economicefforts result in increased activity by relocating, expanding firms
Athough Rockland County has a relatively small commercial and industrial market, totaling 16.2 million sq. ft., its location on the Hudson River just west of Westchester County, N.Y., and north of the New Jersey border, where some of the most prime office and distribution space is available, makes Rockland a choice of companies in other counties looking for less expensive expansion opportunities.
That factor of lower rental rates has caused Rockland to see its industrial vacancy rate drop from 17.5% in June 1993 to 12.5% in December 1994, according to statistics kept by Jim Tully of CB Commercial in Hackensack, N.J.
"The market has definitely tightened up, there's no question, and prices have stabilized," he adds. "The terms and conditions for landlords and owners are more favorable than they have been in the past."
Marc Krieger, president of Krieger & Co. Real Estate Services Inc., New City, agrees with Tully. "Rents are indeed firming up and there are less concessions on the part of landlords." In fact, he adds, the past six months have been absolutely "frantic," with not much product being available due to the smallness of the commercial market.
Adds Richard Struck, director of area development for Orange and Rockland Utilities, "We have been experiencing a number of serious inquiries. It started happening in the fall of 1994 and it continues in 1995."
He defined "serious" as companies out looking in the market that are speaking more realistically about rental prices, "not bottom fishing as we have seen in the past several years." He adds that the type of user is more likely to be a light industrial company looking for 30,000 to 50,000 sq. ft. Office use is still in the smaller space category of under 5,000 sq. ft.
Companies who are interested in space in Rockland are coming from nearby New Jersey, Westchester County and New York City. "Our immediate neighbors seem to be giving us the most business and I see this activity level going right into the whole year," he adds.
Jack Holt, chairman of the board of the Rockland Economic Development Corp. (REDC) and president of the Pearl River, N.Y.-basedfirm Fred L. Holt, is equally buoyant. The success has to do with "the REDC's headquarters at One Blue Hill Plaza in Pearl River that offers a one-stop shopping center for a wide range of assistance that firms may need when considering a move to Rockland or looking to augment current county activity."
He says that supporting the creation and attraction of new businesses, as well as retention and expansion of existing operations, promotes jobs and provides new ratables to hold down the residential property tax bite.
He notes that Rockland move-ins and expansions by companies with prior operations in the county topped 1 million sq. ft. in 1994 with purchase prices, rentals and construction totaling nearly $47 million. This activity also accounted for 2,300 new jobs.
Adds Holly Freedman, the REDC's executive director: "We have grown because we are proactive and our location is wellsuited for the businesses who choose to relocate here. We are constantly listening to what businesses have to say."
She says that Rockland offers the best of everything - location that is clearly close to Manhattan and to major Northeast routes of transportation, along with a skilled labor force and affordable housing.
In November and December of 1994, the REDC registered 22 company visits to Rockland County, equally divided among manufacturing and service sector businesses. The number of businesses that would hire up to nine employees was eight, followed by 10 to 49 employees at seven, 50 to 99 employees at one, and over 100 employees at seven.
During the third quarter, 16 companies came to visit Rockland and nine companies made a return trip to the county.
Dress Barn chooses Rockland
Rockland was the choice last year for Dress Barn, the Stamford, Conn.-based retailer, that decided Montibello would be its new headquarters and distribution site. When the company's 5 1 0,000 sq. ft. building was completed this year, Rockland County's executive, C. Scott Vanderhoef, told Dress Barn: "We are absolutely thrilled to welcome a company such as yours to our neighborhood. After all, we are the smallest county in New York state, outside of the boroughs of New York City, and so your presence means a lot to us. You came here for the space, the workforce and the environment. We are grateful that all of these needs came together in Rockland."
Rockland County is only 176 sq. mi. with about 260,000 residents. Its unemployment rate stands at under 4%.
To further enhance Dress Barn's decision, die state of New York's Urban Development Corp. kicked in $3.5 million for a low-interest loan to help finance the move. The distribution center will handle an average of 105,000 units a day, creating a more efficient flow of goods to the company's 688 stores nationwide.
According to Elliot Jaffe, chairman of Dress Barn, the company should break through $.5 billion in sales in 1995 and have a payroll of around $75 million. The Rockland Economic Development Corp. (REDC) coordinated the Dress Barn move, including local site selection, financing and incentives. In addition, the REDC has established a Government Procurement Committee to look at ways the REDC's Procurement and Technical Assistance Center can best provide assistance to small business in understanding the federal procurement process and help those interested in or currently selling to the federal government. The goat is to promote Rockland's competitiveness nationally and internationally and to create jobs, says Harvey Weingard, a former chairman of the REDC Board of Directors.
The center has been in existence for eight years and, in 1993, it assisted 109 Rockland firms. Of those firms, 10 received $3,787,272 in procurement money from the federal government.
The Dress Barn move and the direction of the REDC has spurred much activity in the county, resulting in increased rentals of both office and industrial space. "The REDC has been making a concerted effort to attract quality tenants and users into this county," says Tully at CB Commercial.
Office market tightening
According to Frank Tomasulo, senior vice president of CB Commercial in Stamford, Conn., the Class-A office vacancy rate in early 1995 is 18%. One year ago, the rate stood at 20%.
The largest lease in the office market so far in 1995 seems to be a 40,000 sq. ft., about to be inked for Blue Hill Plaza, a 1.2 million sq. ft. site in Pearl River. Although Tomasulo was involved in the lease, he could not name the parties that were signing.
Holt of the REDC says that Blue Hill Plaza has indeed been a success story. Expansion and move-in activity recently in the pipeline has allowed the building to reach the 90%-occupied rank. Completion of an on-site back-up power plant at year's end is designed to attract new tenants in need of disaster recovery sites.
Other than that large lease, office space use has ranged in small deals under 5,000 sq. ft. However, Tully managed to sign the largest lease in 1994 to Providence Savings Bank for 36,250 sq. ft. at the Office Center at Montibello in Montibello. The owner of the 180,000 sq. ft. building is Cross Ramapo Holding Co. With that lease, the site became 6% vacant.
In addition, the State Farm Insurance Co. has announced plans to build a 14,122 sq. ft. office building on Route 59 in Airmont. The building that will be located on almost three acres will house administrative offices and a claims processing center, according to David Emory, who is the division manager of State Farm Insurance in Rockland.
State Farm currently employs 29 people at its Rockland claims center, and Emory said that the company's penetration in the state is now at 12.5%. He anticipated further growth in the future, enough to build the new facility.
Krieger represents 17 and 20 Squadron Ave. in New City. At 17 Squadron, he has only 600 sq. ft. vacant of the 60,000 sq. ft. total in the building. "We have had tremendous growth of deals in that building during the past 18 months." Rents there range in the $18 gross category and include utilities.
At 20 Squadron, there is only 3,900 sq. ft. available at the 40,000 sq. ft. building. However, that includes a lease out on 4,200 sq. ft. that Krieger believes will come about in the next month.
Industrial market sees activity
The industrial market is only 14.1 million sq. ft. but it has provided the greater share of activity in the commercial leasing market.
Tully and Tomasulo were recently involved in Bionair taking 75,000 sq. ft. at 616 Route 303 in Blauvelt. Bionair took the site as its U.S. corporate headquarters and plans to move its Allendale, N.J., office to that site, employing 100 people.
"Bionair had been looking in the area for about 18 months and they had searched for sites in southern New York and New Jersey, but they liked the Blauvelt building," adds Tomasulo. The building, located on a four-way interchange with excellent transportation routes, was the former headquarters for General Bearing Co. It has full air-conditioning, and is a combined warehouse/distribution site with office space on 10 landscaped acres.
Tomasulo sees a tightening in the market, so much that some land owners who previously had not wanted to put their parcels up for sale, are now deciding to do so. We are beginning to represent some land sites on Route 303, an area where there is great opportunity for development, he adds.
According to Tully, there have been three significant sales in the industrial market. Grossman Steel and Aluminum Corp. sold a 54,000 sq. ft. building in Tappan located on 11.5 acres to Joseph Miele Inc. The building, which was sold for just under $2 million, offered great rail access to Joseph Miele for its high-quality paper recycling business.
In addition, Bradco Supply Company of New Jersey bought the former Ford Products Corp. building in Valley Cottage for just under $2.5 million. The 170,000 sq. ft. building, where Bradco previously had some space, will now allow the company to lease up to 70,000 sq. ft. and rent the rest of the building.
In West Nyack, at 50 Snake Hill Road, there was a 46,800 sq. ft. site on 1 1 acres that was two different buildings, the smallest being 16,000 sq. ft. It was sold to a group of private investors for $2.3 million by Fisher Skylights Inc. The investors leased the larger building to Safety Clean Corp., a solvents company. The other building is being bought by Joseph Miele Inc. for another site.
The largest leases in the industrial category have been at the Ramapo Land Co.'s Ramapo site that is 200,000 sq. ft. Tenants who took sites at the 100%-leased facility included Tully's customer Refrigerant Reclamation Co., a three-year-old Rockland-based firm. The company took 22,000 sq. ft. In addition Dibella Inc., a recycler, took 65,000 sq. ft. at the site.
Another large lease was 20,000 sq. ft. taken by Scholastic Book Fair Inc. at 709 Corporate Drive in Valley Cottage, N.Y. And Oak Beverages took 35,000 sq. ft. in Blauvelt at 1 Flower Lane. In addition, American Dynamics took 28,000 sq. ft. on Western Highway at the Bradley Corporate Park.
Industrial space is running from $3.50 to $5.50 a sq. ft.
"The deals are happening because there is a lot of quality space available in the county, Class--A industrial sites at rates that are less expensive than Westchester County, with the availability for high bay/distribution facilities with efficient column space and loading," says Tully. This kind of space is attractive to Westchester County tenants where properties in that county tend to be somewhat older with less modem facilities.
At Rusten Corporate Park in Chestnut Ridge, there is only 3,400 sq. ft. left at the 156,000 sq. ft. facility, according to Krieger. The last large lease was for Mehron, he says, which was a 12,000 sq. ft. deal for light manufacturing and warehouse space. "The flex market is really hot, and I believe there is only 10% vacant of such space in the county," he adds.
Overall, Krieger says the Rockland and Bergen, N.J., industrial markets remain active. "I think we are seeing both internal growth of companies, along with firms who are relocating here for beginning satellite operations."
Another industrial transaction included Hudson Technologies, a refrigerant reclamation company that purchased and renovated a facility in Hillbum. The four-year-old company was in Gamerville and increased its space from 5,000 to 21,000 sq. ft. and its staff from 22 to 29 people.
Tully foresees growth for the Rockland County market in 1995. At present, there are a number of large space-users out looking in the market. He sees the 1-287 completion as a reason for such interest in Rockland. The 1-287 highway allows for trucks to bypass congestive areas of New Jersey en route to southern trucking corridors.
"That highway now puts us in the enviable position of having distribution facilities that are on strategic transportation routes to New Jersey and Pennsylvania, as well as the north," Tully says.
Adds Freedman of the REDC, "The I-287 completion really has created an enormous amount of interest for the western part of the county, now that trucks and cargo do not have to pass through Manhattan."
Retail shows signs of life
Even the retail market shows signs of life. The Pyramid Cos. is indicating that plans are under way to build its new shopping mall, the Palisades Center, which will be 975,000 sq. ft. upon completion. The mall will create 2, 1 00 new jobs.
And the Nanuet Mall recently celebrated the opening of 21 additional stores to its expansion from 675,000 sq. ft. to 1 million sq. ft. The estimated infusion of $50 million to the mall in Nanuet allowed for it to add an A&S (now called Stems) as an anchor tenant, along with such specialty retailers as Banana Republic, Crabtree and Evelyn and the new restaurant Ruby Tuesday. The mall also added a two-story parking lot.
The mall had an especially active holiday season, according to general manager Deborah Lucas. "We heard positivefrom A&S along with Warner Brothers, World Foot Locker, Franklin Mint and Ann Taylor. Overall, it was an excellent holiday season."
The mall also added a 1,500 sq. ft. conference room available to Rockland County community organizations for public meetings, board and membership meetings, public exhibitions and other functions. The room can accommodate up to 100 people.
In the near future, Tully sees build-to-suit possibilities mounting as the space in the currently constructed markets gets eaten up by large firms. He cautions that developers look at the cost of land relative to what tenants will pay for the space.
Krieger agrees. Although he says there are currently two freestanding buildings available with a lot of footage, one at 100,000 sq. ft. and one at 65,000 sq. ft., there is no indication that such structures will be subdivided. So he believes that build-to-suit activity will be taking place soon. "It will only happen, however, if the companies are financially creditworthy tenants. And towns need to be flexible to allow for building."
But the best sign of future activity could be Daikin Inc. exercising its option to build a 50,000 sq. ft. facility in Orangeburg. According to Tully, "they are very impressed with our central location and that's causing even more companies to look Rockland's way."