deals.”

How has the credit crisis affected the firm? “Underwriting is a laborious business,” said Kulik. “These days they read what we put in front of them.”

shows promise for her business. “If I can find another niche, I’ll grab it.”

“There are a lot of people out there looking for work and fighting for projects.”

Clients, she said, “are now looking for service.” Bancone’s personal service includes consulting on green building design and construction.

Returning to the region’s commercial real estate market eight years ago, “It was clearly more active back then. Now there’s work, but it’s harder to find. You’ve got to work harder to find the work.”

Builders stir in Yonkers

BY JOHN GOLDEN jgolden@westfairinc.com

T

he Yonkers Industrial Development Agency has tentatively approved financial incentives for four development projects that would add nearly 600 units of housing and a commercial complex in the city at an estimated cost of $221 million.

On the Hudson On the downtown waterfront, Collins Enterprises plans to build a 22-story, 220-unit luxury apartment building on Alexander Street in the third phase of the Stamford, Conn. company’s Hudson Park mixed-use development. The $60 million project also would extend a public promenade to improve public access to the waterfront, said Yonkers Mayor Mike Spano, who chairs the city IDA board.

Following a public hearing, the IDA plans to approve sales and use tax exemptions on construction materials and equipment along with property and mortgage recording tax abatements for the Hudson Park developer.

Collins Enterprises in February announced a $147 million recapitalization deal that brought in Berkshire Property Advisors in Manhattan as majority partner at Hudson Park, the 560-unit luxury rental development beside the Yonkers City Pier.

Collins Enterprises, founded and led by brothers Dwight T. and Arthur Collins, remains the partnership’s managing member and operates the property.

The company hopes to start a 14- to 16-month construction period in early 2013.

Ginsburg returns Developer Martin Ginsburg, of Ginsburg Development Cos. in Valhalla, plans to move ahead with the River Club, a two-building complex of 330 market-rate rental units at 1105-1135 Warburton Ave. The $107.5 million project would be backed by the Yonkers IDA with sales and

use tax exemptions during construction, a mortgage recording tax exemption and a partial property tax exemption, according to the mayor’s office. River Club is expected to create an average of 120 construction jobs and 10 to 15 permanent jobs when completed.

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The $22.5 million project, a joint venture of the city’s private-sector partners, Maryland-based Landex Development L.L.C. and The Richman Group Affordable Housing, of Greenwich, Conn., is expected to create 40 construction jobs.

Following a public hearing, the IDA expects to approve sales and use tax and mortgage recording tax exemptions and negotiate property tax abatements.

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Boyce Thompson In northwest Yonkers, a long-vacant and deteriorating industrial landmark on North Broadway, the former Boyce Thompson Institute for Plant Research, could be largely preserved and redeveloped in a $21.4 million project proposed by Weinberg Brothers of Eastchester.

The city acquired the 6.6.-acre property in 1999 and has a sale agreement with BAT Weinberg L.L.C. The developer plans medical offices, banking and a restaurant on the site. Spano said the architecturally significant building, once the site of a plant research center, would be largely preserved under the plan.

The project would create an estimated 180 to 250 permanent jobs and 120 construction jobs. The IDA board is ready to grant sales and use tax exemptions for the renovations and negotiate a reduced property tax agreement.

“This project has been stalled for several years and we are pleased to work with the developers to restart it,” Spano said in a statement. “This once-attractive building has become an eyesore, so it is exciting that we will now see it contribute revenues and jobs to the city of Yonkers.”

Your #1 source for local business news

westfaironline.com FAIRFIELD COUNTY BUSINESS JOURNAL • HV BIZ • WESTCHESTER COUNTY BUSINESS JOURNAL • MAY 28, 2012

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Deals and deeds

Biotech firm buys Nokia building

BY JOHN GOLDEN jgolden@westfairinc.com

O

West:

k (on partercial rmer orate Their r the

IN THE HEART OF

South Norwalk’s Historic District

wners of a fast-growing international biotechnology company in Ossining paid $12 million to acquire the former Nokia Inc. building as their new headquarters on the Platinum Mile in Harrison.

The recent closing gives Histogenetics Inc. two adjacent vacant office buildings on Corporate Park Drive. The company in December paid $7 million for 104 Corporate Park Drive, the 118,000-square-foot former headquarters of Malcolm Pirnie Inc. But Histogenetics owners decided the building next door at 102 Corporate Park Drive, renovated by Nokia in 2006 at a reported $30 million cost, was better fitted for their office and laboratory needs.

Nokia, as part of a global consolidation, in early spring closed the regional office, which once employed about 300 workers, and removed the Nokia corporate sign. The Finnish communications company is expected to repay about $229,000 in incentives from the Westchester County Industrial Development Agency for failing to meet agreed-to job numbers there this year.

Both office buildings were marketed for their owners by brokers at CBRE Group Inc. Michael Rao and Frank Rao, partners at New York Commercial Realty Group in Harrison, represented Histogenetics.

Michael Rao said the deals began with his client’s search for 10,000 square feet of warehouse space. Founded 13 years ago

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ibility testing in blood stem cell transplants, Histogenetics in a decade grew to occupy the entire 30,000 square feet at 300 Executive Boulevard in Ossining. The company has opened branches in South Korea, India, Germany, Turkey and Atlanta, Ga. Visiting his client’s cramped Ossining facility, Rao suggested to a co-owner the company needed more than 10,000 feet of warehouse space for its operations. We’re considering looking for new headquarters, she replied. “That’s how it really jumpstarted,” said Rao, and led the broker and his client to successive deals on Corporate Park Drive.

Nokia in 2004 paid slightly more than $8 million to acquire the approximately 102,000-square-foot, class-A office building, before extensively renovating it. Rao said Nokia left for the new owner almost a “turnkey” furnished building.

“We’re very happy,” Rao said of the $12 million deal.”I had a strong buyer in a weak market…We had a good number and the building was brand new.”

Cereb told county IDA officials that Histogenetics will use some space for storage at long-vacant 104 Corporate Park Drive and will try to lease the remaining offices to other businesses.

Rao said Histogenetics plans to keep its Ossining building after the headquarters relocation.

Nokia was represented in the transaction by a brokerage team from CBRE Group Inc. and attorney Gerard V. Hannon, of Baker & McKenzie in New York. The buyer also was represented by attorney Kenneth J. Gould, of Marcus, Gould & Sussman L.L.P. in White Plains.

Real estate news in Fairfield and Westchester Counties XPO address now Greenwich

XPO Logistics Inc. made official the relocation of its headquarters to Greenwich.

The freight logistics company had been based in Buchanan, Mich.

XPO’s main offices are now at Five Greenwich Office Park. Former United Rentals Inc. CEO Bradley Jacobs bought a controlling stake in the company last year.

The company acts as a broker between businesses and cargo haulers, with 215 employees at last report. XPO lost $2.7 million as revenue increased 7 percent to $44.6 million.

On May 8, XPO spent $3.4 million to acquire Columbia, S.C.-based Continental Freight Services Inc. Other XPO units include Express-1 Inc., Concert Group Logistics Inc. and Bounce Logistics Inc.

Union promises Harbor Point action

The Connecticut Laborers’ District Council is launching what it says will be an ongoing organizing campaign at Stamford’s Harbor Point development under construction by Building and Land Technology.

The Hartford-based union launched demonstrations in mid-May at the corner of Washington Blvd. and Pacific St. in Stamford, also targeting Harbor Point contractor Baker Concrete, based in Ohio.

“Our protest action will continue on a weekly basis at the front entrance to the construction project until Carl and Paul Kuehner, heads of Building and Land Technology, start hiring Connecticut companies and Connecticut workers on this project,” said Charles LeConche, business manager for the Connecticut Laborers’ District Council, in a written statement.

The union released a supporting statement from U.S. Rep. Jim Himes pressing BLT to “change its contracting and hiring practices to support more people and businesses in Connecticut.”

Starwood Capital in big apt. deal

With a New York City investor, Starwood Capital Group Inc. acquired a 9,500-unit portfolio of Sunbelt dwellings as part of a Chapter 11 bankruptcy auction.

Greenwich-based Starwood Capital and Gaia Real Estate Holdings L.L.C. are investing $22.5 million to acquire and recapitalize Chicago-based PJ Finance Co. L.L.C., which filed for Chapter 11 bankruptcy protection more than a year ago.

Nearly two thirds of the units are in Dallas and Phoenix, with others in Texas, Florida, Georgia and Tennessee.

During the downturn, the PJ Finance portfolio struggled under a heavy debt load, siphoning off capital that could otherwise have been invested in renovations to draw tenants, according to Starwood and Gaia. The companies plan to spend more than $45 million over eight years in upgrades, hiring Seattle-based Pinnacle Co. to manage the portfolio.

Lifestyle Lift

Cosmetic surgery practice Lifestyle Lift is opening its first Connecticut office in Norwalk, taking 6,500 square feet of space in a building that itself is undergoing a facelift.

The Troy, Mich.-based company bills itself as the largest plastic surgery practice in the country with more than 40 centers.

Lifestyle Lift took a 6,500-square-foot space at 69 East Ave. in Norwalk, recently acquired by Fairfield-based Edgewood Capital Advisors which has been renovating the property while retaining Cushman & Wakefield to handle lease negotiations.

— Alexander Soule and John Golden

Architects merge firms

Architects Raymond Beeler and Michael Gallin have combined their practices and five-person staff to form Gallin Beeler Design Studio in Tarrytown.

Beeler, a former senior designer at Skidmore Owens & Merrill with 30 years’ experience in the industry, has been sole principal of Raymond Beeler Architect P.C. in Pelham since 1987.

One of his recent public projects was the renovation and restoration of the 1921 Pelham Michael Gallin Picture House. He is a past president of the Westchester and Hudson Valley chapter of the American Institute of Architects.

Gallin has designed both commercial and residenRaymond Beeler tial projects as sole principal of Gallin Design Studio P.L.L.C. He has worked on major redevelopment projects, including the commercial conversion of the 600,000-sqaure-foot former Grand Union distribution center in Mount Kisco.

Currently he is involved in the redevelopment of the 125,000-square-foot U.S. headquarters of Zwilling J.A. Henckels in Pleasantville.

FAIRFIELD COUNTY BUSINESS JOURNAL • HV BIZ • WESTCHESTER COUNTY BUSINESS JOURNAL • MAY 28, 2012

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