Where Business Gets Down to Business
February 10, 2006
Top 10 Deals of 2005
by Dawn Wotapka Hardesty
An historic lease. The sale of the regionÕs premier office building. The takeover of pristine land to make way for a regional tech hub. These are a few of the stories that grabbed our attention in 2005.
For our annual Top 10 Real Estate deals, we not only took into account transaction sizes, but also the stories behind them.
What it comes down to is, size matters, but we were also impressed by the obstacles overcome in some of these deals and the visions laid out by the dealmakers.
1. North Shore-LIJÕs mammoth iPark lease
It was the kind of headline-grabbing deal that brokers dream of, ensuring wads of notoriety and a commission check that could easily put a kid or two through Stony Brook.
In what was likely Long IslandÕs biggest commercial lease ever, the North Shore-Long Island Jewish Health System leased 454,000 square feet, about a third of the sprawling i.park campus in Lake Success.
For 25 years, North Shore-LIJ will pay a reported $300 million in rent as it creates a headquarters for outpatient services Ð freeing its existing hospital space for inpatient beds.
ÒThe deal was a long time in the making,Ó recalled David Leviton, of Cushman & Wakefield who worked on the lease, but wouldnÕt discuss terms. ÒIt was very complex and a lot of people worked a lot hours putting it together.Ó
Brian Waterman, the Newmark Knight Frank executive vice president and principal who worked with Scott Panzer to represent the hospital system, said the lease gives North Shore-LIJ flexibility and control over its real estate space and strategy.
ÒItÕs more than just a real estate deal,Ó he said.
2. Reckson buys EAB Plaza
Ever-busy Reckson Associates Realty Corp. earns the second slot for its $240 million purchase of EAB Plaza in Uniondale. The deal for the 1.1 million-square-foot complex cements the Melville office giant as the regionÕs top class A owner.
ÒFor it to achieve the number of over 240 million dollars is amazing,Ó said C&WÕs Leviton.
Reckson, which also aims to redevelop the nearby coliseum, almost immediately christened the building Reckson Plaza and announced it was relocating its headquarters from Melville.
ÒTo me thatÕs the No. 1 deal,Ó said Alan Rosenberg, president of Sutton & Edwards Inc./TCN Worldwide. ÒItÕs the most prominent piece of real estate on Long Island. It was built as the Rockefeller Center of Long Island and it remains as such.Ó
3. Stony Brook seizes Flowerfield site
Even before the U.S. Supreme Court ruled government can use eminent domain to seize property for public use, Stony Brook University had its eye on 246 acres of the Flowerfield property in St. James, Gyrodyne Co. of America Inc.Õs main asset.
Gyrodyne, which once developed drone choppers for the Navy, envisioned filling the land straddling the Brookhaven and Smithtown line with a golf course and hundreds of luxury homes. Stony Brook, meanwhile, plans a research park anchored by a 100,000-square-foot Center for Excellence in Wireless and Infor-mation Technology. Gyrodyne vows that it will fight for the land.
4. Tilles Cos. sells its empire
Back to building sales for No. 4.
After decades as Island real estate royalty, the Tilles family decided to cash out of a sizzling real estate market. It sold its 2.1 million-square-foot empire for a whopping $335 million.
The patchwork of partners that makes up CLK/Houlihan-Parnes instantly be-came one of the IslandÕs biggest landlords, with its portfolio covering some of Nassau CountyÕs most valuable land.
ÒIt changed the whole make-up on Long Island and in my opinion led to the sale of the Blumenfeld Portfolio [See deal 9] as well as other block sales of properties,Ó said Jack Britvan, president of American Commercial Real Estate and a CLK/HP tenant. ÒIn my opinion, this was the No. 1 real estate transaction.Ó
5. 1-800-Flowers transplants roots
Taking slot five is internet retailer 1-800-Flowers.comÕs surprising decision to trade its highly-visible Stewart Avenue digs Ð and its regionally famous signage Ð for space at 1 Old Country Road in Carle Place.
The deal was announced in May, but 1-800-Flowers.com has only recently finished moving into the 90,000 square feet it will fill for at least a dozen years.
That may seem like a while, but Kraig Silver, who worked for landlord The Treeline Cos., pointed out the actual deal only took six weeks.
ÒThatÕs unbelievable,Ó he said. ÒIt usually takes a lot longer than that.Ó
6. Reckson cashes in with Citibank
Another lease, this one much bigger, wins No. 6.
In a deal that earns Reckson its second slot on this list, Citibank leased 203,000 square feet at 68 S. Service Road in Melville.
ÒWeÕre not just a mom-and-pop kind of market,Ó said Sutton & EdwardsÕ Rosenberg. ÒItÕs good to have big companies.Ó
Lots of things about this deal are big. The yearÕs second-biggest lease, it fills two-thirds of one of the biggest Long Island buildings built without a tenant.
One thing not so big? The ÒwowÓ factor. Word of the deal was so widespread before the official announcement that real estate firms were counting the space as leased long before Reckson announced it.
ThatÕs what happens with big deals, said Brian Lee, the Long Island-based Newmark Knight Frank broker who represented Citibank and worked on the deal for about a year. ÒIt becomes kind of anti-climatic when its done.Ó
But the news still affected the market, said Rosenberg.
ÒBy taking a building of that size and leasing two-thirds of it with the stroke of your hand, so to speak, the waving of your wand, you tighten the market.Ó
7. Arrow ends Hub dispute
In addition to Òbuild it and they will come,Ó Long Island learned another lesson in 2005: end neighborhood feuds by buying the property.
Arrow Electronics Inc., Long IslandÕs biggest company in terms of revenue, sold its former Hub Drive headquarters to KeySpan.
That wouldnÕt be a big deal if Arrow hadnÕt led the fight against KeySpanÕs plans to build a 250-megawatt plant on 31 nearby acres.
Neither company, of course, would admit the sale helped KeySpan block another protestor from acquiring it. Arrow says the sale simply consolidates its Melville operations, now at 50 Marcus Drive.
8. Building a Long Island presence
Just in time for the residential bubble to pop comes No. 8.
Huttig Building Products announced its first Long Island distribution center at 110 Plant Ave. in Hauppauge. The 125,000-square-foot deal is ranked by Newmark Knight Frank as the yearÕs biggest warehouse lease.
Huttig, a 120-year-old company based in St. Louis, is the largest domestic distributor of millwork, building materials and wood products used in building and remodeling homes.
9. Blumenfeld gives up office for retail
The yearÕs ninth-biggest story could be labeled a home run.
An affiliate of Sterling Equities, run by Mets Principal Fred Wilpon, purchased the Blumenfeld office portfolio, seven office buildings totaling more than 450,000 square feet.
But the portfolioÕs new public face, Philip Wachtler, is hardly new. HeÕs WilponÕs son-in-law whose experience includes stints with Tilles and CLK/Houlihan Parnes. (See No. 2.)
By shedding the office space, Blumenfeld can focus on its retail ventures, including a Deer Park outlet mall.
10. A new beginning
The yearÕs final top deal earns the distinction because of one manÕs vision. When Joseph Farkas drove past the Bristol-Myers Squibb Pharma Co. building on Stewart Ave., he didnÕt see an outdated plant that had seen better days. Instead, he saw potential.
Farkas, president Metropolitan Realty Associates LLC, and Manhattan Equity Partner Angelo, Gordon & Co. paid $7.4 million for the turreted, 190,000-square-foot fortress.
Instead of producing pills, Farkas branded the complex The Business and Research Center at Garden City, and carved it up for multiple uses that could include office, warehouse, distribution, research, medical and laboratory.
He believes in the project so much, he relocated his office into the building. And the transformation to a Òtrue mixed-use projectÓ isnÕt over.
ÒYou really have to wait and see whatÕs coming next,Ó promised Farkas.
For our annual Top 10 Real Estate deals, we not only took into account transaction sizes, but also the stories behind them.
What it comes down to is, size matters, but we were also impressed by the obstacles overcome in some of these deals and the visions laid out by the dealmakers.
1. North Shore-LIJÕs mammoth iPark lease
It was the kind of headline-grabbing deal that brokers dream of, ensuring wads of notoriety and a commission check that could easily put a kid or two through Stony Brook.
In what was likely Long IslandÕs biggest commercial lease ever, the North Shore-Long Island Jewish Health System leased 454,000 square feet, about a third of the sprawling i.park campus in Lake Success.
For 25 years, North Shore-LIJ will pay a reported $300 million in rent as it creates a headquarters for outpatient services Ð freeing its existing hospital space for inpatient beds.
ÒThe deal was a long time in the making,Ó recalled David Leviton, of Cushman & Wakefield who worked on the lease, but wouldnÕt discuss terms. ÒIt was very complex and a lot of people worked a lot hours putting it together.Ó
Brian Waterman, the Newmark Knight Frank executive vice president and principal who worked with Scott Panzer to represent the hospital system, said the lease gives North Shore-LIJ flexibility and control over its real estate space and strategy.
ÒItÕs more than just a real estate deal,Ó he said.
2. Reckson buys EAB Plaza
Ever-busy Reckson Associates Realty Corp. earns the second slot for its $240 million purchase of EAB Plaza in Uniondale. The deal for the 1.1 million-square-foot complex cements the Melville office giant as the regionÕs top class A owner.
ÒFor it to achieve the number of over 240 million dollars is amazing,Ó said C&WÕs Leviton.
Reckson, which also aims to redevelop the nearby coliseum, almost immediately christened the building Reckson Plaza and announced it was relocating its headquarters from Melville.
ÒTo me thatÕs the No. 1 deal,Ó said Alan Rosenberg, president of Sutton & Edwards Inc./TCN Worldwide. ÒItÕs the most prominent piece of real estate on Long Island. It was built as the Rockefeller Center of Long Island and it remains as such.Ó
3. Stony Brook seizes Flowerfield site
Even before the U.S. Supreme Court ruled government can use eminent domain to seize property for public use, Stony Brook University had its eye on 246 acres of the Flowerfield property in St. James, Gyrodyne Co. of America Inc.Õs main asset.
Gyrodyne, which once developed drone choppers for the Navy, envisioned filling the land straddling the Brookhaven and Smithtown line with a golf course and hundreds of luxury homes. Stony Brook, meanwhile, plans a research park anchored by a 100,000-square-foot Center for Excellence in Wireless and Infor-mation Technology. Gyrodyne vows that it will fight for the land.
4. Tilles Cos. sells its empire
Back to building sales for No. 4.
After decades as Island real estate royalty, the Tilles family decided to cash out of a sizzling real estate market. It sold its 2.1 million-square-foot empire for a whopping $335 million.
The patchwork of partners that makes up CLK/Houlihan-Parnes instantly be-came one of the IslandÕs biggest landlords, with its portfolio covering some of Nassau CountyÕs most valuable land.
ÒIt changed the whole make-up on Long Island and in my opinion led to the sale of the Blumenfeld Portfolio [See deal 9] as well as other block sales of properties,Ó said Jack Britvan, president of American Commercial Real Estate and a CLK/HP tenant. ÒIn my opinion, this was the No. 1 real estate transaction.Ó
5. 1-800-Flowers transplants roots
Taking slot five is internet retailer 1-800-Flowers.comÕs surprising decision to trade its highly-visible Stewart Avenue digs Ð and its regionally famous signage Ð for space at 1 Old Country Road in Carle Place.
The deal was announced in May, but 1-800-Flowers.com has only recently finished moving into the 90,000 square feet it will fill for at least a dozen years.
That may seem like a while, but Kraig Silver, who worked for landlord The Treeline Cos., pointed out the actual deal only took six weeks.
ÒThatÕs unbelievable,Ó he said. ÒIt usually takes a lot longer than that.Ó
6. Reckson cashes in with Citibank
Another lease, this one much bigger, wins No. 6.
In a deal that earns Reckson its second slot on this list, Citibank leased 203,000 square feet at 68 S. Service Road in Melville.
ÒWeÕre not just a mom-and-pop kind of market,Ó said Sutton & EdwardsÕ Rosenberg. ÒItÕs good to have big companies.Ó
Lots of things about this deal are big. The yearÕs second-biggest lease, it fills two-thirds of one of the biggest Long Island buildings built without a tenant.
One thing not so big? The ÒwowÓ factor. Word of the deal was so widespread before the official announcement that real estate firms were counting the space as leased long before Reckson announced it.
ThatÕs what happens with big deals, said Brian Lee, the Long Island-based Newmark Knight Frank broker who represented Citibank and worked on the deal for about a year. ÒIt becomes kind of anti-climatic when its done.Ó
But the news still affected the market, said Rosenberg.
ÒBy taking a building of that size and leasing two-thirds of it with the stroke of your hand, so to speak, the waving of your wand, you tighten the market.Ó
7. Arrow ends Hub dispute
In addition to Òbuild it and they will come,Ó Long Island learned another lesson in 2005: end neighborhood feuds by buying the property.
Arrow Electronics Inc., Long IslandÕs biggest company in terms of revenue, sold its former Hub Drive headquarters to KeySpan.
That wouldnÕt be a big deal if Arrow hadnÕt led the fight against KeySpanÕs plans to build a 250-megawatt plant on 31 nearby acres.
Neither company, of course, would admit the sale helped KeySpan block another protestor from acquiring it. Arrow says the sale simply consolidates its Melville operations, now at 50 Marcus Drive.
8. Building a Long Island presence
Just in time for the residential bubble to pop comes No. 8.
Huttig Building Products announced its first Long Island distribution center at 110 Plant Ave. in Hauppauge. The 125,000-square-foot deal is ranked by Newmark Knight Frank as the yearÕs biggest warehouse lease.
Huttig, a 120-year-old company based in St. Louis, is the largest domestic distributor of millwork, building materials and wood products used in building and remodeling homes.
9. Blumenfeld gives up office for retail
The yearÕs ninth-biggest story could be labeled a home run.
An affiliate of Sterling Equities, run by Mets Principal Fred Wilpon, purchased the Blumenfeld office portfolio, seven office buildings totaling more than 450,000 square feet.
But the portfolioÕs new public face, Philip Wachtler, is hardly new. HeÕs WilponÕs son-in-law whose experience includes stints with Tilles and CLK/Houlihan Parnes. (See No. 2.)
By shedding the office space, Blumenfeld can focus on its retail ventures, including a Deer Park outlet mall.
10. A new beginning
The yearÕs final top deal earns the distinction because of one manÕs vision. When Joseph Farkas drove past the Bristol-Myers Squibb Pharma Co. building on Stewart Ave., he didnÕt see an outdated plant that had seen better days. Instead, he saw potential.
Farkas, president Metropolitan Realty Associates LLC, and Manhattan Equity Partner Angelo, Gordon & Co. paid $7.4 million for the turreted, 190,000-square-foot fortress.
Instead of producing pills, Farkas branded the complex The Business and Research Center at Garden City, and carved it up for multiple uses that could include office, warehouse, distribution, research, medical and laboratory.
He believes in the project so much, he relocated his office into the building. And the transformation to a Òtrue mixed-use projectÓ isnÕt over.
ÒYou really have to wait and see whatÕs coming next,Ó promised Farkas.