Heritage Realty to revamp office park
-August 15, 2013
By: Crystal Kang, Posted date: August 15, 2013, In: Featured, Real Estate, Westchester
While some suburban office parks have abandoned renovation projects and left giant rusting eyesores, Heritage Realty Services L.L.C. plans to revamp its three properties on Gannett Drive and market the site as Westchester Park Center.
The idea is to renovate the office buildings and redesign the space using more natural lighting and brighter colors to attract more tenants. Renovations are expected to cost nearly $13 million.
3 Gannett Drive
"We want to get away from the office environment of hierarchy and middle management and go to an open space area that's brighter and happier," said George Constantin, Heritage Realty Services CEO and president. "Some of the Gannett Office Park was old and it wasn't healthy the way it was."
Heritage Realty Services recently signed two new leases, bringing in one new company and retaining another, just as one of its major tenants Wilson Elser Moskowitz Edelman & Dicker L.L.P. moved out.
"The fact that Wilson Elser left ... is not the healthiest for us," Constantin said. "But it provided an opportunity to start from scratch. We want to eliminate what existed and establish real quality, genuine rental value and renaming the office park is part of it."
Arthur J. Gallagher & Co., one of the world's largest insurance brokerage and risk management services firms, recently extended its contract for eight years with Heritage Realty Services. The company plans to take advantage of the renovation projects that will start in September. Arthur J. Gallagher's incentives for staying on the third floor of 2 Gannett Drive include the proximity to the new café on the main floor and the new gym opening up at the end of the street.
"From a location standpoint and for the employees, it's beneficial to not uproot them," said Charles Brower, Arthur J. Gallagher's chief operational officer. "There's also a Life Time Fitness gym coming in, and they are talking about pavement improvements for the office parks."
The health club is being built on the site once occupied by the Gannett-owned newspaper The Journal News. The paper moved last year to offices at 1133 Westchester Ave.
Improvements and amenities aside, the real draw for Arthur J. Gallagher's decision to renew its lease with Heritage is the 17-year relationship it has built with Constantin. Heritage provided $200,000 to the company to cover the painting, carpeting and refurbishing expenses in its office, Brower said. In addition, the company's employees have more space per person, which is a bonus to stay with Heritage.
"We have close to 90 people here and 20,000 square feet of space, which normally if we moved away to another place they'd only give us 18,000 square feet because of real estate guidelines on the amount of space allotted per person," Brower said.
Heritage will spend $12.5 million on the office park renovations to redesign the lobbies, hallways and elevators inside 2, 3 and 4 Gannett Drive. Tenants can expect to see Italian frosted glass placed inside 2 and 4 Gannett Drive and wider and taller entrances at 3 Gannett Drive, Constantin said. The old pyramid awnings at each entrance will eventually come down.
"We're putting in new awnings and paths to the entrances," Constantin said. "The dark wood is going out and we're bringing in more natural lighting. All the elevators will be completely replaced from top to bottom along with the common hallways."
Wilson Elser, which occupied 80 percent of 3 Gannett, left four floors totaling 120,000 square feet of space unoccupied. Constantin said he has a potential tenant who saw the blueprints for the new office park.
"That tenant looked at our architectural renderings and liked what we're doing," Constantin said. "We don't want to make an announcement on who it is yet. We started working with them two to three months ago."
As the Westchester Park Center competes with larger commercial real estate properties for tenants, Constantin said his focus is on delivering a high-end global office environment.
"Those large office buildings are former headquarter properties and they're not conducive to having tenants under 10,000 to 15,000 square feet," Constantin said. "We want to create a multitenant environment so every floor in our building will have four to five tenants and add diversity. We don't have the mile-long hallway to get to offices like the bigger office parks."
Heritage Realty Services maintains 386,000 square feet of office space at Westchester Park Center, and the rental cost per square foot is in the mid-$20 range.
In addition, Heritage owns properties at 12 E. 52nd St., 420 Fifth Ave. and 67 Irving Place in Manhattan.
Tenants can lease their spaces for extended periods of time and anything above seven years is considered a long-term lease. On average, bigger companies have stayed for 10 to 15 years and smaller ones have stayed for three to five years. Constantin said Heritage Realty Services has retained most of its tenants, and some have shuffled around between 2 and 4 Gannett Drive, which are currently 90 percent occupied.
"At 2 Gannett Drive our tenants expanded at Clark Dodge and went from the fourth floor of 2 Gannett Drive and tripled its space on the second floor," Constantin said. "Accountants Inc. doubled their space, so it decided to relocate within our office from 2 Gannett to 4 Gannett."
Wilson Elser is the first tenant Heritage Realty Services lost before its lease ended, Constantin said.