Tappan Zee Bridge stirs talk of real estate deals
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Lower Hudson Valley commercial real estate brokers are gearing up for an anticipated boom in new leases and sales on properties near the Tappan Zee Bridge, with early signs that good times might be ahead.
"Business is picking up. What you're going to experience is a mini-boom town, a gold rush town," said Paul Adler, vice president for Rand Commercial Services.
Since Rand launched a bridge-specific website Oct. 4 -- Adler is also chairman of the company's Tappan Zee Bridge Task Force -- the company has posted information on more than 100 available warehouses, industrial spaces and other commercial properties suitable for engineering companies, contractors and service providers who will be working on the new $5.9 billion bridge.
Only about 30 of the listings on tappanzeebridge.randcommercial.com are properties Rand is handling, with the rest in the hands of rival companies. Adler said the company feels customers will appreciate the concentration of all available data in one place.
He said early interest in commercial space is concentrated on the western side of the Hudson River, in Rockland County.
"Rockland is a lower-priced market and might offer more opportunities," Adler said.
In the end, he predicted, Westchester County might emerge as the stronger office market because the county is closer to both New York City and the State Thruway offices in Tarrytown. But warehouse space is more plentiful in Rockland than in Westchester, Adler said, and is now leasing in Rockland for $6 to $8 per square foot annually.
Prime office space in Rockland now runs about $18 per square foot annually, but Westchester rates for office space can approach the mid- to high $20 range, according to brokers.
Prospective clients are shopping based on specific transportation needs, especially within the prime 5-mile ring around the bridge, Adler said. With Gov. Andrew Cuomo vowing to minimize the impact of traffic on residential neighborhoods by using barges to deliver building materials, Rockland County is in a better position to meet the needs of many contractors, he said.
He pointed out that the Westchester shoreline is zippered up by Metro-North train tracks.
Adler said that highway access will offer important advantages to construction-oriented companies as well.
"Anything on a Thruway interchange is ground zero," he said.
GOING, GOING, GONE
In Nanuet, Rockland Realty president Steve Yassky agreed that interest in commercial real estate near the bridge has been picking up. Inquiries regarding the six-building, 150,000-square-foot Airport Executive Park that his company manages have picked up, Yassky said. The 20 percent vacancy rate of 2010 gradually dropped to 10-15 percent by 2011. With an existing engineering tenant expanding and new warehouse and high-tech tenants moving in, there are now only 3,000 square feet left in this industrial park, located about 10 miles from the bridge, according to Yassky.
"A 3 percent vacancy rate is pretty much unheard of," he said.
On the Westchester County side, two contracting companies that figure as partners in consortiums bidding for the main bridge contract opened offices last summer. Granite Construction is now a tenant in a 25,000-square-foot facility at 120 White Plains Rd., in Tarrytown, where space is going in the mid- to high $20 range, said Jones Lang LaSalle managing partner Chris O'Callaghan. Granite is a partner in the Tappan Zee Constructors consortium led by Texas-based Fluor Corp.
Jones Lang Lasalle has also worked with Tutor Perini, which has purchased a $5 million, 30,000-square-foot office building in New Rochelle. Tutor Perini is partnering with Bechtel Infrastructure Corp. in a second consortium called Tappan Zee Bridge Partners.
The third consortium is the Kiewit-Skanka-Weeks Joint Venture.
The state is expected to chose one of the three as the winner of the $5.9 billion contract by year's end.
Meanwhile, there remains an "abundance" of office space of varying quality right next to the bridge in Tarrytown and Sleepy Hollow, but very little action there at the moment, said Frank Rao, executive vice president for the New York Commercial Realty Group in Harrison.
Rao said business is still on the uptick. He said he recently sold a 70,000-square-foot Elmsford warehouse situated five miles from the bridge. Rao said he expects property values in the area to appreciate because "any properties around the bridge in Elmsford and Ardsley will benefit from a newly designed bridge with an easier traffic flow."
Brian Conybeare, a spokesman for Cuomo's bridge outreach team, said increasing interest in real estate around the bridge should come as no surprise.
"The winning design-build team will require both commercial office space and industrial staging sites here in the Hudson Valley to make the project a success," Coneybeare told Newsday in an emailed statement. "That is just one of the many positive impacts the Tappan Zee Bridge replacement will have on the local economy in Rockland, Westchester and the entire region."