Fairfield and Westchester continue to improve - New Jersey; New York; real estate markets - Focus on: Suburban Markets

Fairfield and Westchester real estate markets are experiencing a continual improvement.

Just a couple of years ago, virtually everyone was extremely bearish on these two counties. But today, vacancy rates in Fairfield County are lower than they have been in years - and in Westchester County they're dropping further.

A number of factors have contributed to the solid, steady real estate recoveries underway. Fairfield's and Westchester's close proximity to New York continues to attract relocations into the two counties. Many European-based companies, responding to the growth of global enterprise, have elected to situate American headquarters in the suburban areas outside of - but close to - New York. Moreover, growth businesses which were the start-ups driven by the corporate downsizing of the late 1980's are expanding and requiring additional space.

But while absorption of Class A space is growing, current fair market rental rates are not at levels which justify new construction. From where, then, will the new Class A office space supply come? The answer is that more and more owners have turned to the renovation and upgrade of existing structures. Examples are two successful "turnaround" projects recently undertaken by investment groups led by Peter and Anthony Malkin, which are now managed by W&M Properties.

First, let's consider Darien Green, a two-building office park at 320-330 Boston Post Road in Darien, CT.

When added to W&M's portfolio in June of 1997, Darien Green's two buildings were totally vacant; today, they are 100 percent leased. We leased one entire building at Darien Green to Fine Host Corporation, one of the largest contract food service companies in the United States, for its new headquarters. The other building was leased in its entirety as the headquarters for Alcone Marketing Group, Inc., a subsidiary of world-wide advertising giant Omnicom Group.

As part of their aggressive marketing and leasing strategy to attract top-credit tenants, the new owners appreciated early on the importance of demonstrating their commitment to thoroughly upgrade this property, so that it would be competitive with even the newest Class A office buildings in the area. Thus, W&M Properties (through its affiliate, W&M Construction Corp.) is renovating the main lobby of the 330 Post Road building, installing new entrances and elevator cab finishes, upgrading the security, fire, and electrical systems and making alterations so that the state-of-the-art fitness facility at 320 Post Road will be available to the tenants of both buildings. (W&M Construction Corp. will also be performing all tenant installation work on behalf of Fine Host, as well as Alcone Marketing.)

A second example of our continuing turnaround strategy is another of our more recent acquisitions, 711 Westchester Avenue, along the I-287 corridor between the Hutchinson Parkway and downtown White Plains, known as the "Platinum Mile."

When we acquired the four-story office building in July 1996 from an insurance company, it too was 100 percent vacant. Previously a single-tenant building, 711 was on the roster of high vacancy rate Class B office inventory and off the radar screen of prospective tenants.

But we decided that, in this case, the single-tenant leasing strategy was a mistake. And as we near the completion of our almost $7 million upgrade - which includes lobby renovations, new fitness and conference facilities, new common areas and bathrooms, increased HVAC and electric capacity, new elevators and entrances, repaving the parking lot, and landscaping the borders - we have, in less than one year, signed leases accounting for more than 90 percent of the building.

Space requirements in Fairfield and Westchester Counties today can be satisfied for far less cost than new construction. As the management, marketing and acquisition arm of the Malkin family, W&M Properties is responding to a growing demand by successfully turning around distressed properties, and supplying the suburban market with premier Class A office space.

COPYRIGHT 1997 Hagedorn Publication
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