Cappelli raises New Rochelle bet to $1 billion

Westchester County Business Journal, May 09, 2005 by Philippidis, Alex

Louis R. Cappelli is raising his stake in downtown New Rochelle to $1 billion, with the start of construction on one apartment tower and plans for a mixed-use megaproject on much of a city block.

As he did last year in White Plains, Cappelli will team up with Donald J. Trump to bring the first million-dollar condos to the "Queen City on the Sound." Trump will invest an undisclosed sum of money and allow the use of his, name on a $150 million, 32-story apartment-retail building to rise across from Cappelli-built New Roe City, on a parcel bordered by Interstate 95, North Avenue, Cedar and Huguenot streets.

Catty-corner to Trump Plaza, Cappelli is pursuing approvals to build a $600 million complex of two 32-story towers to include stores, apartments and either a hotel or 225,000 square feet of office space. The project would rise on an urban renewal block bordered by Anderson Plaza, Huguenot Street, LeCount Place and North Street.

New Rochelle officials advanced that effort on April 26, when the City Council approved an agreement designating the Valhalla developer its preferred builder for the site.

"New Rochelle is ready as the next great developable city. It's close to Manhattan It's underdeveloped. And it has tremendous, tremendous, tremendous untapped potential," Cappelli said.

The two-tower mixed-use project would rise on most of a city block bordered by Anderson Plaza, Huguenot Street, LeCount Place and North Street. The developer would need to acquire rive properties comprising the project site. If Cappelli fails to secure deals, the city has agreed to use its "eminent domain" power to condemn the parcels he wants, under a "memorandum of understanding" between the city and Cappelli.

The new project and Trump Plaza join an increasingly crowded field of condo developments in downtown New Rochelle where officials have sought upscale housing in hopes of reversing a generation of urban decay.

Mona Gora's 72-unit Davenport Lofts-on-Main opened last year, while Geoffrey Weir's BlueGill Realty L.L.C. is building the 90-unit 543 Main St. A New Rochelle developer, Joseph Simone, has won rights to build 435 condominium apartments, duplex townhouses and live-work lofts in a $175 million apartment complex he's planning for Church and Division streets near Main Street.

PRICIEST UNITS

Cappelli says he can stand out in that field by offering the priciest units to buyers, not to mention the cache of the 'Trump name. One target market for his projects is buyers priced out of Manhattan, where units sell for $1,000 and more per square foot. Cappelli says units at Trump Plaza will go for $500 per square foot, while the mixed-use project will see even higher prices.

Manhattan dwellers and young professionals are two of three buyer groups, the third is empty nesters, that have filled upscale condo projects in New Rochelle and elsewhere in Westchester in recent years, said Greg Rand, president of Prudential Rand Realty in White Plains.

"A large segment of the market is the New York City market, people from Brooklyn and Manhattan who think a short train ride to work is worth it in order to pay $400 per square foot versus $1,000 a square foot," Rand said.

A sister brokerage to Prudential Rand, Prudential Douglas Elliman in New York City, is marketing 543 Main St., where condo prices sell as high as $650,000.

Another market for New Rochelle condos, Cappelli says, are renters of apartments at Avalon on the Sound's 412-unit first phase on Huguenot Street, as well as potential renters of the 588-unit second phase now under construction by AvalonBay Communities Inc.

"We've heard about half the buyers at Davenport Lofts were people who moved to New Rochelle into our apartments first, so I guess we're a feeder," said Philip Wharton, senior development director with AvalonBay.

Wharton said AvalonBay has no plans to convert its rental units to condos, or hike rents dramatically at its buildings: "Cappelli's projects will have a positive impact on our leasing velocity and strength. But we don't want to enter his market. We want to stay affordable in ours.

Also starting construction in recent weeks is Trump Plaza, whose 181 condos will average 1,300 square feet, 200 square feet smaller than the CappelliTrump condo tower in White Plains. The project includes 141,500 square feet of retail space for which no leases have been signed, though talks with potential tenants are in progress, Cappelli said.

New Rochelle Mayor Timothy C. Idoni said Trump Plaza and the mixed-use project "represent major steps forward for the downtown."