Chappaqua Crossing Set to Break Ground in 2016

John Jordan | November 2015

WHITE PLAINS—If all goes according to plan it will be more than 11 years from the time the developer of the former Reader’s Digest corporate headquarters in Chappaqua acquired the property in December 2004 until it turns its first shovel on its mixed-use project on the 114-acre campus in early 2016.

The archives of Real Estate In-Depth tell the frustrating story of a project that first made headlines in late 2004 with the $59-million sale and partial leaseback of the Reader’s Digest property to a joint venture of South Norwalk, CT-based Summit Development LLC and Greenfield Partners, LLC in a deal valued at $59 million.

A story in the May 2005 edition of Real Estate In-Depth began with “A new page in Reader’s Digest’s association with the Village of Chappaqua is about to be written” and chronicled the highlights of developer Felix Charney’s first appearance before the then Westchester County Board of Realtor’s Commercial Investment Division. Charney, a partner with Summit Development, met with the CID to discuss the plan his firm was about to submit for its Chappaqua Crossing deveopment that called for 348 units of age-restricted housing. It also called for a restacking of the office space since Reader’s Digest agreed to lease back 224,000 square feet of the more than 600,000 square feet of office space avaialble at the storied brick headquarters building.

The plan began to unravel in 2009 when Reader’s Digest filed for bankruptcy and announced as part of its plan it would move out of its headquarters in Chappaqua and relocate to offices in White Plains and Manhattan, leaving the entire headquarters property vacant. Since that time intense opposition to development at the site, failed negotiations with a number of administrations of the Town of New Castle, revised plans, false starts, and litigation have dominated local headlines in connection with the project until fairly recently.

Charney returned to speak before the now Hudson Gateway Association of Realtors’ Commercial Investment Division on Oct. 22, 2015 at the HGAR offices in White Plains where he revealed a much different plan than the original he discussed more than a decade earlier.

The project, now valued at approximately $140 million, will involve the development of 111 residential units, 120,000-square-feet of retail space, as well as the lease-up of the remaining vacant space in the former headquarters building.

A critical facet of the project that helped turn local sentiment in favor of development at the site was the deal signed with Whole Foods to anchor the retail component of the project. Chappaqua some years back had lost its only grocer and now welcomes the addition of the 40,000-square-foot store at the property. Another major tenant will be Lifetime Fitness, which will open a 40,000-square-foot prototype location at the development. Lifetime Fitness operates a more than 200,000-square-foot location at the former Journal News building in Harrision.

The residential component will now consist of a 111-unit residential layout on 30 acres of the site. The plan calls for a mix of fee-simple townhomes and condominium flats in the eastern portion of the site. A total of 32 units have been designated as affordable housing and are to developed in a portion of the upper two floors of the four-story Georgian-style, cupola-topped former Reader’s Digest building, which opened in 1939. The affordable housing component will be built to comply with the guidelines set forth in the fair housing settlement between Westchester County and the U.S. Department of Housing and Urban Development. It will include a mix of studio, one-, two- and three-bedroom apartments.

Charney said after demolition of some of the office space and reuse to residential of a portion of the space, the office space component of the property will amount to approximately 500,000 square feet. The developer was successful in eventually removing what had been a restriction of a maximum of four tenants at the property, including one tenant occupying at least 250,000 square feet.

At present, approximately 220,000 square feet of office space is leased or commited for at the property. Chappaqua Crossing’s tenant roster includes Northern Westchester Hospital and the Mount Kisco Medical Group. He said there is a total of 90,000 square feet of space new leases pending.

“This thing has awakened from the dead,” Charney said. “People wouldn’t come here for love or money and now people are calling us.” He credited the synergy that now exists between the retail town center component and the office space there as a reason why retailers and businesses have shown interest in the project.

He added that his firm will likely try to secure a deal with office space provider Regus, for a portion of the office space.

In terms of the project timeline, he said that the plan is in its final stages of site plan approval with the Town of New Castle. The firm has a commitment to deliver the Whole Foods store in October of 2016.

“We are intending to start construction in January or February,” Charney said, “with this entire property finished and stabilized kind of late spring of 2017.”

 

John Jordan
Editor, Real Estate In-Depth