Help me with industry sign banking connecticut living will
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properties stonehenge partners the witkoff group urban american and these friends you so we have a place it's called Westchester in Connecticut it's a market where a lot of people live some people even have their offices there's a lot of retail but we haven't spoken about in the last couple years so today I've assembled a group of individuals to provide their insight on what's happening in this market I guess they include David fury of Marcus partners Mitch better off a better off properties Margie Maria of people's united bank mark element of celestial partners and last but not least the man who's helped me produce today's guest show Robert Wise of our pw group so mr. wise you know you've been in Westchester how many years in not living with operating business 25 25 years mark about the same hey you 40 right now our business started in 1922 so you your family and everybody has been there the longest and you our business 20 years me personally 16 okay so how do you see the market today as compared to the last five years in last 10 years let's let's bring it up to the office market because most of the people here are in the office market i will say that westchester is in transition now the transition is occurring from a very corporate environment to an environment that is is more catered to the residents that are in the area so we have a medical for example that is expanding dramatically and that's mostly because empty nesters instead of moving out of westchester i'm going to flowery that they're staying in westchester they're just moving from from Anna how from a house to an apartment and and I will guess that one of the substantial changes in Westchester is the fact that a lot of local companies are growing and not developing in the county you know you bring up an interesting point because I mean you bought the general foods headquarters and Allah I mean 30 years ago and I missed you you and your family seen it I mean we had all these major company's stock moving to Westchester and they took the entire property they moved the world changed you know they walked out of there I think one of the few companies of the large magnitude might be PepsiCo with with what they had Morgan Stanley and more Stanley IBM right yeah but but but in general a lot of the companies moved and there's been a consolidation and there's a repositioning and you had a reposition your properties over there what you know that some of the problems that we have in certain markets especially in Long Island is people have to sell their homes to down size their homes are there are enough new residential towers being built i know that i believe the angle berman group who's who's the Bristol assisted living in Long Island are coming out and building an assisted living facility in Westchester do there's an armlock one annoyed plans right so that the world is changing are people staying in Westchester okay the housing over there I mean because the people who work in the buildings there most of them living live in Westchester you know it's it's like New York City I will think of the residential market in Westchester must be the strongest market after New York City in the tri-state so you have frankly two different aspects of the Westchester economy the residential part is extremely strong the price of a house during the the goody years it was in the mid 700,000 average now is probably somewhere in the 600,000 and even in this environment you have towns that there is no inventory that there are more buyers than houses available at the same time westchester is suffering what entire country suffering a very very slow economy so we are we are getting that impact as well as everybody else we are finding that there are some industries that are expanding and such as biotechnology such as medical world in general and as we were mentioning before life fitness for example is building a brand new facility of 200,000 square feet on a 20 acre site you know he's a change you know but you bring up life fitness and you know we have a good situation because we have margin you know with people's united which is 28 30 billion dollar bank was a major player in the Westchester Connecticut marketplace how do you look at a life fitness which is it which is a total different type of business I mean health clubs and it's not it's not a health club it's it's a it's an environment it's like an it's an indoor Country Club you know which is perfect because west chester has so many countries another country it's another country club but we also mention as you know a number the clubs closed the Westchester over there how do you as a banker look at a life center over there and how do you see the market because you have to make good loans and that's what the bank has done over the years yeah I have to say that's not one of our favorite products but we will look at like a CNI lon we analyze the financials of the test oh you're looking at more as a business loan as opposed to looking at the real estate on that type of thing and how do you see the as you know look David's company just bought a building in Connecticut you know there's somebody you'd like to do business with how are you looking because of the 25-percent vacancy in certain markets that we're talking before about the Stanford market or so on how do you look at making loans to any of these people which are the best people that you could do business with anyway in general as a banker how do you look at the market there are steel buildings that are real position you know we want to make sure it's not to leverage we put a lot of reliance on the sponsor to make sure that the sponsor has right as opposed to what we were talking about before you know certain people in the boom years of 2006-2007 Wall Street money didn't care they said if there was an idea or a thought they would give the money exactly so that's the key and also the cache of the tenants we just have to make sure the leverage is it's not over leveraged you know we sometimes have reserves right now be looking to do a repositioning loan in Westchester because we like to sponsor and we feel it's going to get least and he's going to have a lot of equity in the building and we found them good news money as he says the building we keep giving him more money Mitch you know you and I know each other a long time but I remember you came to a taping it you weren't on the show this is the first time I've been able to get you to sit on the set and we were talking about white plains and what's happened over the White Plains New Rochelle what's happening in those markets today we don't have much of a presence in there a show we have some presence in White Plains I think the central business district is surviving adequately on from an office front there hasn't been any real new development other than there's a hotel under construction now on Main Street on the western part of the eastern part of Main Street we have a several industrial buildings in town and it's very very quiet it's hard to it's now very competitive for tenants it's a tenant's market we're doing more for tenants now than we've ever done in the past how do you see I mean you had the heavy the trump building you had a hotel over there you enormous amount Rita how do you see those segments of the market in the White Plains marketed I know that the the new office building that was part of the Ritz project has suffered I don't know if they've rented any of that I think it's changed hands they must have some tenants in it 360 Hamilton Avenue does great the trump building you know I know from familial experience that moving a unit in that building was very very difficult prices I don't think have held up since they first came on the market so it's it's a bit soft mark you've been investing in in the Westchester Marco fear for many years how do you see the market today as compared to when you were buying more buildings well right now the market is slow it's slow in Westchester and Fairfield as it's slow everywhere and I think that's a combination of the normal summer doldrums plus the uncertainty about the election and budgets and taxes and basically I think everyone anticipated this year would be pretty slow the good news is I have I know longer see downward rent pressure I don't see any rent growth but I don't see rent pressure the traffic is light but I think and and a big part of the game these days is tenant retention if there is no growth in demand for space the worst thing that you can have is have one of your competitors take your tenant because the downtime and the leasing commissions and the fit up each alive and all you're going to accomplish is then you'll go take your other competitors that you know margin was talking about the hartz mountain who friends and they've been on the show and when a number about a year and a half ago I did a show on New Jersey and it was going to be in New Jersey office market and main Eastern said to me let's not talk about because there's not an office market in New Jersey the key who makes money in the office market in New Jersey is the broker moving one tenant from one building to another building but guess otherwise there's nothing happening over there in New Jersey you're the man from the kid who does lots of business in Connecticut now they've been some big leases over there what's happening in Connecticut today academic it's an interesting market in that certainly if you're near a train which i think is like that probably nationwide but you're probably doing pretty well if you've got a building that is in very good shape and has the infrastructure you're probably doing very well we're very lucky in that art portfolio is filled with buildings that have have the infrastructure in the amenities where we've been able to have actually been very busy the market in general has continued to be slightly negative really since october of 2008 it has not gone positive yet it but it's not because companies aren't growing we certainly have I think we've grown three or four companies just the summer so there is growth out there but the what we've seen is to offset that growth the the major national companies international companies are cutting their square foot per person dramatically so for every five companies I'm growing I might be shrinking one is shrinking by more than those five are growing now what about you know the week before I did a show in the office market and York City what type of if you're a company and I and I do remember i Greenberg trout was on the show and I said to rob Ivanhoe couple years ago I said you moved the number of people from New York City to White Plains it was a big advantage there's a big cost savings in Westchester in Connecticut what type of what's this the difference in rent from Westchester Connecticut to New York City and what type of course do you have to expend on Tanith TI or something to bring a tenant to Westchester you know I think that that's a very important point you're bringing up is never in the 25 years and I'm in the industry frankly 25 years in Westchester over 30 in the industry the gap has been so dramatic the rents in Westchester County are less than one third done in New York City space that in New York will rent for eighty and ninety dollars the foot you can probably rent in Westchester for less than 30 we don't read about you don't have occupancy tax rate you don't have occupancy tax you don't have to pay for parking and you have all the amenities in the world that you probably wouldn't have in a building in New York City I think what's happening and I think this is characteristic of the country the the cities are attracting people they are they're kind of a magnet you see all major cities Chicago LA Atlanta New York they're attracting people and the suburbs are hurting and usually this is a cycle that we go through every so many years the city becomes the magnet the rents keep escalating and one point company starts saying well we should move out of the city we should look at other markets and that's what's happening Westchester County we're getting to the point now that the gap in rent is so dramatic that we see companies coming to look because the the the discrepancy not only rents the the cost of operating in the suburbs is much lower than operating in the city but here's a point and i agree with you one hundred percent how do you get young people to work in Westchester everybody you know the reason why we have a vacancy factor on the residential market of less than 2% in New York City in Manhattan is because all the young people want to be in manhattan they don't say I want to be living in New Rochelle or Shelton well you know there's no meat packing district you know how do you how do you retain and bring the the younger people to Westchester and Connecticut that they didn't know before our tenants that are there need to do that and we do have several to do it's one of the reasons why they're in our parks because we have so many amenities I know Robert you've done very well with that as well and but we just built a starbucks on the ground floor of one of our buildings because it was demanded by the tenant by one of the tenants that we've got a we're competing with google for employees I think there's another point to be made Michael it's not just the fact that younger people want to be in the city I moved into Manhattan when I graduated college I won't tell you how long ago that was New York City has never been as good as it is right now it's clean it's safe people you know the systems work at people are not afraid of getting hassled and so the people are more friendly as a result a lot of older people who used to move out or staying in the city these days and if the decision maker the president of the company lives in Manhattan the company is going to be in hatton but go ahead i'm sure i want to talk about Stanford a little bit because I think Stanford has done a fabulous job making itself turning itself to a 24-7 city I mean you should go to Stanford like twelve o clock at night I mean the streets are hopping the bars are open people are walking around they have this party every Thursday called live at five on the park and people are getting on the train and coming from New York City I'm not kidding and all over this Connecticut to attend this party white plains is accomplished so I think it's always a municipal requirement to address those the so-called cool factor yeah and white plains is making an attempt at that you know their parts of America avenue that are very hot socially close to the station but I got a ways to go downtown white plains it's a magnet right now for young people I agree that cannot compete with new york city new york city's in a completely different level but ten years ago downtown white plains it was completely empty at six o clock in the evening and now at ten and eleven o'clock all the bars or fail there are many high-end bars and high-end restaurants the city's the small cities that are part of the suburbs are realizing that they needed to do something and Stanford took the lead Stanford is certainly the one that has make the turn and others are following New Rochelle is trying to do the same thing so there is a process I think that that I always say that in
his industry the secret is to live long enough because you just have to be there when the cycles happen and the cycles you can avoid in the same they venue of the comment that you made about the office market the residential market the cost of living in New York City for a young person is so prohibitive I mean you're paying 60 hours 17 hours a square foot for rent over here you know you I mean you can westchester or Connecticut right i also moved to New York City straight out of college and it was prohibitive than to we had through add two roommates now now you'd be six roommates for the same type of Brent I don't know I'm these kids make an awful lot of money coming out of school now if they can get a job I have everything moved it's happening with zoning in the city to decrease the minimum size of apartments don't worry i wrote I wrote an article on bunk beds and somebody said to me you know did you read the article about the the 300 square foot apartment I said no I just wrote the bunkbed are the two bedroom that's right i would have been a move up for something oh so now what something that we discussed before in the green room was the fact that we have in Westchester you and even certain parts of Connecticut you have a large number of obsolescent buildings which are being or should be converted to residential what's happening about that there is a very very strong effort on the part of a number of the municipalities to rezone the infrastructure and white plains is doing it and Harrison is going at it I think that there is going to be quite a bit of that buildings that would be converted into residential however I also think that what we're going to find is that more and more people are going to reposition existing buildings that are obsolete but have good bones that need new systems and they would mention that he was doing that in Connecticut you buying a building and you just taken the infrastructure by you're turning into what is needed today in terms of power in terms of amenities in terms of efficiency and frankly that's that's near everywhere including including New York City now you know very interesting left racks were very successful they are taking an office building which is a good location in queens right near forest hills and they have they're converting this entire office building into residential because of the hot market over theirs that's one of the points Michael it's that's very interesting in terms of the the Westchester market while it hasn't been a huge growth in the numerator of the vacancy equation there has been a fairly significant shrinkage in the denominator a lot of buildings are coming off the competitive market which is hoping to hoping to reduce vacancy as well as ultimately increase rents and as Robert said there are a number of people Robert being the the poster boy who have bought older buildings which were no longer really competitive and put the money into them to bring them up to date and make them competitive so the quality of the inventory particularly in Westchester because the stock is older in Westchester is in Fairfield is improving make it more competitor the show we were talking about retail and I was a little surprised not sure who said this that Westchester and Connecticut is under retail I did I frankly you're talking about two counties that have the highest income per capita in the country together with Beverly Hills and right after New York City so when when retailers look at the demographics they love Westchester you have a tremendous concentration because in spite of the fact that that housing is comfortable in terms of the amount of land that they have this is a very very dense part of the world and the income that is there is just phenomenal so one thing that we have seen them frankly is another aspect of the the economy in westchester county is the private banking of many of the banks and margin i'm sure that you are doing your share as well in westchester the you've seen how those offices are growing and growing now we have very large offices of some of the major banks opening in westchester to cater to the people that live there that have very high incomes and those are the same people that are looking to shop that's why the westchester mall does so well and that weather is such an appetite for more retail the other thing about retail in Westchester is when you look at you know to supply constraint market there are only a limited number of development sites so if a retailer wants to be in Westchester because of the demographics and and the the trade area they have to bend from their national prototype to fit into something that would not wouldn't work somewhere else they'll take it to get into Westchester and that's a sign that it's not overeat hid under it is desirable Marja and how do you see the hospitality market alloys just the new hotels I mean New York City we've had 80 90 new hotels over the last couple years yeah that market seems to be pretty hot but me that's not one of our favorite products and we did one this year for a sponsor that we knew near an office building and how do you see the retail market I retail to Robert's point we see a lot of we have done several CVS Walgreens Bank larger banks branches building brand new branches so it's very active a lot of banks are expanding and pharmacy macchina you said your company's been around since nineteen twenty-two so here's the question do you see some new players like David's company in a marcus partners come in do you see any any new people who you know private equity firms or other companies who have not been in Westchester coming to Westchester now I mean owner I'm a bony developer ssin to ask that question but truthfully no I think that the the current establishment of owners like Robert and mark I don't see a lot of new there is some new blood has to be some new blood yeah it's not like there's a helper Stillman coming in or you know some big player that's going to make a move in the marketplace now here's a an interesting point then I'm and I'm going to write about this I noticed I was doing a little research on the web today i was looking at Matt Callie's website because I wanted the statistics on the rest Chester and I know that they have the statistics from question of Wakefield and I read a press release where it said that they had done a deal in jersey city with a residential developer to build something a residential tower SL green has done business with Jeff Sutton on retail so what we're seeing is certain REITs are now diversifying from there the core product to other products do you see that happening in the Westchester market in Connecticut do you think that there's a possibility of that yes and actually there's rumor that I can't say Who there is rumored that one of the big office reads is going to buy a huge residential development company which I think they'll hear about it soon I do believe that it could Westchester market right now you know in the last year we had you dr come to New York City for the residential market you've also had ampco and I think you're going to see the reeds we're there that in the same manner is that they're out of this market over here they have to they want to be close to New York they want the convenience and Westchester in Connecticut of the perfect places a half hour is not in a proprietary when we saw at the 12th season I won't be as negligent and I will have a show on western connecticut like the fact David Mitch marjan mark and Robert thank you
