Savanna Partners working on Hudson Valley Business Center

Real Estate Weekly, Dec 5, 2001

Two former IBM buildings in the mid-Hudson Valley are being revitalized and aggressively repositioned by Savanna Partners, a New York City-based real estate investment and development company. According to company principal Nicholas Bienstock, the project is reflective of the quality of the infrastructure of the buildings and the Hudson Valley region's clear appeal as an area that offers low operating costs and an extraordinary quality of life.

The two interconnected buildings have been dubbed the Hudson Valley Business Center (HVBC). The buildings total more than 500,000 SF, with one building measuring approximately 310,000 SF and the other measuring approximately 212,000 SF.

The HVBC is located off of Exit 19 on I-87 in Lake Katrine, NY minutes from Woodstock, NY and close to downtown Kingston, NY. The buildings are also adjacent to the Kingston-Rhinecliff Bridge, providing immediate access to Rhinebeck, NY and the rest of Dutchess County, NY.

"The HVBC offers an incredibly cost-effective real estate solution in an area that provides a high quality of life and an available, trained workforce," said Bienstock. "When you add in the fact that the buildings are just north of the New Jersey technology and pharmaceutical corridor and only 1 [1/2] hour from New York City, we felt that we had a very compelling opportunity."

The HVBC buildings were built to IBM's state-of-the-art specifications in the mid-1980s, and are being offered for lease at rental rates 60% less than property in Northern New Jersey and 80% less than property in New York City. In addition, the buildings are located in a New York State Empire Zone ("EZ"), which provides highly compelling tax incentives to businesses moving to the area. "As we move into an economic environment in which companies are looking to reduce costs, these buildings are able to deliver 'Class A' space to tenants at huge savings," Bienstock noted.

Savanna Partners recently hired senior vice president James Tully and Director Richard E. Charkham of national brokerage firm CB Richard Ellis to market the properties for office, data center, call center and R&D/light manufacturing use. CB Richard Ellis will be working in conjunction with Hudson Valley broker Thomas A. Collins of Commercial Associates.

"Given the extraordinary quality of the buildings, the availability of a low cost labor pool and the huge economic incentives available via the Empire Zone, the opportunity provided by the HVBC is not only vastly superior to what is available in Northern New Jersey, but can compete on cost with locations in states like Tennessee and Alabama," Tully said.

Until recently, the facility was named the Ulster County Technology Center (UCTC). The name change is reflective of the HVBC's positioning as the premier location in the mid-Hudson Valley for both technology and non-technology-based businesses. Savanna Partners has invested substantial dollars in repositioning the buildings, and has successfully leased over 60,000 SF of space to local companies, including nationally known interactive services firm Harte-Hanks Interactive (NYSE: HHS), United American Healthcare Corp. (NYSE: UAHC) and Ulster-BOCES. Another 45,000 SF of space are currently in negotiation.

The HVBC was part of a 4 million SF campus vacated by IBM in the early 1990s. Most recently, the mid-Hudson Valley area received nationwide attention when IBM announced plans to develop a multi-billion dollar chip plant in nearby Fishkill, New York. When completed, the chip plant will be the largest capital investment in IBM's history.

The New York State EZ incentives, which played a major role in IBM's decision to build the chip plant in Fishkill, NY, include: A five-year wage tax credit of up to $3,000 per-employee per-year; credit against business, personal income and corporate taxes for 14 years; sales tax exemption from New York State sales and use taxes for personal property and services for 10 years.