Military Tactic
With the government preparing a list of military bases slated for closing, some bases are turning to real-estate developers to help ensure their survival.
Case in point: A one-million-square-foot research park that is taking shape on the grounds of the U.S. Army's Picatinny Arsenal in Morris County, N.J., about 40 miles northwest of Manhattan. Picatinny, a 6,500-acre site that traces its history to the Revolutionary War, currently develops Army weapons.
Advance Realty Group LLC, a real-estate development and investment firm in Bedminster, N.J., is set to break ground on the 120-acre project, which will also involve renovating four existing buildings with 100,000 square feet of office and laboratory space. Advance Realty will lease the land and buildings for 50 years from InSitech Inc., a nonprofit that has a contract with the Army to both lease the surplus property at the base and commercialize research at Picatinny.
Advance Realty plans to rent the space to researchers, military contractors and the companies that are expected to use technology created at Picatinny to produce commercial products.
"Picatinny is coming up for [closure] review like all military bases," says Greg Senkevitch, Advance Realty's chief operating officer. "Military bases are constantly looking to make sure they're having as much impact on the mission of the military to remain open."
Lap of Luxury
Vornado Realty Trust made what is believed to be the most expensive U.S. real-estate purchase ever.
Vornado announced last week it would pay $113 million for 17,000 square feet of retail space at the former Westbury Hotel in New York, which was converted about five years ago into condominiums. That's $6,647 a square foot, far above the last high water mark set four years ago when another retail property in New York sold for nearly $3,000 a square foot, according to Real Capital Analytics Inc., a New York-based real-estate research firm.
The retail property Vornado is buying occupies prime turf on Madison Avenue and has swanky tenants -- Cartier, Chloe and Gucci.
Gucci has available for sublease about one-fifth of the 12,000 square feet of space it occupies, says Joel Isaacs, president of Isaacs & Co., which is marketing the space for Gucci. Mr. Isaacs says Gucci has no plans to give back the space to Vornado. The asking rent for the sublease space is $750 a square foot. But Faith Hope Consolo, chairman of the retail group at Prudential Douglas Elliman Real Estate, says less-desirable retail space in the area is leasing for $850 to $900 a square foot.
Vornado declined to comment. Gucci didn't return calls seeking comment.
Beach Front Property
Commercial real-estate investors see opportunity in Fort Lauderdale, the Florida city known more for spring break beer blasts and retiree condo complexes than office buildings.
Shorenstein Co., a closely held real-estate investment firm based in San Francisco, has bought a 90% interest in Bank of America Plaza at Las Olas City Centre, a 408,000-square-foot office tower in downtown Fort Lauderdale. Stiles Corp., which developed the building three years ago, is retaining a 10% interest in the property. The two companies won't say how much Shorenstein paid, but a person familiar with the deal says the price was $120 million. The building is 24% vacant.
More investors may be heading to the Fort Lauderdale market. This month, Marcus & Millichap Real Estate Investment Brokerage Co. put the city at the top of its list of the best markets in the U.S. for office property investors. Marcus & Millichap predicts Fort Lauderdale will post the biggest jump in job growth of the 42 markets it ranked, with 33,600 new jobs, a 4.5% increase. That will push the office vacancy rate in the area down to 13% from about 15%, according to the Marcus & Millichap report.
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