When a lender first called me about a mostly vacant 41,000 SF REObuilding in Rockville Centre, I thought the sale would be pretty straight forward. At an asking price of $1,500,000, it seemed like a bargain at around $35/SF. The property is ideally located near the LIRR in a town which has one of the top 50 public schools in the nation, according to Newsweek.
The challenge, I soon found out, was the lack of parking and the real estate taxes. It drastically impacted the interest. Most buyers said they would never have enough parking to convert the property to a higher and better use. Those who could overlook the lack of parking were deterred by the $133,000 annual real estate taxes which included $100,000 for School Tax, $13,000 for General Tax, and $20,000 for the Village Tax.
While onsite parking is a luxury in New York City, it is oftentimes a requirement in the suburbs. In Rockville Centre, Long Island, the town requires 5 spaces for every 1,000 SF of office or retail and one space for every 600 SF for light industrial use. Based on this, the property would require around 200 parking spaces if converted. It only had 6.
Fortunately, there is a municipal lot across the street; however, we quickly learned the spaces did not automatically qualify as a parking alternative for this property. We discovered that in the early 1990s, an owner had tried to get a variance by stating that he wouldover one hundred municipal spaces on a monthly basis. The owner never saw this through, but at least it showed a potential strategy.
Ultimately, the property at 66-70 Randall Avenue on the southeast corner of North Center Avenue, sold in an all cash transaction valued at $1,060,000 to an end user who will continue to use it for light manufacturing. This use will help alleviate the parking requirements.
The two-story property is approximately 41,230 square feet and sits on a 200' x 100' lot. The first floor is configured for either industrial or warehouse use and benefits from 12' ceilings. The second floor has eight foot ceilings and a separate entrance from Randall Avenue. It is partially occupied on a month-to-month bases by a manufacturing tenant. The sale price equates to approximately $26/SF.
Even with the high real estate taxes, this will still turn out to be an attractive alternative to leasing in the long term, giving them a permanent home.