What's really happening in the Rockland County market

Whenever someone asks me what I do for a living and I tell them I am a real estate broker, I receive a great amount of sympathy. "Oh, you must be having a hard time. The market is horrible!" I hear this time and time again. When I explain that the commercial market is great, people begin to stare at me in disbelief. Yes folks, I know. For the past two years all we seem to hear about, through every possible medium, is the sub-prime mortgage mess, foreclosures, companies closing or downsizing, people losing their jobs, and most recently about banks going under and the Fannie May and Freddie Mac crisis. How much worse can it get? Everyone is totally justified in thinking that the world is falling apart beneath our feet. However, it is not. Let me begin by talking about the area that has received more negative press than anywhere else in the county, North Rockland, an area plagued by poor road access and serious tax issues. (I won't even get into the reasons, I am sure you are sick of hearing it!) To sum it all up, in the past five years, taxes have tripled. Any reasonably intelligent human being would have to logically conclude that this would negatively affect commercial real estate in the area. However it has not. Remember Annie's Shack, a staple of the North Rockland community for over 30 years? That corner piece of real estate consisting of about two acres we recently sold for about $2 million an acre and developed into a location for long term tenants, CVS and Provident Bank. Did you ever hear of "The War of the Roses?" Well, in North Rockland they are having "The War of the Supermarkets." Shoprite with two locations, closed their West Haverstraw location. Stop & Shop took Shoprite's former site, while keeping Stop & Shop's old site in Stony Point vacant, to keep another supermarket from getting in. However, Shoprite has found a way into Stony Point by obtaining approvals for a previously zoned industrial site to be converted to retail on Kay Fries Dr. In another part of North Rockland immediate approvals are being sought to build an additional 15,000 s/f of warehouse space where a long-term lease has already been executed to bring a movable storage company into the area. An additional 89,500 s/f of warehouse to be built is already in the works! Great success story: Recently a 200,000 s/f industrial property was put on the market in Haverstraw. It was a sad situation with newspaper reports of 60 employees being laid off. Within one month's time, the property has received several competing bids and it won't be long before a contract is signed. What about the rest of Rockland County? Rockland has several major corporate parks, all of which have very few vacancies. There continues to be a huge amount of development by some of Rockland's most experienced, long-term property owners. What better indicator than this, of confidence in the market? Clarkstown Executive Park, a corporate park development located in Valley Cottage in which an expansion recently took place. Within a short period of time, two new buildings were 100% leased, and the owners are going for approvals to build more. Kohl Industries recently purchased the former interelectronics site located on Rte. 303 in Congress. Several acres of industrial property quickly turned into 255,000 s/f of industrial space. Tenants have been pulled into Rockland County from N.J., Westchester and upstate N.Y. Alan Litt, the company's president, says he cannot believe the amount of calls he is receiving on a daily basis from companies looking for space. Although the building is not finished, over 150,000 s/f, or 65% of the space already has signed leases. In fact, 100,000 s/f of space was already signed before the first shovel even touched the ground! According to Steven Porath, director of economic development of the Rockland Economic Development Corporation (REDC), he has seen an upswing of activity in the past six months. They get many inquiries about Rockland's newly formed Empire Zones and companies are comparing benefits to determine the smartest location for their business. Some transactions the REDC helped to procure are Vision Sciences, a manufacturer of endoscopes, in which the company expanded to larger quarters to accommodate an additional 100 employees, some of which would be relocating from another state. Schreiner MediPharm moved into 40,000 s/f at Bradley Corporate Park, with an option to take the balance of the building, and bringing about 80 manufacturing jobs to the area. It was not too long ago - maybe five years or so - that Hillburn Industrial Park was mostly vacant. Once the property was given Empire Zone status, the complex filled quickly and upon a recent inquiry I made, was informed that there was no remaining space in the complex. Spook Rock Industrial Park is one of Rockland's little miracles. It was 10 to 15 years ago that a man had the idea of buying this land and turning it into an industrial condo development. Units began at about $20 a s/f. These are now the most expensive units in the county - the last one selling at about $170 per s/f and renting for about $10 per s/f triple net. Investment properties are still in great demand. Real estate continues to be a great place to put your money when you understand the market and the property you are buying. Cap rates are usually a good indicator of the investment market. The cap rate is basically used to determine the value of a commercial property and fluctuates according to supply and demand. Low cap rates indicate large demand. About 15 years ago, in a buyer's market, cap rates were between 10% and 15% - indicating low demand. In the recent height of the market, before the "fall" cap rates were, unbelievably, at 5% to 6%. In the current market, the cap rate has come up only slightly. Depending on the property, I am seeing anywhere in the range of 7% to 9%. So, ladies and gentlemen, in this time when there is much to be concerned about, there is still much for which we can be grateful. The reality of it all is not as horrible as you have been led to believe. Maybe it's time to begin focusing on some of the great developments taking place out there, and by doing so, maybe we can start a new trend! LynnTeger is a commercial real estate broker and owner of Teger Commercial LLC, West Haverstraw, N.Y.