Developer Steel Equities wins tax breaks to turn former BOCES school into a warehouse in Bethpage

A developer has won 15 years of tax breaks from Nassau County to convert a former trade school in Bethpage to a warehouse or factory with up to 17 loading docks.

Steel Equities plans to make $7.4 million in improvements to the property at 610 Hicksville Rd., which was built in 1976 on top of a runway used by the then-Grumman Aerospace.

The 50,000-square-foot building was constructed for the Board of Cooperative Educational Services, or BOCES, for classes in flight training and aircraft maintenance. At one point, attendance peaked at 500 students, according to an engineering report from 1996.

Since 1999, the building has been owned by Steel Equities and rented to the Long Island Rail Road for an engineering office, workshops and storage. About 170 railroad employees are based there, David Steckel, a spokesperson for the Metropolitan Transportation Authority, the LIRR’s parent, told Newsday last month.

The LIRR plans to move to 225 Central Ave. South, also in Bethpage, which it purchased for $20 million in 2020, Newsday has previously reported.

So, the Hicksville Road property is available for new use, said Daniel P. Deegan, a real estate attorney for the developer, Bethpage-based Steel Equities.

"The MTA is moving out, leaving a building that is dilapidated and outmoded, that needs a lot of work to make it even suitable to show to tenants," Deegan told a meeting of the county’s Industrial Development Agency last week.

Renovated former Grumman buildings

The developer plans to upgrade the electrical, plumbing and ventilation systems as well as build new interior walls and add loading docks over the next year, said Deegan, adding that Steel Equities had rehabilitated Grumman buildings nearby with IDA tax breaks.

The agency’s board voted unanimously to grant an incentive package consisting of a sales-tax exemption of up to $334,675 on the purchase of construction materials, equipment and furnishings; up to $45,000 off the mortgage-recording tax, and property-tax savings over 15 years.

The latter will still result in $3.3 million going to the public school district and local governments, which haven’t received tax payments for 25 years because the LIRR is tax-exempt, said Sheldon L. Shrenkel, the IDA’s CEO and executive director.

"The developer has a good reputation and an interest in making this project work, to create jobs in the county," he said in an interview.

Demand for warehouse and industrial space on Long Island has increased this year, according to the real estate brokerage firm Cushman & Wakefield.

The vacancy rate for warehouses and factories was 5.2% in the July-September period, which represented the second consecutive quarterly decline after steady increases since early 2022, Cushman & Wakefield reported.

Paul O’Brien, the IDA’s transaction attorney, said he was told by Steel Equities the former Grumman buildings that the developer has renovated are 95% occupied.

"So, the demand for the space is there," O’Brien said during the IDA meeting. 

Private equity firm buys Kravet

The 80,000-square-foot building on Central Avenue South that the LIRR will occupy was once the headquarters of Kravet Inc., a designer and wholesaler of fabrics, furniture, wallpaper and other home furnishings.

When the LIRR decided to buy the property, the IDA awarded Kravet 17 years of tax breaks for a new, $16 million office in Woodbury.

State records show Kravet has saved $126,000 in sales taxes on materials, equipment and furnishings for the new office, $79,500 off the mortgage-recording tax and more than $129,000 off property taxes. The company has about 190 employees locally.

A year ago, a Westchester County private equity firm, Dunes Point Capital, purchased a controlling interest in Kravet from the company’s founding family for an undisclosed amount, according to IDA records and a Dunes Point announcement.

By James T. Madore

james.madore@newsday.comJamesTMadore

James T. Madore writes about Long Island business news including the economy, development, and the relationship between government and business. He previously served as Albany bureau chief.