NYC Developer Investing Big in Suburbs

WHITE PLAINS—While its suburban properties may not garner the same attention of some of its high-profile Manhattan office tower holdings, George Comfort & Sons is looking to take advantage of changing market conditions and reposition some iconic properties in Westchester and Fairfield (CT) counties.

Peter Duncan, president and CEO of New York City-development firm George Comfort & Sons, told more than 80 attendees of the Hudson Gateway Association of Realtors Commercial Investment Division last week that the firm is particularly bullish on Westchester and has embarked on some ambitious redevelopment efforts at a number of properties in the county.

The firm, recently acquired the former Reckson Executive Park in Rye Brook, now known as 1100 King St., in a joint venture with a fund managed by DRA Advisors for $55 million from SL Green Realty. The firm has office holdings and development rights for approximately two million square feet in Westchester County and another two million square feet in Fairfield County, CT, including the former UBS headquarters complex in Stamford, CT, as well as another 450,000 square feet in Southern New Jersey.

George Comfort & Sons has extensive holdings in Manhattan, including 200 Madison Ave, 498 Seventh Ave., 63 Madison Ave. and 575 Lexington Ave., to name just a few. The company has grown its overall portfolio from around 1 million square feet in the early 1990s to between 14 million square feet to 15 million square feet at present.

“All we really are is a company that rolls up its sleeves every day and tries to work out the problems,” Duncan said, noting that particularly with its suburban portfolio, the company had to have the patience and imagination to adapt to changing market conditions. He related several examples of suburban properties the company acquired that required George Comfort & Sons to alter its initial plans to a different leasing or investment environment.

Overall, he said that he likes acquiring suburban New York City properties because, “quite frankly I can buy on a basis that in most instances where I can feel comfortable in putting money into these properties, repositioning them and turning them into something that they weren’t at the time that we acquired them.”

Duncan at the session said that one of the reasons Westchester is attractive to the firm is that there has been approximately six million square feet of outdated office space taken off the market in the last 10 years or so.

“I do think Westchester is ahead of Fairfield right now because Westchester, whether by design or whatever, bit the bullet and started transforming a lot of Class C and D properties into new uses,” he said. “So, I think the Westchester market right now—the commercial office side—is much sounder than the Fairfield market.”

He adds that market conditions in Greenwich are tightening, which will eventually benefit the Stamford office market. However, he cautioned that the turnaround will take some time. Duncan blamed at least some of the market’s troubles on the administration of Gov. Dannel Malloy and said that there needs to be a “wholesale change of thinking” in state government in Connecticut.

Duncan briefed CID members on a number of the company’s efforts, including the proposed redevelopment of the former Good Counsel High School campus in White Plains. The plan, which is currently in the approval process before the White Plains Common Council, calls for the sale of portion of the property to Sunrise Senior Living, which will develop 85 to 90n assisted living units in a four-story building. The plan also calls for the preservation of a portion of the property formerly owned by the Sisters of Divine Compassion, including its storied chapel and a portion of the convent. The development plan also calls for the construction of 95 units of student housing for the adjoining Pace University Law School, and approximately 370 market rate apartments in an eight to 10-story building.

He said the development plan is geared to trying to keep the property’s “beautiful vistas” as well as its rich history.

Duncan also outlined the planned redevelopment of 900 King St. in Rye. Brook, a vacant 265,000-square-foot office building it plans to convert into a senior living (age restricted 55 and over) complex that will feature a total of 269 units—80 to 90 units of assisted living/memory units, 24 townhomes and 160 independent living units. The plan, if approved, will involve the demolition of the existing office building.

He also noted that the firm is currently in negotiation with a number of prospective tenants at 1100 King St. in Rye Brook that he believes could bring the percentage of leased space at the 560,000-square-foot complex from its current 65% level to the higher 80s by early 2019.

The firm recently acquired the six-building complex at a little less than 7.5% un-levered cap rate and believes that based on strong tenant demand for its nearby Center at Purchase office complex, which consists of four buildings totaling approximately 685,000 square feet), the 1100 King St. property could lease up quickly. The Centre at Purchase is currently 98% leased and Duncan says that smaller-sized tenant demand has driven significant activity at 1100 King St. of late.

He termed the 1100 King St. purchase as a “market opportunity. We took advantage of a great site, we got a great base to start with and we are meeting a market,” Duncan said.

In just a few months, Duncan said that the firm has completed 45,000 square feet in new lease deals, another 15,000 square feet in lease renewals and extensions, and is in negotiations on another 100,000 square feet in potential transactions at the property.

One of the company’s other high-profile suburban New York projects is the repositioning of the former UBS headquarters complex in Downtown Stamford, CT.

Thus far, George Comfort & Sons has leased approximately 50,000 square feet of the 710,000-square-foot complex and is currently undertaking a host of capital improvement projects at the property and also plans to add a 180-room boutique hotel at the site. One of the new tenants at the former UBS property is KPMG.

Duncan said that his firm is in “earnest” negotiations with firms involving about 1 million square feet at the complex. While not revealing the identity of the prospective tenant, he said, “We are very far down the road with a group that would take all of the pavilion (275,000 square feet) and a good chunk of the (415,000-square-foot) office tower.”