Rush order placed on Long Island building projects in aftermath of 9/

Long Island Business News, Sep 21, 2001 by Nick Anastasi

Long Island developers are accelerating construction and build out of local projects in anticipation of a forced migration of Manhattan firms displaced by the World Trade Center disaster.

While vacancy rates for Long Island office space hover at 11 percent, class A vacancies total only 7 percent and there are few blocks of large contiguous space available. As a result, developers who had slowed development to keep pace with the faltering economy are ratcheting up their operations and some are considering new speculative construction.

Bob Coughlan, a principal with Tritec Real Estate Co., said his firm would speed the completion of its 208,000-square-foot project on Motor Parkway in Hauppauge. Phase one of the project, due for a late December opening, is now expected to be ready for tenants in mid- November, he said.

"And the second phase could be ready for occupation in six months," Coughlan said of the project's twin second building.

Coughlan said he believes many people who work in Manhattan's financial district and other parts of the city no longer feel comfortable there, and he predicts firms will seek to disperse operations in the future. Coughlan sees the first waves relocating to Westchester County and southern Connecticut, followed by Long Island.

Mitchell Rechler, co-president of Melville-based Reckson Associates, said his firm could build out the space at 58 South Service Road in Melville, a 177,000-square-foot class A office facility, in as little as four weeks if necessary. The firm has no plans to build out on a spec basis. He noted that though his office has been receiving a "fair amount" of calls regarding space availability, Reckson has no immediate plans to break ground on the project's second 177,000-square-foot building.

To date, the facility that has received the most interest has been i.park, the 1.1 million-square-foot compound nestled on the Nassau- Queens border in Lake Success. Its owners are racing to complete 500,000 square feet of space at the site to accommodate demand, although no new tenants have been signed. New York's Metropolitan Transportation Authority, the Port Authority of New York and New Jersey and American Express have all expressed interest in the former Lockheed Martin building.

On the new construction front, the Woodbury-based Tilles Group said it would consider new office development at the former pumpkin farm it owns in Melville, should lease rates make the project affordable. The site had originally been targeted for more than 500,000 square feet of office development. Tilles has more recently eyed a luxury residential project there.

About 20 percent of the downtown Manhattan office market, a total of 15.5 million square feet of space, was destroyed in the attack on the World Trade Center. An additional 12 million square feet of office space was damaged in the aftermath of the attack, according to Grubb & Ellis of Manhattan. About 25.5 million square feet is available in Manhattan now, Grubb & Ellis said. But only a small percentage of that space is in large open blocks like those found in the World Trade Center and surrounding buildings.

An additional 22 million square feet of vacant space is immediately available outside Manhattan in northern New Jersey, Nassau, Westchester and Fairfield counties.

Prior to the terrorist attacks, New York City was the tightest office market in the country with a 7.4 percent vacancy rate, despite still having 33.1 million square feet available, according to the Bethesda, Md.-based real estate information firm CoStar Group.

It estimates that the events of the past week will displace 650 tenants, with nearly 500 being small to mid-sized firms with less than 125 employees and occupying less than 25,000 square feet of space.