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Steel Equities to spend $50M to buy, renovate Forest Labs building

Commercial developer Steel Equities plans to spend $50

Commercial developer Steel Equities plans to spend $50 million to purchase and renovate Forest Laboratories Inc.'s former packaging facility in Commack, according to Suffolk County documents. Photo Credit: Newsday / Thomas A. Ferrara

Commercial developer Steel Equities plans to spend $50 million to purchase and renovate Forest Laboratories Inc.'s former packaging facility in Commack, according to Suffolk County documents.

The Bethpage-based developer submitted an application to the county's Industrial Development Agency in November seeking tax breaks for the planned multitenant conversion of the largely industrial building. Steel expects to close its $25 million purchase of the 420,000-square-foot building this month, and plans to spend an additional $25 million to renovate and convert the facility at 500 Commack Rd. to office space.

Sitting on 33.8 acres, the building was placed on the market in May for $45 million, according to an advertisement from brokerage CBRE.

Steel is asking the county for a sales tax exemption on construction materials and equipment; a performance-based payment in lieu of taxes agreement for 20 years; and a mortgage recording tax exemption, according to a letter from Steel's attorney to the IDA.

According to Steel's IDA application obtained by Newsday under the State's Freedom of Information Law, the developer estimates the building could house 400 to 500 employees from various tenants. Steel expects that fully leasing the building will take 18 to 24 months.

The developer has spoken to several potential tenants about the facility, including mindShift Technologies Inc., a Massachusetts-based IT outsourcing and cloud services provider with an operation in Commack, according to the attorney's letter. Pending project approval, mindShift would occupy approximately 40,000 square feet and is expected to spend an additional $15 million to renovate its space.

Manhattan-based drugmaker Forest Laboratories began a $40 million improvement project in 2011 to convert the packaging facility into space for research and development and administrative activities. The company was bought by Actavis PLC of Dublin in July for $25 billion.

In September, Forest announced it would close six of its seven facilities in Suffolk County, affecting 475 jobs, and would consolidate some functions in New Jersey. Forest is expected to sign a two-year lease to keep its brand sales training operation at the facility if IDA assistance is granted, according to Steel's letter to the IDA.

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